Mexico power expansion faces execution test as investors warm to new framework: panelists

Mexico's power-sector challenge is shifting from policy to execution as developers embrace a more flexible framework for private investment, but warn that delivering the required generation will strain project, equipment and financing capacity.

Mexico needs to add roughly 7 GW of generation annually to meet government targets, industry executives said Oct. 1 during S&P Global Energy's 2026 Mexico Market Briefing.

"Mexico has to build roughly 7 GW per year," José Luis García, CEO of Yeltica Energy said. "Few countries have been able to execute that much in such a short period of time."

The challenge extends beyond financing to equipment availability, port logistics, labor and the maturity of projects entering development.

Many projects are still at a very early stage of development, García said. "What concerns me is the availability of resources to execute."

Developers welcome new framework

Executives were broadly positive about recent procurement processes, saying they showed greater flexibility toward private investment.

The processes have provided greater clarity around storage costs, corporate governance and other project conditions while showing an "interest in making conditions more flexible," said Saavi Energía CEO Francisco Garza.

Executives also pointed to greater alignment between government and developers as Mexico combines a central role for state utility CFE with private investment through mixed projects.

"What excites me is that there are projects," Diana Sasse, an independent legal expert said. "There is alignment of interests rather than confrontation."

Mexico will nevertheless need additional private investment beyond mixed projects, Garza said.

"It is still necessary to trigger private projects and private PPAs," he said, noting that many large corporate consumers remain dependent on CFE.

Storage remains unresolved

Energy storage remains one of the outstanding issues as Mexico expands renewable generation.

"We need to give greater visibility to storage and clarify how it is going to be remunerated," Garza said.

The question is becoming more pressing as batteries increasingly provide an option for supporting grid reliability alongside solar and wind generation.

"Batteries remove the stigma of intermittency," Sasse said, referring to one of the longstanding criticisms of renewable generation. "Work is being done to improve the offer of renewable energies into the system, and that is a positive step," she said.