Renewable Energy Comparative Guide

1 Legal and regulatory framework

1.1 What role does the state play in the renewables industry and which national legislative and regulatory provisions have relevance for the renewables industry in your jurisdiction?

According to Article 73, Section X of the Constitution, all energy matters fall under the federal jurisdiction. Thus, renewable energy projects fall under federal oversight and regulation. In addition, Article 25, paragraphs 1 and 7 of the Constitution require the state to:

• guarantee that national development is integral and sustainable; and
• under the criteria of social justice, productivity and sustainability, support enterprises in the social and private sectors of the economy.

In addition, the Electric Industry Law and the Energy Transition Law both highlight the need to promote sustainability in the energy industry.

1.2 Which bilateral or multilateral instruments or treaties with effect in your jurisdiction have relevance for the renewables industry?

Mexico is a party to more than 800 international treaties, of which the following focus on promoting renewables:

• the United Nations Framework Convention on Climate Change (1992);
• the Kyoto Protocol (1997);
• the Stockholm Convention on Persistent Organic Pollutants (2001);
• the Paris Agreement (2015); and
• the United States-Canada-Mexico Agreement (2018).

1.3 Which national regulatory bodies are responsible for enforcing the applicable laws and regulations? What powers do they have and what is their general approach in regulating the renewables industry?

The Ministry of Energy (SENER) and its internal organ, the National Energy Commission (CNE). Further to a constitutional reform published on 20 December 2024, the CNE is no longer an independent entity and now forms part of SENER but retains operational and technical autonomy.

The CNE:

• oversees planning and energy policy;
• issues permits for power producers, including renewables;
• issues clean energy certificate requirements; and
• enforces compliance with energy laws and regulations.

The Ministry of the Environment and Natural Resources is responsible for promoting national sustainability policies.

1.4 What role do regional or local government or public bodies play in the renewables industry?

Regional and local government public bodies play a limited role in the renewables industry, as the power industry in Mexico is federally regulated. Nonetheless, according to the Energy Planning and Transition Law, the state and municipal governments may sign agreements with the National Commission for the Efficient Use of Energy (CONUEE) so the latter can provide technical advice and support to federal entities and municipalities that request it for the design and implementation of projects, programs, or local technical regulations related to Energy Efficiency and Sustainable Energy Use.

2 Renewables industry

2.1 Which renewable technologies are considered relatively mature in your jurisdiction, and which are emerging as potentially new technologies in the market?

In Mexico:

• solar, wind and hydroelectric are considered mature renewable sources; and
• geothermal is an emerging new technology with high growth potential.

The following table sets out details of the Mexican energy mix in 2022.

Technology	Electricity per year (GWh)	Clean energy participation (%)	Total energy participation (%)
Hydroelectric	35,558.85	33	10.4
Geothermal	4,412.68	4	1.3
Wind power	20,528.75	19	6
Solar power	20,342.04	19	6
Biomass	2,141.26	2	0.6
Total renewable energy	82,983.58		24.4

2.2 Who are the key players in the renewables industry in your jurisdiction?

State-owned company Comisión Federal de Electricidad (Federal Electricity Commission) is the largest renewable developer. In addition, key private players in Mexico include:

• Acciona;
• Iberdrola;
• Enel; and
• Energía Real.

2.3 How much do renewables currently contribute to the domestic energy mix? What are the near-term projections for the role they will play?

Renewable energy accounts for 24.4% of all energy generated in Mexico. By 2036, it is expected that the additional installed capacity will be 8 gigawatts.

3 Utility-scale renewables projects

3.1 What utility-scale renewables projects are currently operational or planned in your jurisdiction? What are their key features?

Many utility-scale renewable projects are planned or in operation.

The largest projects in operation include the following:

• Solar projects:
• • La Pimienta Solar Plant: Developed by Atlas Renewable Energy, this facility is fully operational and stands as Mexico's second-largest solar plant to date.
  • Helios Solar and Tuli Solar: Located in Mazapil Municipality, Zacatecas, these solar projects are owned and operated by Pattern Energy.
• Wind projects:
• • Los Cañones Wind Farm: Operated by EDP Renewables North America, this is the company's third renewable energy site in Mexico, contributing to a total operating capacity of 496 megawatts (MW) in the country.
  • Invenergy projects: Over the past decade, Invenergy has developed nearly 900 MW of clean energy across six projects in Mexico, sufficient to power nearly 1 million Mexican homes.
• Hydroelectric projects: Mexico's renewable energy mix also includes hydroelectric plants, contributing to the country's clean energy capacity.

The largest projects in the planning stage include the following:

• Solar projects:
• • Villanueva I and II Solar Plant: Located in Coahuila, this plant is one of the largest in Latin America, with a combined capacity of over 700 MW.
  • Puerto Libertad Photovoltaic Solar Park: Situated in Sonora, this project has a capacity of 405 MW peak and was completed in December 2018.
• Wind projects:
• • Mesa de Morenos Wind Farm: With a capacity of 100 MW, this project is under development in Zacatecas.
  • Coromuel Wind Farm: Located in Baja California Sur, this park will have a capacity of 50 MW and is expected to begin operations soon.
• Government and private initiatives:
• • Iberdrola Mexico's project portfolio: The company has more than 30 projects in the pipeline, totalling approximately 8.6 gigawatts (GW) of capacity, spread across 14 states in the country.
  • National Commitment for 2030: Mexico has pledged to double its renewable energy capacity by 2030, with plans to develop an additional 30 GW of green energy, including investments in solar, wind, geothermal and hydroelectric power.

3.2 What authorisations are required for the construction and operation of utility-scale renewables projects in your jurisdiction?

Federal, state and municipal authorisations are required to construct and operate renewable projects in Mexico. State and municipal authorisations vary across each jurisdiction, but generally they include:

• land zoning licences; and
• construction licences.

The following federal authorisations are required:

• To operate a power plant: A sole generator permit from the National Energy Commission (CNE).
• To interconnect to the national electric grid:
• • Interconnection studies (indicative, impact, and installations studies) conducted with the independent system operator, the National Centre for Energy Control (CENACE); and
  • The signing of an interconnection contract with:
  • • CFE Transmisión (high tension); or
    • CFE Distribución (mid and low tension).

3.3 Do these authorisations vary in respect of the location of the energy source, the location of the asset or the involvement of a foreign entity?

No. Only one sole generation permit is needed and the requirements to obtain this do not vary depending on:

• the energy source;
• the location of asset; or
• whether the applicant is a foreign or domestic company.

3.4 What is the procedure for obtaining such authorisations? How long does this typically take? Who is responsible for issuing them?

• Submit an impact study or a rapid version impact study to CENACE (approximately 30 days to draft the study for submission and 30–60 days for CENACE to issue a decision on the study).
• File a social impact study with the Ministry of Energy (30 days to draft and file the study).
• File an application for a generation permit (90 days to draft the permit application and 60 business days from receipt of the application for the CRE to resolve the application).
• File a petition with CENACE to sign a market participant contract with Comisión Federal de Electricidad (CFE) (30 business days).
• Complete the interconnection process with CENACE to interconnect to the grid (120 days).

3.5 What are the key features of such authorisations, including any process for renewal and the rights and obligations of the holder?

Permit holders receive the right to generate electricity through their generation permit, while the interconnection agreement gives them the right to dispatch electricity to the grid.

Permits have a term of up to 30 years and may be renewed if the applicable rules are complied with.

The general obligations of a permit holder are as follows:

• to comply with and adopt the necessary measures to ensure compliance with all regulations;
• to enter into the respective interconnection and market participant contracts, and perform any other acts required for the execution of operations related to or derived from the generation of electricity that it wishes to carry out, in accordance with applicable legislation, if necessary;
• to obtain the necessary authorisations or permits required by other authorities concerning the permitted activity before the start of operations established in the permit title and comply with the associated obligations on an ongoing basis;
• to comply with the resolution and recommendations of the Ministry of Energy concerning social impact;
• to adhere to the terms of accounting separation and the rules for transactions between generators and their affiliated marketers established by the CRE;
• to notify CENACE of each power plant it represents and comply with its instructions, if applicable;
• to comply with applicable regulations and best practices regarding infrastructure and equipment;
• to operate the power plant in compliance with CENACE's instructions;
• to fulfil the information requirements of the CRE and comply with information obligations related to the permit;
• to coordinate the maintenance of the power plant according to CENACE's instructions;
• to inform the CRE, once operations begin, of the amount of electricity generated monthly, as well as any additional information requested by the CRE, in the formats published on the website, within 10 business days of the conclusion of the previous reporting period;
• to facilitate access to its facilities if notified of verification visits intended to ensure compliance with the applicable legal provisions; and
• to comply with all other requirements established by the Electricity Industry Law.

3.6 Can these authorisations be transferred? If so, how and subject to what consents? Do any restrictions apply to the transfer?

Yes, they can be transferred. Condition 6 of the Permit Titles provides that in order to transfer the rights deriving from a permit, a corresponding authorisation must be requested from the CNE through a free-form written request signed by both the assignor and the assignee.

The legal acts intended to transfer the rights derived from this permit must be subject, in addition to the provisions of applicable legal regulations, to the suspensive condition that both the assignor and the assignee obtain authorisation for the transfer from the CNE.

3.7 What obligations apply in relation to decommissioning? How is this funded?

Land use and occupation contracts between the interested party (permit holder) and the landowner must include financial mechanisms that must be adopted for the permit holder to ensure that its installations are decommissioned and the occupied real estate is left:

• according to best practices; and
• in a way that respects the rights of landowners.

3.8 What are the main barriers to the development of utility-scale renewables projects in your jurisdiction?

The main problem is government delays in granting authorisations and permits. This is partly due to a lack of sufficient personnel and funding.

3.9 Environmental issues: (a) What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)? (b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees? (c) Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

(a) What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)?

The principal environmental statute which renewables generators must observe is the General Law of Ecological Equilibrium and Environmental Protection.

Renewables generators must obtain an environmental impact manifest authorisation (MIA) from the Ministry of Natural Resources (SEMARNAT). This is a technical document which evaluates and describes the possible effects that the project or activities may have on the environment.

(b) What are the potential consequences of breach of these requirements – both for the renewable's generator and for its directors, managers and employees?

Failure to comply with the terms of a MIA can lead to various legal, financial and operational consequences for the party involved. These sanctions are designed to protect the environment and ensure compliance with the law. The main consequences are as follows:

• Administrative penalties: The General Law of Ecological Balance and Environmental Protection and its regulations establish penalties for failure to submit or comply with an MIA. These include:
• • fines ranging from 30 to 50,000 times the unit of measure and update (UMA), depending on the severity of the violation (this equates to approximately MXN 3,000 to MXN 5 million);
  • a SEMARNAT order for the partial or total suspension of activities; and
  • a Federal Attorney for Environmental Protection (PROFEPA) order for the temporary or permanent closure of the project if it:
  • • operates without environmental authorisation; or
    • fails to comply with the conditions stipulated in the MIA.
• Criminal liability: In severe cases, such as significant environmental damage or harm to public health, those responsible may face criminal charges. Penalties may include imprisonment for one to nine years and additional fines, as per the Federal Penal Code (Articles 414 and 420).
• Damages and compensation: Responsible parties may be required to repair environmental damage, which can incur high costs for:
• • ecological restoration;
  • cleanups; and/or
  • compensation.
• They may also face civil lawsuits for harm caused to third parties.

(c) Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

In Mexico, the SEMARNAT and PROFEPA play complementary and essential roles in regulating the electricity industry, including renewables.

They ensure that activities relating to the generation, transmission and distribution of electricity are conducted in an environmentally responsible manner. Their primary functions are outlined below.

SEMARNAT: SEMARNAT is responsible for regulating, supervising and issuing environmental permits for the electricity industry. Its main activities include:

• environmental impact evaluation and authorisation;
• waste and emissions management;
• renewable energy regulation; and
• issuance of environmental standards.

PROFEPA: PROFEPA acts as the oversight body to ensure compliance with the regulations issued by SEMARNAT. Its responsibilities include:

• supervision and verification
• imposition of sanctions for non-compliance;
• resolution of environmental complaints; and
• environmental monitoring and audits.

Renewable projects such as solar and wind project require permits that assess their impact on biodiversity and land use (through the MIA). In addition, if the plan is to build on protected or forested areas, authorisation for a change in land use change is also needed from the SEMARNAT.

3.10 Health and safety issues: (a) What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted? (b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

(a) What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted?

Renewable energy projects in Mexico are subject to various health and safety requirements as set out in national laws and regulations. These are primarily derived from:

• the Federal Labour Law; and
• official norms (NOMs) issued by the Ministry of Labour and Social Welfare (STPS).

Additionally, international best practices are often adopted to enhance safety standards and ensure compliance with global expectations. The key requirements and best practices are outlined below.

Health and safety requirements: These include the following:

• Compliance with:
• • NOM-001-STPS-2008 on workplace electrical installations, which must be safe and comply with operational standards;
  • NOM-002-STPS-2010 on fire prevention measures for industrial facilities;
  • NOM-009-STPS-2011 on procedures for working at heights, applicable to wind turbines and solar installations;
  • NOM-017-STPS-2008 on the provision and use of personal protective equipment;
  • NOM-018-STPS-2015 on the identification and communication of hazardous chemicals in the workplace;
  • NOM-019-STPS-2011 on the organisation and functioning of workplace safety and health committees;
  • NOM-030-STPS-2009 on preventive safety and health services at workplaces; and
  • environmental and safety approvals:
• MIAs: Projects must assess and mitigate risks to both the environment and human health.
• Occupational health and safety programme: Employers must establish and maintain a programme tailored to project activities.
• Permits and reporting:
• • Risk assessments and mitigation strategies must be reported to STPS.
  • Regular inspections and audits will be conducted by government authorities.
• Training requirements: Mandatory training is required for employees on:
• • specific safety procedures;
  • hazard identification; and
  • emergency response.
• Certification is required for operators of:
• • heavy equipment;
  • cranes; and
  • other machinery.

Best practices in health and safety: These include the following:

• Risk assessment and mitigation:
• • Conduct a comprehensive risk analysis for project phases (construction, operation, maintenance).
  • Address specific hazards such as:
  • • high-voltage equipment;
    • confined spaces; and
    • working at heights.
• Adoption of international standards:
• • ISO 45001: Occupational health and safety management systems.
  • IEC and IEEE standards: Electrical installations and energy systems.
• Emergency response planning:
• • Establish detailed emergency response protocols for:
  • • fires;
    • equipment failures; and
    • natural disasters.
  • Conduct regular drills and ensure clear communication channels.

(b) What are the potential consequences of breach of these requirements – both for the renewable's generator and for its directors, managers and employees?

The legal consequences of a breach of health and safety regulations are as follows:

• Fines and penalties: Breaches of the NOMs or the Federal Labour Law can lead to the imposition of monetary fines by the STPS. Fines are calculated based on the severity of the violation and can range from 50 to 5,000 times the UMA, which is periodically updated.
• Temporary or permanent shutdown of operations: Severe breaches may lead to the partial or total suspension of work activities until compliance is achieved.
• Civil liability: Companies may face lawsuits for damages if workers or third parties are injured due to negligence.
• Criminal liability: In cases involving gross negligence, particularly where fatalities or serious injuries occur, company representatives – including directors, managers and employees – could face criminal charges.
• Revocation of permits: Repeated violations or failure to comply with corrective measures could result in the revocation of project permits or licences.

4 Distributed generation projects

4.1 What are the key differences in relation to small-scale distributed generation projects compared to utility-scale projects in your jurisdiction with regard to the regime discussed in question 3?

In Mexico, if the capacity of a power plant – whether conventional or renewable – is less than 0.7 megawatts (MW), it does not require a permit from the National Energy Commission (CNE). These are called 'exempt generators'. If the capacity is equal or greater than 0.7 MW, a permit is required; these are called sole generators.

According to Article 3, Section XXII of the Electric Sector Law, to be considered as distributed generation, an exempt generator must connect to the general distribution grids, meaning that it must be medium or low tension. High-tension generators may be exempt generators but not distributed generators.

Distributed generation has the right:

• to open and non-discriminatory access to the general distribution grids; and
• to choose from one of the following financial remuneration mechanisms:
• • net billing;
  • net metering; and
  • total sales

Net metering allows exempt generators within the distributed generation scheme to benefit from a virtual energy bank, meaning that excess production is credited for the generator's benefit for 12 months, giving the load centre attached to the generator the possibility to use this excess banked energy when the power plant is not producing energy, such as at night.

4.2 What are the main networks that apply to small-scale distributed generation projects in your jurisdiction?

The national electric system comprises two networks, as follows:

• National Transmission Grid: High tension, meaning a level higher than 35 kilovolts.
• General distribution grids:
• • Mid tension, meaning 35 kilovolts to higher than 1 kilovolt; and
  • Low tension, meaning tensions lower than 1 kilovolt.

Distributed generation projects in Mexico are allowed to interconnect to the general distribution grids only.

5 Taxes and incentives

5.1 What national, regional and/or local incentives are available as subsidies or support to facilitate the deployment of renewables projects in your jurisdiction?

In Mexico, the deployment of renewable energy projects is influenced by a combination of:

• regulatory frameworks;
• fiscal incentives; and
• market mechanisms.

While direct subsidies are limited, several support mechanisms facilitate the growth of renewable energy:

• Clean energy certificates (CELs): CELs are designed to promote the generation of electricity from clean energy sources. Generators receive one CEL for each megawatt-hour of clean energy produced. These certificates can be sold to entities ('load responsible entities'), which must acquire for the load centres that they represent a certain percentage of clean energy, creating an additional revenue stream for renewable projects.
• Distributed generation: For distributed generation projects, exempt generators do not need to obtain a permit or to sign an interconnection contract with the National Centre for Energy Control; this is done locally with CFE Distribución.

5.2 Are any tax reliefs available for investment in renewables projects?

In Mexico, taxpayers that invest in renewable energy equipment may benefit from accelerated depreciation rates, allowing for a faster recovery of their investment. Article 34, Section XII of the Income Tax Law allows for a 100% depreciation on renewable energy assets in the first year.

5.3 Have there been any interventions affecting renewables projects in terms of their ability to be constructed or operated, or their ability to earn revenue, in your jurisdiction?

Between 2018 and 2024, the federal government's energy policy shifted from allowing clear access to the grid to all renewable projects to suspending and reviewing projects in the process of interconnection to the grid to determine their viability on a case-by-case basis. This policy has focused on maintaining and strengthening grid reliability. Considering that renewables are intermittent generators, they could place high stress on the national grid; thus, new projects are now subject to special review.

The current government has maintained this approach and has proposed new rules for all access to the grid for renewables – for example, requiring at least 30% of storage systems to be allowed to interconnect.

In this regard, on 18 March 2025, the following energy laws came into place:

• the Law on the Public State Company Comisión Federal de Electricidad;
• the Law on the Public State Company Petróleos Mexicanos;
• the Electric Sector Law;
• the Hydrocarbon Sector Law;
• the Planning and Energy Transition Law;
• the Biofuels Law;
• the Geothermal Law; and
• the National Energy Commission Law.

5.4 What other incentives are available to promote the development of the renewables industry in your jurisdiction?

While most energy regulations are promulgated at the national level, the Energy Transition Law provides that states and municipalities may also promote renewable generation independently if such measures do not interfere with or contradict federal legislation.

As an example, the government of Mexico City offers incentives to retrofit installations to meet energy and renewable standards, thus promoting further renewable energy projects in this jurisdiction.

6 Financing structures

6.1 Is debt financing typically used and are there any particular structures that are common for renewables projects in your jurisdiction?

Yes, debt financing is typically used in Mexico to pursue renewable projects. The available structures include:

• project finance;
• bank loans;
• development bank loans;
• vendor financing; and
• lease financing.

6.2 What are the advantages and disadvantages of these different types of structures?

Structure	Advantages	Disadvantages
Project finance	Risk containment, long tenure, tailored to cash flows.	High transaction costs and long implementation times.
Bank loans	Flexibility, quick access, relationship-based lending.	Shorter tenures, higher interest rates, recourse to developer.
Development bank loans	Favourable terms, technical support, risk mitigation.	Bureaucratic, limited funding, sector-specific restrictions.
Vendor financing	Simplified process, cost deferral, industry expertise.	Higher costs, limited flexibility, smaller-scale applicability.
Lease financing	Capital preservation, off-balance-sheet, flexible terms.	Higher total cost, ownership restrictions, restrictive agreements.

6.3 What other considerations and concerns should parties bear in mind when deciding on a financing structure for a renewables project?

Parties should specifically consider:

• the interest rate of the financing;
• the term; and
• whether the financier/lender will require any guarantees.

6.4 What main financing institutions are active in your jurisdiction?

• Private:
• • BBVA;
  • Banorte;
  • Banregio;
  • Banamex;
  • Santander;
  • Scotiabank;
  • HSBC;
  • Inbursa; and
  • Banco Azteca.
• Government:
• • Banco Nacional de Comercio Exterior: Targets exporters and large corporations.
  • Nacional Financiera: Targets small and medium-sized businesses.

6.5 Which financing markets are usually turned to for sources of debt in your jurisdiction, (eg, local, London, New York)?

Usually, the focus is on the local financial market; a second focus is the New York financial market.

7 Transmission, distribution and export

7.1 What are the applicable processes for connecting renewables projects with transmission, distribution and export networks in your jurisdiction? Do these processes differ between different types of renewable technologies and between renewables and non-renewable projects?

In Mexico there are three networks that form part of the national electric system:

• Sistema Baja California (state of Baja California);
• Sistema Baja California Sur (state of Baja California Sur); and
• Sistema Interconectado Nacional (rest of Mexico).

The Manual for the Interconnection of Power Plants and Connection of Load Centres sets out the requirements to dispatch or receive energy into or from the grid, including for export and import.

These processes do not vary between different types of renewables. However, there are differences between renewables and non-renewables.

The process to interconnect a renewable power plant project is as follows:

• An indicative study is filed with the National Centre for Energy Control (CENACE).
• An impact study is filed with CENACE.
• An installation study is filed with CENACE.
• A guarantee is granted by the power plant.
• A connection agreement is signed with Comisión Federal de Electricidad (CFE).

The above studies will determine the substation to which the power plant will interconnect, including the specific and reinforcement works that must be executed to have the right to dispatch electricity to the grid.

This process applies to sole generators (0.7 megawatts (MW) and above) only, and not to exempt generators (lower than 0.7 MW).

The regulations governing imports and exports are set out in the Manual of Imports and Exports. Market participants may submit purchase and sale offers for the import and export of electricity for one or more interconnection links during the same hour.

Only the independent system operator, CENACE, may import or export energy and/or ancillary services for reliability and/or emergency to and from the national electric grid. This is done through the day-ahead market, which forms part of the electric wholesale market.

Offers will be subject to the general floor and ceiling prices established by the Market Monitoring Unit.

Market participants must submit import and export offers with integer values and only incremental values of 1 MW are allowed; fractional values will be rejected.

7.2 What requirements and restrictions apply to the export of renewable energy onto the network?

Mexico can export renewable energy to the United States and to Guatemala. There are no distinctions between exporting renewable energy or conventional energy from Mexico to those countries.

The requirements to export are set out in article 10 of the Electric Sector Law and the Manual of Imports and Exports, and include:

1. a generation permit from the National Energy Commission;
2. an export or import permit is granted by the Ministry of Energy;
3. an interconnection agreement with CFE; and
4. a market participant agreement with CENACE.

Requirements 1 and 3 only apply to generators; traders are not required to obtain the generation permit nor to sign the interconnection agreement.

7.3 What other considerations and concerns should be borne in mind in relation to the transmission, distribution and export of renewable energy in your jurisdiction, including participation in ancillary services, wholesale electricity trading markets, network charging arrangements specific to renewables and the ability to construct part of the connection infrastructure? Are there long queues and delays for connection?

Conventional and renewable power producers must comply with the same rules to have the right to interconnect to the grid, except for storage, which is needed for any intermittent power source, as is the case with renewables.

In addition, payment for ancillary services may be received by power producers. These are defined as services that are:

• linked to the operation of the national electric system; and
• necessary to guarantee its quality, reliability, continuity and security.

Measures are defined in the Market Rules and may include:

• operating reserves;
• rolling reserves;
• frequency regulation;
• voltage regulation; and
• emergency startup.

This means that if a renewable power producer offers ancillary services – which is not always the case because of the intermittency factor – it may receive consideration from either:

• the electric wholesale market; or
• market participants.

The timeframes for interconnection to the grid depend on the amount of specific and reinforcement works required by CENACE. They do not necessarily increase for renewables. The key is to comply with the minimum storage requirements.

7.4 Are there any initiatives, reforms or consultations relating to the connection of renewables projects?

On 31 October 2024, a constitutional reform decree was published in the Official Journal of the Federation. Articles 25, 27 and 28 of the Constitution were reformed, giving state-owned electricity company CFE prevalence with regard to the private sector. Currently, a process is ongoing at the executive branch to revise the federal energy laws and regulations to reflect the new constitutional reforms. On 18 March 2025, the following new energy laws were enacted:

• the Law on Public State Company Comisión Federal de Electricidad;
• the Law on Public State Company Petróleos Mexicanos;
• the Electric Sector Law;
• the Hydrocarbon Sector Law;
• the Planning and Energy Transition Law;
• the Biofuels Law;
• the Geothermal Law; and
• the National Energy Commission Law.

This might affect renewables, as the CFE will now be able to dispatch energy to the grid with special priority over all other producers, including renewables.

Currently, renewables have the benefit of mostly dispatching first, because in Mexico, the principle of economic dispatch applies, meaning that the lower the variable cost of power production, the sooner you get to dispatch. Because renewables have practically zero variable cost, they have been able to dispatch first, meaning that there is more clean energy in the market. This may change with the new reforms.

8 Storage

8.1 What processes and rules apply to parties wishing to construct and operate a storage (eg, battery, hydrogen, hydro) project in your jurisdiction?

Power producers must include in their permits the possibility to store power, which is done through the National Energy Commission (CNE). In case of energy consumers, there is no need to obtain a permit for energy storage.

The rules on energy storage are set out in articles 82 to 85 of the Electric Sector Law and the General Administrative Provisions for the Incorporation of Electric Energy Storage Systems into the National Electric System, issued by the CNE.

The process depends on the party involved in the storage system, as follows:

• Energy storage system (SAE) associated with a power plant: This is directly integrated into a generating plant, allowing for optimised production and management of the intermittency of renewable energies.
• SAE associated with a load centre: This is connected to a consumption point, facilitating demand management and improving energy efficiency.
• SAE associated with an isolated supply scheme: This is used in isolated electrical systems, guaranteeing a continuous supply in the absence of the main grid.
• Non-associated SAE: Not directly linked to a power plant or load centre, this offers auxiliary services to the national electricity system.
• SAE associated with an exempt generator (SAE-GE): This relates to small-scale generators that are exempt from certain regulatory permits.

Interested parties must follow the interconnection procedure established in the Manual for the Interconnection of Power Plants and Connection of Load Centres and must consider that any intermittent power producer (e.g. solar, wind) who injects electricity to the grid, must have energy storage systems. For SAE-GEs, the Interconnection Manual for Generation Plants with a Capacity of Less than 0.7 Megawatts applies.

The CNE is responsible for granting permits for the generation of electric energy, where required. In doing so, it will evaluate the legal, technical and financial capacity of the applicant.

Existing power plants that wish to integrate an SAE must consider this action as a technical modification, which requires:

• their permits to be updated; and
• corresponding interconnection studies to be conducted (please see question 7).

8.2 Are there any barriers to the development of storage projects in your jurisdiction?

The barriers that exist relate to government delays in issuing or modifying the corresponding permits and authorisations.

8.3 What other considerations and concerns should be borne in mind in relation to the development of storage projects in your jurisdiction?

Energy storage projects in Mexico present abundant opportunities to:

• enhance the reliability and stability of the national electric system;
• facilitate the integration of renewable energy sources; and
• optimise electricity costs.

However, the successful implementation of such projects requires developers to address and mitigate several legal and operational challenges, including:

• regulatory ambiguity;
• financial structuring;
• technical feasibility; and
• compliance with environmental and social impact requirements.

With regard to regulatory aspects, interested parties should consider:

• the changing regulatory landscape, as new regulations are promulgated; and
• the complexity of the permit process, which involves both the CNE and the National Centre for Energy Control (CENACE).

From a legal perspective, developers must ensure adherence to applicable regulations established by the CRE and CENACE, including:

• obtaining the necessary permits;
• complying with interconnection procedures; and
• observing environmental laws and community engagement obligations.

Furthermore, they must structure their projects to:

• address:
• • financial risks;
  • contractual obligations; and
  • operational challenges; and
• ensure compliance with evolving market rules and legal standards.

Strategic planning, early and meaningful stakeholder consultations, and the incorporation of flexible, forward-looking legal frameworks are essential to:

• manage these risks effectively; and
• ensure successful project development within this rapidly evolving sector.

9 Competition

9.1 Are there any dominant players, including dominant purchasers, in the renewables industry in your jurisdiction?

The dominant renewable power producers in Mexico are:

• the state-owned company Comisión Federal de Electricidad; and
• in the private sector:
• • Iberdrola;
  • Enel Green Power;
  • EDF;
  • Acciona;
  • Grupo Bimbo; and
  • Energía Real.

9.2 Are there any pro-competition measures that are targeted specifically at renewables generators?

There are two main measures in this regard:

• The economic dispatch principle allows the lowest variable cost producers – such as renewables producers – to dispatch first. Companies compete to produce at the lowest possible cost.
• Clean energy certificates (CELs) are granted to clean energy power producers, incentivising competition to produce as many CELs as possible to give a producer an economic advantage over its competitors.

10 Disputes

10.1 In your jurisdiction, do disputes typically go to arbitration or litigation, and does this vary for different types of disputes? What sorts of matters tend to come up in disputes?

Disputes between market participants and consumers typically end up in litigation. However, the higher the cost of the project, the more likely the parties will seek to resolve any dispute through arbitration.

Disputes between generators (sellers) and suppliers (buyers, which later sell to end users) of clean energy usually involve issues such as:

• failure to commence operations by the specified date; or
• failure to produce the specified minimum amount of electricity and/or clean energy certificates.

Disputes between the government and private market participants primarily involve refusal of access to:

• interconnect to the grid; or
• dispatch energy to the grid.

10.2 Have there been any important disputes in the public domain that relate to or may potentially impact on the renewables industry or the deployment of renewables projects?

Most disputes are between private participants and government regulators. Hundreds of lawsuits have been brought against the government in recent years, which have been resolved through administrative trials such as amparo or nullity procedures.

Plaintiffs' claims have generally involved:

• attempts by the government to change the dispatch rules to give preference to Comisión Federal de Electricidad; and
• changes in wheeling tariffs which affect clean power generators.

In most cases, the judicial branch has ruled in favour of the clean power producers because anything that affects their ability to generate clean power affects the environment, which is a constitutional human right of the Mexican people and society.

11 Trends and predictions

11.1 How would you describe the current renewables landscape and prevailing trends in your jurisdiction?

Once the dust has settled on the latest regulatory changes, the outlook for the Mexican renewables sector should be positive. The current federal administration has publicly declared its support for renewable projects. Investment is expected:

• from the public sector through Comisión Federal de Electricidad; and
• from the private sector through:
• • on-site generation to satisfy directly linked load centres; and
  • new projects with grid dispatch.

11.2 What influence are net zero commitments having on the development of the renewables industry in your jurisdiction?

Mexico has committed to achieve net-zero greenhouse gas emissions by 2050. Under the Paris Agreement, Mexico has set a target of reducing emissions by 35% by 2030.

Although, since 2018, the government has avoided most private investment in the power production sector, it now recognises that without such investment, Mexico will be unable to achieve its renewable power production objectives. The government is thus expected to allow new renewable power projects in Mexico if they comply with the new rules on energy storage issued by the former Energy Regulatory Commission through Decree A/113/2024, which was published in the Official Federal Gazette on 7 March 2025.

11.3 What new developments are anticipated in the next 12 months, including any proposed legislative reforms?

The new federal energy regulations which were enacted on 18 March 2025, and which are applicable law for Mexico since 19 March 2025. Some of the major changes include:

• the incorporation of energy storage rules into the new Electric Sector Law;
• an update to the clean energy targets in the new Planning and Energy Transition Law;
• granting preference for the State Public Company, Comisión Federal de Electricidad, over the private sector, which will change the electricity dispatch rules which might affect dispatch by clean energy producers; and
• a change to the exempt generator rule, increasing the limit for exempt generators from 0.5 megawatts (MW) to 0.7 MW. This should further promote distributed generation in Mexico, considering that there is no need to obtain a permit from the National Energy Commission.

With the enactment of the 8 new federal energy laws, we expect for regulations which derive from them will be published by the Executive Branch within 2025, in order for current terciary regulations to comply with the federal energy laws.

12 Tips and traps

12.1 What are your top tips for renewables generators in your jurisdiction and what potential sticking points would you highlight?

Renewable power producers should consider the following when planning to invest in Mexico:

• Understand regulations:
• • Stay updated on policies: Regularly review changes to Mexico's energy laws, including those related to:
  • • permitting;
    • interconnection; and
    • clean energy certificates (CELs).
  • Leverage incentives: Explore available tax benefits, accelerated depreciation for renewable energy equipment and mechanisms such as CELs to optimise project economics.
• Optimise market participation:
• • Power purchase agreements: Secure long-term contracts with private offtakers to:
  • • guarantee stable revenue streams; and
    • reduce exposure to market volatility.
  • Spot market opportunities: Participate in the wholesale electricity market for additional revenue, especially during peak price periods.
  • Ancillary services: Explore opportunities to provide grid stability services, which are increasingly valuable as renewable penetration grows.
• Manage financial risks:
• • Diversify revenue streams: Combine multiple revenue sources – such as energy sales, capacity payments and ancillary services – to ensure financial stability.
  • Secure financing:
  • • Work with development banks such as Banco Nacional de Comercio Exterior and Nacional Financiera to obtain favourable loan terms; and
    • Explore green bonds or international funding sources.
  • Hedge against currency risk: For projects with foreign capital, consider strategies to mitigate exchange rate fluctuations.
• Focus on technology and operations:
• • Invest in modern technologies: Utilise advanced monitoring, forecasting and optimisation tools to enhance operational efficiency and reliability.
  • Prioritise maintenance: Implement proactive maintenance programmes to reduce downtime and extend the lifespan of assets.
  • Integrate energy storage: Consider pairing renewable projects with energy storage systems to manage intermittency and improve grid integration.
• Address environmental and social aspects:
• • Environmental compliance: Conduct thorough environmental impact assessments and comply with all related regulations to avoid project delays or penalties.
  • Community engagement: Build strong relationships with local communities by:
  • • addressing their concerns;
    • creating local jobs; and
    • providing community benefits.
  • Sustainability practices: Incorporate eco-friendly construction methods and recycling plans for project materials.
• Adapt to grid challenges:
• • Plan for interconnection delays: Work closely with the National Centre for Energy Control to:
  • • navigate grid interconnection processes; and
    • ensure timely integration.
  • Grid stability solutions: Be prepared to contribute to grid stability, especially in regions with high renewable energy penetration.
  • Regional considerations: Choose project locations based on grid capacity and proximity to demand centres to reduce curtailment risks.
• Build partnerships:
• • Collaborate with experienced partners: Partner with established developers, engineering, procurement and construction contractors and operators to leverage expertise and mitigate risks.
  • Engage with industry groups: Participate in associations such as the Mexican Wind Energy Association or the Mexican Solar Energy Association to stay informed and advocate for favourable policies.
• Innovate for the future:
• • Explore new business models: Consider opportunities in:
  • • distributed generation;
    • virtual power plants; or
    • peer-to-peer energy trading.
  • Be ready: Plan for long-term developments such as:
  • • hydrogen production;
    • carbon capture; and
    • advanced energy storage.

In conclusion, there are increasing opportunities to invest in renewables in Mexico. The jurisdiction has significant potential because of its geography and energy demand – especially renewable energy demand – is soaring.

The key is to keep informed of the market and regulatory dynamics.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.