Mexico Power Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Mexico Power Market Trends and Insights

Near-shoring-led Industrial Load Growth

Rapid relocation of manufacturing from Asia is expected to boost electricity demand by 30% through 2030, driven by USMCA tariff advantages and proximity to US consumer markets. Nuevo León, Guanajuato, and Chihuahua register the steepest increases in load, prompting firms to purchase dedicated generation assets to secure supply continuity. Industrial power tariffs remain competitive relative to Texas, sustaining investment momentum despite higher capacity-reserve charges. CFE’s pipeline of 15 new combined-cycle plants will add 10.1 GW to meet nearshoring demand, equivalent to 810 MMcf/d of incremental gas burn. Grid planners nevertheless caution that sub-transmission backbones require parallel reinforcement to prevent regional bottlenecks.

35 % renewables target by 2024 extended to 2030

The federal clean-energy goal was pragmatically shifted from 2024 to 2030, offering developers a longer runway to close financing and interconnection milestones. Solar installations reached 10.67 GW in 2024 and are forecast to cross 27 GW by 2030, representing a 14.5% annual increase that keeps México among Latin America's top solar growth markets. Wind additions, led by Sempra Infrastructure's 320 MW Cimarron project, reinforce México's power market decarbonization while enhancing export headroom into California and Arizona grids.^{[2]Sempra Infrastructure, “Cimarron Wind Project Overview,” semprainfrastructure.com} The Plan México framework allocates 6.4 GW of new renewables under the 54%-46% public-private split, confirming the state utility's central role as offtaker.

Surge in Utility-Scale Solar and On-Site PV PPAs

Corporate demand for traceable, clean electricity accelerates multi-gigawatt PPA signings, with industrial groups locking in 15- to 20-year solar offtakes to hedge against tariff volatility. Distributed generation surpassed 2,015 MW in 2024, aided by streamlined interconnection rules that now require less than 30 days for systems below 500 kW. Long-duration battery storage pilots emerge alongside PV arrays to comply with Grid Code 2.0 power-quality thresholds. International suppliers, such as Sungrow, partner with local developers to bundle inverters, storage, and digital monitoring, thereby lowering the levelized cost of electricity and enhancing Mexico's power market competitiveness.

Cross-Border Export Potential to ERCOT & WECC

Existing interties with California ISO and ERCOT currently trade marginal volumes, yet surplus solar and wind forecasts suggest up to 4 TWh of annual exports by 2030. Sempra’s high-voltage corridor linking Baja California to San Diego exemplifies how merchant projects can capitalize on production during peak California pricing. Coordinated planning between CENACE and US system operators harmonizes reserve-sharing protocols, though true scale-up hinges on incremental 400-kV pathways across Sonora and Tamaulipas. The export window also creates arbitrage that encourages hybrid gas-and-renewables dispatch, smoothing variability.

Policy Shifts Curbing Private-Sector Permits

Constitutional reform enacted in March 2025 dissolved the autonomous Energy Regulatory Commission and transferred oversight to the National Energy Commission within the Ministry of Energy. The new framework mandates that CFE retain a majority stake in generation, effectively capping private participation at 46% and subjecting new plants to heightened social-impact screening. International developers report that permit timelines are doubling, while banks apply higher risk premiums, inflating the weighted average cost of capital by up to 200 basis points. Industrial offtakers with signed PPAs confront uncertainty over dispatch priority, causing some to renegotiate tariffs or delay construction.

Transmission Congestion and Renewable Curtailment

Wind and solar hubs in Sonora, Chihuahua, and Tamaulipas routinely face curtailment rates exceeding 8% of their potential output during seasonal peaks, reflecting the lag between the build-out of generation and the reinforcement of transmission lines. CENACE’s suspension of emergency alerts complicates visibility into real-time bottlenecks, prompting developers to oversize projects or co-locate storage to secure deliverability. CFE’s USD 7.5 billion upgrade plan allocates 4,038 km of new 400 kV lines; however, the phased commissioning stretches over five years, prolonging the constraints. Limited export capacity further amplifies local congestion, prompting capital to shift to regions with spare thermal grid hosting capacity.

Segment Analysis

By Power Source: Thermal Dominance Amid Renewable Acceleration

Renewables are the fastest-growing segment of the Mexican power market, advancing at a 10.3% CAGR to 2030. Solar PV already totals 10.67 GW and is projected to surpass 27 GW by 2030, keeping Mexico among Latin America’s most dynamic solar markets. Wind additions are also rising, led by Sempra Infrastructure’s 320 MW Cimarron farm backed by a 20-year PPA that signals deep market confidence. Plan México earmarks more than 6,400 MW of new clean capacity under a 54-46 public-private split that still grants CFE strategic control. Hydropower growth is limited by water stress, yet geothermal plants provide a steady baseload, and biomass-to-energy projects in farm belts extend electricity access to underserved communities.

Thermal sources retained 70.3% of the México power market share in 2024, underscoring continuing reliance on natural-gas infrastructure for grid stability. United States pipeline imports averaged 6.4 Bcf/d in December 2024, and the administration’s plan for 15 new combined-cycle plants will add 10.1 GW by 2030. Oil- and diesel-fired units remain critical in remote zones and during extreme-weather contingencies, while nuclear output stays flat as current policy favors renewables and gas flexibility. Coal capacity is edging lower, and emerging technologies—exemplified by Wärtsilä’s launch of a 100% hydrogen-ready engine plant—offer long-term decarbonization options.

Note: Segment shares of all individual segments available upon report purchase

By End User: Industrial Sector Drives Commercial Growth

Utilities retained 68% of the Mexico power market share in 2024, underscoring Comisión Federal de Electricidad’s (CFE) role as the principal off-taker and generator within a framework that reserves 54% of national capacity for the state. The segment’s dominance rests on long-term power-purchase agreements with independent producers, wholesale spot transactions, and emerging cross-border sales that optimize regional dispatch. In parallel, the combined commercial and industrial customer base is expanding at a 7.5% CAGR through 2030, buoyed by nearshoring capital inflows and hyperscale data center pipelines that demand round-the-clock, high-quality power. Automotive assembly plants, electronics fabs, and chemical complexes are increasingly buying or building dedicated plants to hedge reliability risk. Grupo Bachoco’s 190-system distributed-generation rollout across 19 states illustrates this self-supply shift in Mexico..

Commercial services—from shopping malls to hospitality chains—deploy rooftop solar and energy-efficiency retrofits to mitigate rising tariffs, increasing distributed-generation capacity to 2,015 MW, and expanding the Mexico power market size for behind-the-meter assets. Telecommunications upgrades that enable 5G and nationwide fiber backhaul lift electricity intensity, while steel mills and aluminum smelters exploit Mexico’s gas-linked pricing advantage for export-oriented output. Residential demand advances steadily through CFE’s 48.8 million-meter footprint, equal to 99.6% population coverage, and benefits from net-metering incentives that shorten rooftop PV paybacks. Public users include government offices, street lighting, and flagship electrification works such as the Mayan Train, a MXN 6.59 billion project projected to create 2,100 direct jobs and amplify regional load. The evolving policy mix, therefore, channels private capital into joint ventures and long-term contracts that align commercial opportunity with the utility’s strategic oversight, reinforcing CFE’s central position while accelerating low-carbon growth across end-user classes.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Northern border states—Sonora, Chihuahua, Tamaulipas, and Baja California—capture the lion’s share of renewable and industrial build-outs due to superior solar irradiation, steady winds, and direct ties to Arizona, Texas, and California. These states account for 58% of incremental capacity additions in 2024 and will likely maintain a 6.3% CAGR through 2030. Sonora hosts Iberdrola’s 137 MW Hermosillo PV park, generating 175 GWh annually, while Baja California leverages Sempra’s high-voltage corridor for export arbitrage.^{[3]IBERDROLA Corporativa, “Hermosillo PV Plant Commissioning,” iberdrola.com}

Central Mexico—anchored by Mexico City, Guadalajara, and Monterrey—remains the prime demand center, absorbing nearly 40% of national load. The trio houses 500 MW of planned hyperscale data centers that must secure firm, low-carbon power, intensifying pressure on aging sub-transmission backbones. Puebla and Hidalgo anticipate converting the 1.5 GW Tula plant from fuel oil to a combined cycle once the delayed natural-gas pipeline is delivered, which will reduce particulate emissions and free 4.5 million barrels per year of fuel oil for export.

The southern and peninsular regions lag in industrialization but have registered ambitious public-sector electrification projects. The Yucatán Peninsula benefits from twin CFE combined-cycle units in Mérida and Valladolid, safeguarding 2.9 million users against seasonal blackouts. Oaxaca maintains leadership in wind energy with 2,360 MW across 21 farms; however, limited transmission to the Bajío restricts utilization during nocturnal surpluses. A June 2025 blackout that darkened 11 states underscored vulnerability to extreme weather, prompting accelerated investments in looped 400 kV circuits and microgrid pilots.