Mexico City, November 11th 2024.
On November 6th, 2024, President Claudia Sheinbaum announced the National Strategy for the Electricity Sector (the “Strategy”) as part of the National Energy Plan derived from the constitutional reform on energy published in the Federal Official Gazette on October 31st, 2024 (the “Reform”). This Strategy establishes new regulations for private sector participation in the electricity market, allowing private companies to invest up to 46% in electricity generation through bid long-term contracts, with the objective of guaranteeing affordable, clean and efficient energy without increasing tariffs.
Key axes of this Strategy are: (i) strengthening the planning of the electricity sector, (ii) energy justice, (iii) a robust and reliable electricity system, and (iv) clear rules to ensure and increase private investment. The Strategy involves a US$23.4 billion investment from the Federal Electricity Commission (“CFE”) in generation, transmission and distribution, mainly on renewable energy.
Private investment will contribute between 6,400 and 9,550 MW of clean energy, with a focus on grid development, including creating 30% power back-up infrastructure. The Strategy also simplifies permitting for small generators, introduces the «mixed producer» model (state holds 54% of electricity generation, while private investment holds the rest) and promotes industrial zones.
Secondary laws must be amended for full implementation of this Strategy. Accordingly, the decree enacting the Reform sets a 180-day period from its entry into force (November 1st, 2024) for the publication of the corresponding amendments of the secondary laws. The President has announced that these bills of amendments will be filed before Congress in the early months of 2025.
In summary, the Strategy creates a robust and attractive environment for renewable energy investments in Mexico by offering competitively bid long-term contracts. The Strategy promotes administrative efficiency through a one-stop shop and drives the transition to clean energy, all of which open up valuable investment opportunities in renewable projects across the country.
The lawyers of the Energy and Infrastructure practice of our firm are at your disposal for any questions or comments regarding this matter.
Sincerely,
Juan Carlos Serra
Pablo Nosti Herrera
Pamela Salas García
Iván Sánchez López
Paola Arcos Seoane
