Challenges and Opportunities in Mexico's Power Sector

This technical report outlines the challenges and opportunities present in Mexico's power sector as of March 2025. It identifies key bottlenecks affecting investment in the country, including security costs, power scarcity, water scarcity, and human capital issues. The report notes that nearly 20% of firms' sales are consumed by security expenses, and spare power generation capacity is at a 40-year low, with 55% of power required for manufacturing. The government's reversal of constitutional reforms limiting private sector participation is highlighted, suggesting that public-private partnerships (PPPs) and self-generation at industrial parks may be viable investment avenues. The report discusses the implications of the government's financial constraints and the need for private capital to address energy security. It also examines the potential for PPPs in the power sector, despite uncertainties regarding the legal framework and investment climate. The report concludes that while challenges remain, there are opportunities for investment in Mexico's power sector if the government adopts flexible conditions for private participation.