Summary

Mexico’s new government, led by President Claudia Sheinbaum, is implementing major legal reforms to the country’s electricity system, including changes to the market framework, state-owned energy companies, and transparency regime. The government aims to recentralize the power sector, targeting a 54%-46% split between state-owned and private generation, with the goal of providing affordable electricity and protecting energy sovereignty. This approach presents a new set of risks regarding excessive state control, potential corruption and a lack of clarity regarding the role of the private sector, possibly undermining public and private confidence in the system.

The country’s history of electricity contracts has been marked by political contention, multiple models of contracting and ownership, and limited public disclosure. With plans to add over 60 GW of capacity in the next 15 years, despite no new contracts having been issued since 2019, the new government should leverage transparency in long-term electricity contracts to legitimize reforms and improve governance. This will be particularly important as the national electricity company, Comisión Federal de Electricidad (CFE), acquires new renewable energy projects and other SOEs sign long-term contracts to supply new services, such as storage, to the power system. Transparency should also bring to light contingency costs, which are often not considered when accounting for these types of projects, an issue highlighted by specialists within the current left-wing coalition.

This report analyzes transparency in public power generation contracts, focusing on Independent Power Producers (IPPs) and long-term renewable energy auctions, to inform debates about the future of and opportunities for contract transparency in the electricity sector’s new legal framework.

Read our full case study (19 pages) here.