2025
Global Power Transmission Report
Regional Market Overviews
Mexico
GDP (Current Prices) USD (2023) | 1,789 Bn |
Projected Average GDP Growth (2024-2028) | 1.8% |
10-year Govt Bond Yield (12-month rolling average) | 9.6% |
Country Credit Rating | BBB |
Renewable Energy Share | 16% |
Total Transmission Line Length (Km) | 111,030 |
Transmission Network
Mexico’s National Power System comprises nine regions and a binational electricity system in Baja California. The nine regions constitute the National Interconnected System, accounting for about 80% of the power transmission. The rest of the system comprises interconnected networks of Baja California, Baja California Sur and Mulege (Climate Scorecard, 2023). The power transmission infrastructure has lately been undergoing changes to adapt to the emerging energy transition.
The power transmission is managed and operated by the state-owned sole operator, the Comisión Federal de Electricidad (CFE). Its network encompasses voltage levels from 69kV to 400kV, with the sub-transmission lines in the range 69kV-138kV lines and high voltage lines operating predominantly in the 161kV-400kV range. Notably, 230kV and 400kV lines constitute more than 50% of the total transmission length (Baker Institute, 2024).
The growth of Mexico’s transmission capacity has been slower than anticipated, with the network expanding at a compound annual growth rate (CAGR) of just 0.7% between 2015 and 2024 (CFE, 2024) (CIGRE, 2018). According to the Energy Committee of the International Chamber of Commerce Mexico (ICC México), the country faces a cumulative deficit of 4,370 km of power transmission lines that were not constructed between 2018 and 2022 (BNamericas, 2023). This slow pace is due to investment shortfalls and delays in completing planned transmission projects.
A key segment of the Mexican transmission network is cross-border power exchange. Its interregional transmission links with the US, Belize and Guatemala are essential for facilitating cross-border energy trade. Positioned as a key transit country between the North American and Central American markets, Mexico’s transmission infrastructure plays a pivotal role in energy imports and exports. With the increasing integration of renewable energy, CFE will need to prioritize the enhancement of these interconnections to effectively manage the grid and ensure efficient energy distribution (UNIDO, 2023).
Transmission Line Length
| Year | Line Length (circuit km) |
|---|---|
| 2019 | 110,117 |
| 2020 | 110293 |
| 2021 | 110,347 |
| 2022 | 110,449 |
| 2023 | 110,558 |
| 2024 | 111,030 |
Note: Data of 2024 is as of September 2024
Source: CFE
Cross-border Transmission Linkage
| Country Linkage | TSO | About the Linkage |
|---|---|---|
| Mexico-US | CFE ERCOT (Texas) CAISO (California) | States through the states of Texas and California, via 69kV to 230kV lines, featuring capacities that range from 36 MW to 800 MW |
| Mexico-Belize | CFE Belize Electricity Limited (Belize) | Since 1998, Mexico has been connected to Belize via a 115kV and 230kV transmission line with a capacity of 65 MW, supplying around 70% of Belize’s electricity demand |
| Mexico- Guatemala | CFE TRESCA (Guatemala) | A 103 km 400kV transmission line connecting Mexico and Guatemala commenced operations in 2010. Plans are underway to integrate it with the Central American Electrical Interconnection System |
Drivers in Energy Transition
Mexico is one of the most fossil-fuel dependent countries in the Americas, with a heavy reliance on energy sources like natural gas, especially for powering key industrial sectors such as iron, steel, glass, and petrochemicals. Despite this, the country has made progress in transitioning towards cleaner energy. From 2018 to 2023, renewable energy generation grew at twice the rate of fossil fuel generation, expanding by 9.5% annually compared to 4.3% for fossil fuels (IRENA, 2024) (Reuters, 2024).
Mexico’s energy goals require an acceleration of renewable energy growth. The policy target is to generate 35% of its electricity from renewables by 2025 and add 30 GW of renewable capacity by 2030 (Reuters, 2024). While the 2013 Energy Reform encouraged private investment in renewables, recent shifts in policy have focused on protecting state-owned companies like CFE, slowing the development of renewable energy projects. As a result, fossil fuels, particularly natural gas, continue to dominate Mexico’s energy mix, and the transition to renewables is expected to progress slowly (Power Mag, 2024).
Despite limited grid capacity, renewable energy curtailments are significantly low. This may be partly related to the grid management framework placing renewable energy on a priority dispatch order. Fossil fuel-based generation comes lower in dispatch priority order, thus helping the utilisation of wind and solar projects (Chambers and Partners, 2024). This may, however, change in future as there are active considerations to provide CFE the authority for grid dispatch – it may allow CFE’s conventional power plants to gain priority dispatch in the available transmission capacity (NGI, 2024).
The National Electrical System Development Program (PRODESEN 2024-2038) forecasts a 38.2% rise in electricity consumption and a 54.91% increase in on-peak demand by 2038. Between 2024-2027, 25.3GW of new capacity will be added, with ~18.0GW from renewables, led by battery storage (5.5GW), wind (5.0GW), and PV- Solar (3.9GW). The plan highlights the growing role of wind and decentralization, with PV-DG reducing reliance on transmission infrastructure. Smart grids and digitalization are critical for integrating intermittent renewables into the grid, emphasizing the need for a balance between decarbonization and decentralization (S&P Global, 2024).
Policy Regulation
The transmission sector in Mexico faces significant regulatory challenges, primarily due to policy ambiguity and insufficient investment. The transmission network has been underfunded as compared to the budget allocated to generation and CFE’s overall budget since the 2014 energy reform. This underinvestment has hindered the alignment of projects with the business plans of transmission and distribution, limiting the sector’s growth potential (Mexico Business, 2024).
To address these issues, policy corrections are being considered. For example, it is suggested that the Ministry of Finance ensure labelled resources for transmission projects in the CFE’s annual budget, prioritizing them as strategic goals to boost economic growth. Additionally, the government plans to introduce administrative simplifications, including a one-stop shop for energy sector permits and authorizations, aimed at reducing bureaucratic hurdles, costs, and processing times. These measures are intended to enhance the transmission sector’s capacity to meet growing energy demands and support Mexico’s development opportunities (Norton Rose Fulbright, 2024).
Also, the National Strategy for the Electric Sector 2024–2030 seeks to address the issue of self-sufficient companies (autobasto) avoiding network usage charges. The proposed framework includes implementing appropriate charges to ensure all users benefiting from the grid infrastructure contribute their fair share. This approach promotes fair compensation for grid services while maintaining incentives for distributed generation, ultimately aiming to strengthen CFE’s financial stability by reducing the ability of private producers to bypass full tariff obligations (Baker Institute, 2024).
Market Opportunity
The Mexican government, under the National Strategy for the Electricity Sector 2024- 2030, aims to invest $23 billion in the CFE. This investment plan includes $7.5 billion for transmission infrastructure. The proposed investments are much higher than the annual investments in the sector which have ranged between MX$3 billion and MX$6 billion (US$166 million to US$332 million) over the past 10 years. As part of the strategy, the transmission grid will be upgraded to meet the growing demand, improve efficiency, and advance renewable energy integration across the country (Enerdata, 2024).
The proposed investment is likely manageable by CFE, as evident from its credit ratings, due to the strong sovereign linkage with the Mexican government. This linkage is reflected in CFE’s rating of ‘BBB-‘, which aligns with the country’s sovereign rating. Given the company’s critical role in Mexico’s electricity system, particularly as the sole electricity marketer to unqualified users and its exclusive control over transmission and distribution, the government has a strong responsibility to support CFE in case of financial distress (Fitch Ratings, 2024).
Grid maintenance and enhancement is another focus area of investment for the transmission sector. CFE plans to invest MX$2.903 billion (~US$170.76 million) between 2024 and 2026 to improve Mexico’s transmission infrastructure. This includes MX$969 million for 399 transmission lines, MX$970 million for 678 sub-transmission lines, and MX$964 million for vehicles to reduce downtime in the RNT. This investment, a significant increase from 2023’s MX$15.2 million, addresses concerns about the aging grid’s ability to support Mexico’s growing renewable energy capacity and nearshoring demands (Mexico Business, 2024).
Major Transmission Projects in Pipeline
| Charger type | Output | Maximum funding | Maximum funding for indigenous businesses and communities |
|---|---|---|---|
|
Leona Vicario Entq, Dzitnup- Riviera Maya (Quintana Roo) |
39.01 km | 400kV | The transmission lines, part of the National Electric System Development Program (2022–2036), are in the Benito Juarez and Puerto Morelos municipalities of Quintana Roo |
| Kantenah Entq, Dzitnup-Riviera Maya (Quintana Roo) | 42.7 km | 400kV | Located in the municipalities of Solidaridad and Puerto Morelos in Quintana Roo, near Playa del Carmen, the project aims to support the expansion and modernization of the national transmission grid |
| Las Mesas- Huejutla II (San Luis Potosi and Hidalgo) | 45.9 km | 115kV | Located in the municipalities of Tamazunchale and San Martín Chalchicuautla in San Luis Potosí and Hidalgo, the project aims to meet the increasing energy demands of the Tamazunchale and Huejutla region while fostering sustainable development and ensuring environmental protection |
| Las Mesas Note: The estimated investment in developing these six new transmission lines is MX$1.8 billion (US$107 million) Source: Mexico Business (Tamazunchale)- Jilotepec Potencia (State of Mexico, Hidalgo and San Luis Potosi) | 186.7 km | 400kV | Traversing the states of Mexico, Hidalgo, and San Luis Potosí, the project aims to expand the electrical infrastructure to ensure a reliable power supply |
| Culiacan Poniente- Mazatlan Dos (Sinaloa) | 253 km | 400kV | The project will connect the Culiacán Poniente and Mazatlán Dos substations, addressing the power needs of the northern, northwest, and western regions of Mexico |
| Mazatlan Dos- Tepic Dos (Sinaloa and Nayarit) | 257.4 km | 400kV | The project will connect the Mazatlán Dos and Tepic Dos substations, passing through several municipalities in Sinaloa and Nayarit, deemed essential to meet the anticipated increase in energy demand in the region |
Note: The estimated investment in developing these six new transmission lines is MX$1.8 billion (US$107 million)
Source: Mexico Business
Additionally, the Mexican government’s plan to mandate energy storage solutions for renewable energy projects presents a key opportunity for the sector. A proposed “30% backup” requirement would compel projects to incorporate storage systems covering part of their generating capacity. However, the successful rollout depends on a clear regulatory framework, which the Energy Regulatory Commission (CRE) is developing, with updates expected in 2024. These regulations aim to clarify private sector participation and acknowledge the critical grid services energy storage provides. With estimates indicating a need for 2.3GW of new capacity by 2034 to prevent grid issues, energy storage in Mexico emerges as a promising field for innovation and investment (Norton Rose Fulbright, 2024) (PV Magazine, 2024).
Outlook
Mexico’s PRODESEN 2023-2037 aims to strengthen the transmission network by adding 1,800 km of 400kV lines by 2032 (Mexico Business, 2024). However, this expansion may not be sufficient to optimize the grid. According to the Energy Committee of the International Chamber of Commerce Mexico (ICC México), to sustain a 2.4% annual GDP growth over the next 15 years, Mexico must invest MX$2 trillion (US$112 billion) to deploy 59,000 km of transmission lines and generate over 100GW of energy. This requires an annual investment of MX$132 billion, including 800 km of transmission lines per year for every percentage point of growth in the national income (BNamericas, 2023). To meet these targets, CFE must expedite approvals for delayed projects and plan additional initiatives.
Apart from being able to execute its plans to add capacity, Mexico’s electricity transmission sector also grapples with ageing infrastructure, leading to frequent network failures and blackouts, as witnessed in the recent past. These disruptions highlight the critical need for significant investments to modernize the transmission network. As Mexico also sees an increase in energy demand due to trends like nearshoring, the pressure on the existing infrastructure intensifies. The country urgently requires both increased investments in transmission upgrades and the implementation of innovative solutions to improve energy efficiency (M&A Community, 2023).