By Raveen Singh

How does Mexico keep the lights on? Unlike Canada, which generates most of its electricity from clean, renewable hydro power, Mexico relies heavily on fossil fuels. Hydroelectric opportunities are limited by topography, rainfall, and geography. As a result, natural gas has become Mexico’s workhorse — providing about 59% of the country’s electricity between August 2024 and July 2025.

Renewable sources — hydropower, solar, and wind — now supply roughly a quarter of Mexico’s power. While progress has slowed in recent years, the potential for alternate, cleaner, more secure energy remains enormous.

Where Mexico Gets Its Power

The Federal Electricity Commission (CFE), the state-owned utility, still dominates the sector. It is the only electricity provider for small and medium consumers and is legally required to maintain 54% of national power generation. Its mandate is to ensure stability in the National Electric System, but this dominance has made it difficult for private or foreign investors to enter the market.

Mexico’s National Electric System Development Program sets a bold goal: 50% clean energy by 2050. The vision is ambitious — the country’s geography offers abundant sunshine and strong winds — but the reality is more complicated. Recent policy shifts have favored fossil fuel expansion and reduced incentives for renewables. This has caused a slowdown in new solar and wind projects and concern among investors watching Mexico’s energy transition stall.

Hydropower: Limited by Landscape and Public Opinion

Hydropower may be clean and inexpensive once built, but it requires very specific conditions: a combination of terrain, consistent rainfall, and suitable geological foundations, work together for a viable project. Mexico’s geography and climate offer limited opportunities for such large-scale projects. Even where feasible, public opposition often arises over the flooding of valleys and the displacement of communities, not to mention historical land ownership issues that are prevalent.

Large dams also take years — sometimes decades — to plan and fund. A good example of how megaprojects can attract political interference and public distrust is seen with Canada’s SNC-Lavalin corruption scandals in the early 2000s.

Smaller “mini-hydro” installations have been developed across Latin America to minimize environmental impact, but they come at higher costs. Polaris Renewable Energy Ltd., a publicly-traded Canadian company operating in the region, shifted its focus toward solar after finding hydropower and wind developments slow and bureaucratic, as well as expensive and with a higher environmental disruption. As their executives put it, solar projects are simply faster, cheaper, and easier to deliver.

Wind Power: Promise in the Isthmus

Mexico’s southern Isthmus of Tehuantepec is among the windiest corridors in the Americas, making it the natural home for wind generation. The country currently has 87 onshore plants producing 8.67 GWh, with another 13 projects under construction. Yet few new ones are planned or approved.

The challenges are both technical and financial. Wind farms must be designed to withstand hurricanes and tropical storms — risks that drive up insurance and construction costs. Irregular wind patterns mean projects require storage or backup generation. Battery technology is improving but remains expensive and imperfect. And as climate change increases the unpredictability of weather patterns, long-term investors grow cautious.

For now, Mexico’s wind sector remains viable but uncertain — full of potential, short on momentum.

Solar Energy: The Bright Side

The clear winner in Mexico’s renewable race is solar power. With 85% of the country enjoying ideal conditions, sunlight is Mexico’s most abundant resource. Solar energy has expanded dramatically, from just 0.18 GW of installed capacity in 2016 to nearly 12 GW by 2024 — supplying 7.6% of national electricity.

Massive facilities such as the Villanueva Solar Plant in Coahuila (754 MW) and the Puerto Libertad complex in Sonora (405 MW) have positioned Mexico among the world’s leading solar power producing nations. If expanded strategically, solar power could meet more than half of the country’s energy demand within the next decade.

The benefits are obvious: reduced dependence on imported natural gas, lower emissions, and greater energy security.

The Obstacles to Going Solar

So, what’s holding Mexico back?
Despite its potential, building solar farms in Mexico costs more than the global average. Financing is expensive, supply chains are underdeveloped, and grid infrastructure is aging. Much of the national transmission system lacks redundancy, meaning a single failure can leave entire regions without power — as the two-day blackout across Yucatán and Quintana Roo in September 2025 demonstrated.

Solar power also requires major investment in energy storage to balance generation during cloudy days or nighttime hours. Without large-scale batteries and modernized transmission, much of Mexico’s sunshine will remain untapped potential.

Another challenge is policy. While the 2013 constitutional reform opened the energy sector to private and foreign investment, subsequent administrations have reasserted state control. This has made Mexico less attractive to international investors, even as global capital for renewables has surged elsewhere in Latin America.

Acciona: A Case Study in Renewable Investment

Spanish contractor Acciona Energía has been one of the most active foreign developers in Mexico, operating both wind and solar projects and building transmission infrastructure for the CFE. The company’s portfolio includes the 183-MW El Cortijo and 138-MW Santa Cruz wind farms in Tamaulipas, four wind projects in Oaxaca totaling over 550 MW, and the 405-MW Puerto Libertad solar complex in Sonora.

Acciona has also supported rural electrification through its non-profit arm, acciona.org, providing solar power to remote communities in Oaxaca and San Luis Potosí.

Yet even Acciona has signaled uncertainty. In August 2025, it announced a review of its entire Mexican portfolio as part of an “asset rotation process,” citing a tougher business environment. For Mexico — once considered a regional renewable leader — this retreat is a worrying sign.

The Road Ahead

Mexico has pledged to reach 45% clean energy by 2030 and 50% by 2050. Achieving that will require streamlined permitting, modernized transmission lines, and predictable policy to attract both domestic and international investment.

Experts agree the sun offers Mexico its brightest opportunity. But technology alone isn’t enough — political will must align with the nation’s natural advantages. A modern, reliable grid could make Mexico a continental powerhouse of clean energy.

Until then, the country stands at an energy crossroads: one road leading deeper into fossil fuel dependence, and another toward a self-sustaining, solar-powered future.

Acciona’s Renewable Projects in Mexico
Owned Wind Farms
· El Cortijo (Tamaulipas) – 183 MW, commissioned 2018
· Santa Cruz (Tamaulipas) – 138.6 MW, commissioned 2020
· Oaxaca Complex – Four farms totaling 556.5 MW
Wind Farms Built for Clients
· Ventika Complex (Nuevo León) – 252 MW
· Mesa La Paz (Tamaulipas) – 306 MW
Solar Projects
· Puerto Libertad (Sonora) – 405 MWp, joint venture with Tuto Energy
· Supreme Court Building (CDMX) – 1,000 m² of PV panels providing 12% of power
Transmission Projects for CFE
· Empalme II Grid (Sonora/Sinaloa) – 117 km
· Topolobampo III Lines (Sinaloa) – two lines and two substations
Rural Electrification
· acciona.org projects bringing solar home systems to low-income households in Oaxaca and San Luis Potosí