Adequate, Clean, Affordable Energy: Xóchitl Gálvez

The current state of the energy sector cannot sustain the wave of nearshoring due to the closure of opportunities for private investment, as highlighted by Fernando Zendejas, Deputy General Energy Coordinator, Board for Xóchitl Gálvez during the Mexico Nearshoring Summit. This closure represents a significant barrier to economic growth and innovation within the sector.

"We are committed to fostering a fair energy transition, streamlining processes, and enhancing competition within the energy sector to effectively address the evolving demands of both the market and the populace," said Zendejas. However, he underscored the challenges posed by the current administration's policies, citing that 97% of alerts generated within the energy sector are attributed to faults in transmission and distribution networks.

Even though Mexico has a unique opportunity presented by the current geopolitical climate, there are significant hurdles within Mexico's energy policy framework, such as bureaucratic processes that delay projects and a lack of safety. To overcome these challenges, it is imperative to uphold the rule of law, as emphasized by Zendejas. This serves as a stark reminder that disregarding established processes not only impedes progress but also deters private investment—a critical issue compounded by "outdated perspectives reminiscent of the 1970s."

"We need to ensure an efficient and sustainable nearshoring scheme to meet the needs of companies, while also protecting the constitutional integrity of the process to promote the development and transparency of the industry," said Zendejas. The energy transformation proposals  from Xóchitl Gálcez presented during the conference regarding the importance of ensuring sufficient, secure, and affordable energy as we transition towards cleaner sources—a goal that necessitates simplified and enhanced competition within the sector.

Renewable energy and the sustainability of state companies stand out as prominent proposals advocated by Gálvez. These initiatives are intricately linked with overcoming bureaucratic obstacles that impede market expansion, all with the overarching goal of enhancing the economic development of Pemex and CFE. In 2023, state companies attracted investments amounting to MX$2.5 trillion, equivalent to 10% of GDP. 

However, despite this substantial investment, sustainable production remains elusive. As highlighted by Zendejas, CFE's current production capacity stands at 53GW, whereas 25GW is deemed necessary to adequately support nearshoring initiatives.