CFE Continue Electrification: The Week in Energy

President Sheinbaum and CFE Director Calleja announced a MX$21.377 billion program to electrify the 8,247 communities currently lacking grid access, targeting 99.99% national electricity coverage by 2028 through 45,182 infrastructure works, more than double the cumulative total of the prior two administrations combined. 

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SENER Launches MX$21.4B Rural Electrification Plan to Reach 99.99% Coverage

The initiative is framed under the 2024 constitutional reform that for the first time recognized "energy justice" as a legal right. The plan prioritizes indigenous and geographically isolated communities in central and southern Mexico, using photovoltaic panels and solar microgrids where terrain makes grid extension unfeasible. Mexico currently sits at 99.85% electrification with 50 million contracted users. The MX$21.4 billion is distinct from CFE's broader MX$200 billion electricity investment package and addresses the distribution gap that generation capacity alone cannot close.

URSUS Energy and Samsung E&A Break Ground on Mexico's First Private LNG Export Terminal

URSUS Energy signed a FEED-EPC framework agreement with Samsung E&A to develop the US$2.1 billion Coatzacoalcos-PODEBIS LNG terminal in Veracruz, targeting first LNG export in late 2029 at a planned capacity of 2.1MMt/y. The project is sited inside the PODEBIS Coatzacoalcos II industrial zone and marks the first of the eleven CIIT development poles to enter physical execution. Critically, the feedgas source is the nitrogen-contaminated associated gas that PEMEX currently flares or vents, Honeywell technology will handle the nitrogen pre-treatment, converting a waste stream into an export commodity. The capital structure targets US$1.2 billion in equity, with approximately 70% already in firm negotiations or committed, and Bancomext has proposed a US$450 million financing package for phase one. Oppenheimer is managing the capital raise, including a potential green bond component.

USMCA Review Enters Critical Phase With Mexico's Energy Model as the Central Dispute

US and Mexican negotiators held a second bilateral round in Washington on June 16, with a third round scheduled for July 20 in Mexico City, as Trump stated he is "not looking to renew" the agreement that underpins roughly 80% of Mexico's exports. The core energy conflict is structural: the United States and Canada are demanding competitive neutrality and nondiscriminatory market access, while Mexico's 2025 constitutional reform, mandating CFE's 54% generation share, priority dispatch, and a minimum 54% CFE stake in every private renewable project, is embedded in constitutional law that cannot be negotiated away at a trade table. The analysis identifies three scenarios: a painful extension into late 2026, serial annual reviews with no deal, or withdrawal as leverage. Mexico's 80% natural gas import dependency from Texas pipelines gives Washington compounding commercial leverage beyond the legal disputes. Investment in Mexico is already down roughly 10% year-over-year against this backdrop.

Sheinbaum Inaugurates González Ortega Plant; Targets 60% CFE Generation Share

President Sheinbaum formally inaugurated the 745.4MW González Ortega combined-cycle plant in Mexicali on June 21, adding 653MW net to the northwestern grid, alongside the announcement that CFE will replace 4,000 deteriorating wooden distribution poles in the city as part of the broader MX$73.9 billion infrastructure investment in Baja California. Sheinbaum also confirmed that her administration is targeting a 60% CFE generation share, above the 54% constitutional minimum, to be achieved through the combined buildout of combined-cycle plants and the 38-project renewable portfolio awarded on June 5. The plant's operational significance is immediate: Mexicali regularly exceeds 50°C in summer, CENACE had flagged the northwestern grid as a high-risk point, and the plant's commissioning provides meaningful headroom before the 2026 peak season fully materializes.

Chevron and Microsoft's West Texas Deal Models the Power Solution Mexico's Data Centers Need

Chevron signed a 20-year agreement with Microsoft to develop Project Kilby, a behind-the-meter co-located gas power facility in the Permian Basin that will deliver dedicated electricity directly to a Microsoft data center in West Texas by 2028, bypassing the regional utility grid entirely. The project sources stranded associated gas from oil production, converting a waste stream into reliable dispatchable power. Microsoft's AI cloud revenue surpassed a US$37 billion annualized run rate in 3Q26, up 123% year-on-year, with capital expenditure growing 84% to US$30.88 billion. The Chevron-Microsoft model is a direct template for Mexico's rapidly growing data center market, where 279MW of operational capacity is concentrated in states where CFE's transmission network is already operating near ceiling, creating the same reliability gap that co-located on-site generation is designed to solve.

Germany's Grid Monopolies Post 30% Returns While Expansion Stalls, A Warning Relevant to Mexico

An analysis by Germany's bne association found that the country's 18 largest electricity distribution operators posted a market-share-weighted return on equity of 30.1% in 2024, double the prior year and nearly double the DAX average, driven by EWE Netz (61%) and Westnetz (45%), in the same period that grid connection wait times lengthened, digitalization lagged, and renewable integration slowed. 

The paradox is structural: regulated monopolies with no customer competition earn guaranteed returns regardless of performance, creating no automatic mechanism to translate profitability into investment. Germany's regulator BNetzA is attempting to address this through the NEST reform, tightening the revenue cap cycle from five years to three. The article draws an explicit mirror to Mexico, where CFE holds a constitutionally protected national transmission and distribution monopoly, but where the inverse problem applies: CFE is underfunded rather than over-earning, with a 2026 capital budget cut 16.7% in real terms, forcing reliance on private capital through mixed development schemes to fund the grid expansion that demand growth requires.