The Future of Power Generation in Mexico Is Not Binary

In Mexico’s energy debate — much like in much of Latin America — we remain trapped in a binary logic that does little to resolve the sector’s real challenges. Renewables or gas. Public or private. State or market. Black or white. Yet, the reality of the electric system is far more complex, technical, and nuanced than this simplified narrative suggests.

Last year, President Claudia Sheinbaum announced that in 2026 construction will begin on roughly 6,000 megawatts (MW) of new power capacity in Mexico, as part of a new energy model that reestablishes the Federal Electricity Commission (CFE) as a strategic public utility. Under this framework, the state will guarantee at least 54% of national power generation, while the remaining 46% will remain in private hands, governed by clear rules and a centralized planning model.

Sheinbaum noted that this redesign stems from rolling back the 2013 energy reform and constitutionally strengthening the CFE after decades of privatization efforts dating back to 1992. Beyond any political debate this may ignite, the underlying message is clear: Mexico’s electric system is entering a new phase—one in which planning, reliability, and energy sovereignty take center stage.

This announcement does not imply a rejection of clean energy nor a commitment to fossil fuels alone. Rather, it reflects an uncomfortable but necessary truth: the energy transition cannot be built on single-solution thinking or technological dogmas.

Latin America’s Energy Paradox

Latin America is at the center of a paradox that defines both its present and future. The region boasts some of the world’s best natural conditions for renewable energy—sun, wind, water, and land—yet it still relies heavily on fossil fuels to power its economies, industries, and daily life.

According to the International Energy Agency, fossil fuels account for about two-thirds of total energy consumption in the region. While this is better than the global average of nearly 80%, it remains high for a region aspiring to lead the global energy transition.

The conclusion is inescapable: fossil fuels still dominate, but renewables have ceased to be just a promise. Pretending one can abruptly replace the other is not only unrealistic, it is technically risky.

Security, Resilience, Tech: The New Transition Axis

Globally, this idea of complementarity is growing stronger. In 2025, global energy investment surpassed US$3.3 trillion, with US2.2 trillion going specifically to clean energy technologies — an unprecedented figure.

Yet, as the World Economic Forum notes, today’s energy transition is no longer solely about reducing emissions. Its core has shifted toward energy security, system resilience, and technological development, reshaping the entire conversation.

Renewables are indispensable, but their variability requires dependable backup systems. Electric grids demand modernization, digitalization, and flexibility. Storage is progressing, but not yet at the scale required. In this context, natural gas has become a crucial support technology, offering stability, rapid response, and lower emissions compared to other fossil fuels.

To make this possible, transmission networks are critical. The region needs robust, expanded electric systems capable of integrating renewable energy at the scale demanded by global climate commitments. Private sector participation has yielded strong results in countries such as Brazil, Chile, and Peru, expanding infrastructure, attracting investment, and even reducing transmission costs. Looking ahead, cross‑border interconnection should be the goal, enabling the redundancy and energy security Latin America requires.

False Dilemma, Opportunity of Green Nearshoring

This is where the renewables-vs.-conventional debate proves to be a false dilemma. The most sophisticated business leaders in Mexico and across Latin America no longer design energy portfolios based on a single source. They design hybrid portfolios, combining solar, wind, storage, efficient natural gas, and demand‑side management solutions.

Today’s market allows an industrial consumer, through Power Purchase Agreements, to source electricity from multiple generation technologies with full traceability. With sufficient onsite space, they can even incorporate complementary onsite generation. This delivers not only green supply backed by natural gas, but also significantly reduced costs and budget predictability.

This approach is not ideological, it is strategic. It reduces risks, ensures operational continuity, meets environmental targets, and maintains competitive costs. Such a vision could turn green nearshoring into a historic advantage for the region.

Managed correctly, nearshoring will bring not only manufacturing investment but also modern energy infrastructure, cleaner supply chains, and more robust electric systems. Latin America can become a central player in the new global energy map, not by choosing sides but by combining technologies intelligently and planning long term.

Less Dogma, More Realism

The future of power generation in Mexico — and the region — will not be binary. It will not be renewable or fossil, public or private, state or market. It will be, inevitably, a dynamic balance of sources, actors, and technologies, guided by clear rules, technical vision, and social responsibility.

Breaking out of the false dilemma does not mean abandoning the transition. On the contrary, it means making it viable, secure, and sustainable over time. And that may be the conversation the energy sector needs most today.