Grid Expansion Insufficient to Meet Demand: Experts

Energy is often described as a crucial piece for economic development, yet in Mexico that foundation is under strain. During the “Interconnection and Grid Reliability for Economic Growth” panel at Energy Talks 2025, industry leaders and experts identified transmission infrastructure as the country’s most urgent bottleneck, one that jeopardizes both industrial expansion and the clean energy transition, despite recent government commitments of about US$8.2 billion to new transmission projects.

For Aniela Marval, Vice President of Grid Technologies Sales Latin America, Siemens Energy, the equation is straightforward: “Energy is the backbone of a country’s growth,” she said. With nearshoring and industrial relocation driving demand, Marval argued that Mexico has no choice but to modernize, expand, and digitalize its grids. Without stronger planning and regulation that promotes new technologies, she warned, supply will lag behind surging demand.

The challenge is compounded by global market pressures. Delivery times for key equipment are stretching out, as manufacturers face historic order backlogs. “Planning becomes essential,” Marval noted, especially in Latin America, where demand is growing fast but investment cycles are long. For her, the solution lies in coordinated, long-term planning that prioritizes transmission. “There is no energy transition if we cannot move electrons from where they are generated to where they are needed,” she said.

Lack of planning has already left Mexico at a disadvantage, said Casiopea Ramírez, an expert in electricity markets and regulation. “When we talk about transmission planning, we have to think in the long term. We cannot think in six-year terms,” she said. Mexico has seen virtually no grid expansion across the last two administrations, creating a backlog that one administration alone cannot correct.

Private players have stepped in to cover the gap. Over the past decade, she explained, most of the investment in transmission did not come from CFE but from private developers building dedicated infrastructure for their projects. CFE’s own financial constraints have only deepened the shortfall. “Of the projects that were assigned, only 5% are actually being executed, with delays of six or seven years,” Ramírez said.

Transmission is not just an economic issue but a social one, she added. Policy goals such as decarbonization, poverty alleviation, and energy justice cannot be met if the grid remains a bottleneck. Yet current plans fall short of what is needed. The new administration’s proposals to invest around US$8.2 billion into transmission and distribution infrastructure across the country, building 275 new transmission lines and 524 new substation projects with the objective of supplying electricity to 50 million users across the country, represent just 6% of Mexico’s total transmission lines, a marginal increase after more than a decade of stagnation.

Mexico’s geography adds to the challenge. Mountain ranges and difficult terrain have left parts of the country poorly connected. “Mexico, in fact, is an island in several points,” Ramírez explained. Weak interconnections mean that regions like the Yucatan Peninsula frequently face outages with no alternatives. Unlike Europe or Central America, where regional markets support stronger integration, Mexico’s cross-border connections remain limited. Of its 11 interconnections, nine are with the United States, and most are used only for emergencies or excess supply. “Regional interconnections strengthen an energy system,” she said, helping diversify sources, lower costs, and provide backup in emergencies.

For the private sector, these weaknesses are already material. Luis Lugo, Country Head Mexico, CloudHQ, highlighted the scale of energy demand from new industries such as data centers. “We are going to consume 360MW in the next five years,” he said, nearly equivalent to the entire current demand of metropolitan Queretaro.

To secure reliable supply, CloudHQ had to finance its own infrastructure, including a 400kV line, substations, and private connections. “We had to open it ourselves with a private expense,” Lugo explained. But private fixes are not a long-term solution, especially as demand grows. “The success of Mexico will depend on how fast it reacts to this global trend,” he said.

The stress on Queretaro’s grid illustrates the broader challenge. High-voltage lines crossing the region feed multiple states but are not designed to lower voltage locally for industrial use. Industrial parks can build their own substations, but without upstream capacity, much of the power “stays stuck” at the transmission level, Lugo explained. The result is congestion and inefficiency.

For industries like data centers, reliability is paramount. Redundant supply systems, backup batteries, and emergency generation are all standard, but none of that substitutes a stable grid. “You need the guarantee of supply,” Lugo said, pointing to the critical importance of transmission for Mexico’s future as a hub for digital and industrial investment.

Panelists agreed that without a dramatic shift in planning and investment, Mexico risks missing out on the very growth opportunities, nearshoring, industrialization, digitalization, that now seem within reach. Transmission is not just another piece of the puzzle but the foundation, said Marval. Without it, electrons remain stranded, and the promise of an energy transition remains unfulfilled.