Opportunities in Behind-the-Meter Clean Energy, DG, and Storage

Mexico’s energy transition is unfolding in the landscape of a profoundly transformed legal framework for energy. Recent reforms to the electricity sector have modified the open-market logic introduced in 2013 with a centralized, state-led planning model grounded in principles of energy sovereignty, system reliability, and energy justice. While this shift has constrained certain large-scale private generation models, it has simultaneously opened — and in some cases strengthened — opportunities for clean energy projects developed “inside the fence,” particularly through self-consumption schemes, distributed generation, and energy storage.

In this context, the sustainable energy transition in Mexico is no longer driven primarily by merchant projects competing in the wholesale market or through mid- and long-term clean energy auctions, but now also includes the increase of tailored solutions that directly serve industrial, commercial, and institutional users seeking cost certainty, decarbonization, and operational resilience.

Centralized Planning and Its Impact on Private Investment

The entry into force of the Regulations of the Electricity Sector Law and the Energy Planning and Transition Law consolidated a binding planning regime under the leadership of the Ministry of Energy (SENER). Expansion of generation capacity is now determined through official planning instruments, such as the Electric Sector Development Plan (PLADESE), and selective calls for permits aligned with state-defined priorities.

Under this framework, large-scale private generation projects interconnected to the National Electric System are subject to capacity caps, technology preferences, and geographic restrictions. However, it is precisely this restrictive environment that is reinforcing the strategic relevance of projects that operate outside — or at the margins of — the centralized system, particularly those focused on serving onsite demand.

Self-Consumption: The Cornerstone of Behind-the-Meter Projects

Self-consumption has emerged as one of the most interesting and robust legal pathways for private clean energy development in Mexico. The recently issued General Administrative Provisions regulating Electricity Self-Consumption clarified and modernized this scheme, shifting its regulatory focus from corporate affiliation to physical and operational integration.

Under the current regime, self-consumption projects are structured around a private network that connects one or more power plants directly to the load centers they serve. This model is especially attractive for industrial parks, logistics hubs, data centers, real estate developments, corporate campuses, and educational institutions.

Key advantages include:

• Direct access to clean energy without exposure to wholesale market volatility

• Greater predictability of long-term energy costs

• Improved reliability and reduced dependence on a saturated public grid

• Eligibility to receive Clean Energy Certificates for clean generation consumed onsite

Importantly, self-consumption no longer requires users to belong to the same corporate group. What matters is that energy is consumed within the authorized site or polygon, reinforcing the “inside-the-fence” nature of the model.

Isolated vs. Interconnected Self-Consumption

The regulatory framework distinguishes between two main modalities of self-consumption, each with different strategic implications.

Isolated self-consumption operates without synchronizing to the National Electric System. While load centers may retain a grid connection for backup supply, strict technical measures must prevent any energy injection. This modality has become particularly attractive in regions with grid congestion or interconnection delays, as it eliminates exposure to system constraints and wholesale market charges.

Interconnected self-consumption, by contrast, allows synchronization with the grid and, in some cases, the sale of surplus energy. However, surplus sales are subject to mandatory transactions with the Federal Electricity Commission (CFE) under standardized contractual terms. As a result, surplus sales should be viewed as an ancillary feature rather than the core revenue driver of these projects.

From a sustainability perspective, both modalities support corporate decarbonization goals while aligning with the state’s emphasis on reliability and orderly system operation.

Distributed Generation: A Parallel and Complementary Path

Distributed generation (DG), defined as power plants with a capacity of up to 0.7MW, remains exempt from generation permits and centralized planning calls. This makes DG one of the most agile and accessible mechanisms for deploying rooftop solar, small-scale wind, or hybrid systems in residential, commercial, and small industrial settings.

DG projects benefit from simplified interconnection procedures, net metering or net billing schemes, and lower regulatory risk. While limited in scale, their cumulative impact is significant, particularly when combined with energy efficiency measures and digital energy management systems.

For many users, distributed generation serves as the first step toward energy autonomy and emissions reduction, while larger self-consumption projects address more complex or energy-intensive operations.

Energy Storage: The Missing Link Becomes a Regulated Asset

For the first time, Mexico now has a comprehensive legal framework governing energy storage. Storage is recognized as an independent activity, subject to permitting when deployed at scale, and as a critical tool for enhancing system reliability and flexibility.

In behind-the-meter projects, storage plays a pivotal role by:

• Smoothing variability from renewable generation

• Reducing peak demand charges

• Providing backup power during outages

• Optimizing self-consumption ratios

Although storage systems are not eligible for Clean Energy Certificates, their value lies in operational savings, energy arbitrage, and resilience. Hybrid configurations combining solar, storage, and intelligent control systems are increasingly central to sustainable energy strategies for industrial and commercial users.

Sustainability, ESG, and Energy Justice Considerations

The current regulatory framework embeds sustainability beyond emissions reduction. Projects are now required to integrate social impact authorizations, real and measurable community benefit strategies, and energy justice principles from the earliest stages of development.

Behind-the-meter projects are particularly well positioned in this regard. Because they are developed within existing facilities or private sites, they typically involve limited land use impacts and can directly contribute to local economic activity, workforce development, and emissions reductions without imposing systemic risks.

From an ESG perspective, self-consumption and distributed generation projects offer measurable environmental benefits, strong governance visibility, and clear alignment with corporate sustainability commitments.

A Pragmatic Energy Transition

Mexico’s energy transition is not following a linear or purely market-driven path. Instead, it is evolving through a pragmatic balance between state-led planning and targeted private participation. Within this model, behind-the-meter clean energy generation, distributed generation, and storage stand out as the most resilient, bankable, and sustainable opportunities.

For companies operating in Mexico, the path forward is clear: energy transition strategies must be legally precise, technically and financially sound, and closely aligned with onsite demand. In doing so, private actors can continue to play a meaningful role in decarbonization, energy efficiency, and system resilience.