Risk & Reward: The Future of Energy Finance in Mexico

As Mexico’s energy sector adapts to a new federal administration, renewed focus on energy sovereignty, and persistent infrastructure constraints, the question of how to fund the country’s energy transformation is taking center stage. Investors, developers, and financial institutions are navigating a landscape marked by both regulatory uncertainty and growing industrial demand, testing the boundaries of what constitutes a viable, bankable project.

Investor interest has not disappeared, but it has become more selective. Energy projects that can demonstrate offtaker reliability, clear regulatory compliance, and resilient business models are rising to the top of funding pipelines. Industrial clients seeking distributed generation and hybrid solutions, often with integrated storage or efficiency technologies, are viewed as more attractive, particularly when their energy consumption aligns with predictable patterns and strong financial profiles. For financiers, viability is no longer just about technology or scale, but about risk containment, clarity of legal standing, and revenue certainty.

Distributed generation in particular stands out as an attractive investment due to its continued history within the Mexican energy market. According to Jason Potts, CFO, Finsolar, investing in distributed generation is no longer the uncertain bet it was a few years ago. 

“The market has matured in such a way that, fortunately, we now have data. There is a track record that really makes investors take a look at these projects,” says Potts. “What this track record allows is to have a standardized, or rather, more precise quantitative analysis of the customer profile, helping us to rely on evidence and not assumptions."

Mexico's energy landscape is heavily populated by SMEs, which often lack the credit history or collateral required by traditional financial institutions. As a result, investors are increasingly exploring alternative structures that can mitigate risk while unlocking opportunity. Tailored credit assessments, Energy-as-a-Service models, and risk-sharing frameworks are gaining traction, especially when paired with trusted technology providers and EPC partners.

Investing in SMEs requires finding the right mix of elements. Juan Pablo Visoso, Managing Director, Riverstone LATAM, believes that you need partners who genuinely understand their sector, a solid and realistic business plan, strong drive and motivation, and a clear path for growth. This combination is what ultimately sets successful investments apart.

“You can buy shares of Bimbo or of Cemex, but the real exponential growth happens when you invest in an SME that has the right team, is in a growth sector, is well-capitalized, and does not have a regulatory aspect limiting its growth,” says Visoso.

“It is a balance between risk and profitability, and it has to make economic sense,” says Pablo Linares, CFO, Energía Real. “Thoroughness and rigor in the analysis is fundamental as we look for companies that can truly survive in the long term.”

Nowadays, the banking sector has been evolving and adapting to become more specialized. According to Omar Castillo, Sr. Vice President Energy Industry GTB CIB, BBVA, this has allowed the banking sector to understand what these smaller and medium scale projects can bring to the table.

“Projects that once seemed small or not very viable, because the ticket is not large, or attractive, or does not have the most complex financing structure, are now getting attention,” says Castillo. “People are starting to say, ‘Hey, this project, which is just getting started and precisely needs more guidance and support, can actually bring a lot of success.’” 

ESG criteria, once seen as a primary differentiator, are evolving in importance. While regulatory signals in the United States suggest a shift away from ESG mandates, in Mexico the topic retains significance, particularly among international investors, multilateral institutions, and large corporations with global compliance standards. ESG, when combined with sound economics, continues to unlock preferential financing conditions and expand access to international capital.

“The market is so big that even if the needle moves just a little with the United States, in the end, the market is immense. In Mexico, we have a bit of everything, which is a big advantage,” says Ricardo Zúñiga, Country Manager, CapWatt. “I do not think the appetite for renewable and clean energy projects is going to drop significantly. The conversations we are having with clients today are very much aligned with renewable projects.”