Sheinbaum to Launch National Energy Plan

After taking office, president Claudia Sheinbaum announced that her administration will present a National Energy Plan focused on the energy transition. This is the first of its kind for Mexico and it points to a rekindling of renewable energy in Mexico.

In her inaugural speech, Sheinbaum emphasized her commitment to continuing the policy introduced in the latter half of President López Obrador’s administration, reserving 54% of electricity production for the state and capping private generation at 46%. She also promised private investors clear rules for their participation.

As part of her administration's commitments, Sheinbaum reiterated the goal to strengthen PEMEX and CFE as strategic public entities. She announced an oil production cap of 1.8MMb/d, emphasizing that this production will primarily serve domestic consumption. This initiative will be supported by the rehabilitation of the National Refining System.

Despite her push for renewable energy, Moody’s expressed concerns about PEMEX’s diversification into renewable technologies. "A shift away from the profitable oil production business could be risky for the indebted company," stated Roxana Muñoz, Senior Analyst, Moody’s.

Sheinbaum reiterated that CFE will maintain 54% control of electricity generation while allowing private sector collaboration. However, she opposed public-private partnerships (PPPs) in the oil and gas industry. Before her swear-in ceremony, AMEXHI called for her to reconsider public-private partnerships as a strategy to develop more oil fields, especially in unconventional areas, and to increase natural gas production in Mexico. According to the organization, these actions could generate budgetary benefits of nearly US$160 billion.

Sheinbaum’s proposed changes come amid a complicated environment. Recent nationwide blackouts and the cessation of emergency state updates by the National Energy Control Center (CENACE) have raised concerns about CFE’s capability to address energy challenges. COPARMEX attributed these blackouts to insufficient infrastructure investment.

Meanwhile, clean electricity generation fell by 8.2% to 85.5GWh in 2023 against the previous year, with its share in total generation dropping from 27.5% to 24.3%, according to the National Electric System Development Program (PRODESEN) by SENER. This decline moves Mexico further from its 2024 target of 35%, set following the 2016 Paris Agreement ratification. In 2022, clean generation also decreased by 2.7% to 93.2GWh.

President Sheinbaum will also manage the continuation of the proposal to eliminate autonomous regulatory bodies such as CRE and CNH, further complicating the energy sector's regulatory landscape. Different actors like the Mexican Wind Energy Association (AMDEE) and the Business Coordinating Council (CCE) have already warned that this reform could halt investments.

Nonetheless, industry experts remain cautious and hopeful as Sheinbaum’s appointment and addresses have pacified investment sentiment. Despite clear intentions to strengthen PEMEX and CFE, Mexico has become one of the most attractive countries for investment in renewable energy, partly due to the "Sheinbaum effect," according to EY Latin America.