Ten Years On: How Mexico's Energy Market Rewarded Patience

Q: Tuto Power is celebrating 10 years in Mexico. What distinguishes the company now from the one that entered the market a decade ago?

A: A great deal has changed. Tuto was not originally an energy platform; it grew out of a family business with roots in the agri-food sector, with a presence in Sonora. That presence in Sonora led to our first entry into the electricity sector through a solar plant. The 2014 regulatory reforms prompted us to adapt, and we established our qualified supply business. At that point, the solar plant was the core of what we did. The qualified supply operation is now unambiguously the core of the company.

We were positioned to be buyers in the last energy auction held in 2018, and we had actually been awarded 3.2% of all the energy that was to be generated through that auction. That auction was subsequently cancelled. We pivoted, strengthened our hedging capacity to expand the supply business, and continued building out the services clients were asking for — including our distribution capabilities — while maintaining our commitment to renewable energy coverage.

We had seven people 10 years ago; we now have fifty. Over these 10 years, Tuto Power has established itself as the second-largest independent Mexican operator in qualified supply, non-utility, after Amper. 

Q: CFE Calificados has become a significant competitor. What continues to differentiate Tuto Power in this environment?

A: The two dominant players by scale are Iberdrola and CFE Calificados, which trade positions from year to year. What differentiates us is our niche focus. 

Coverage availability is constrained. Mexico has years of underinvestment in new generation to compensate for, and that scarcity of hedging instruments makes it difficult to compete for large industrial clients with high consumption. But in the segment of clients consuming between 3MW and 7MW installed annually, we compete effectively. That client profile has also matured considerably. Clients in this range increasingly know what they want: renewable supply, fixed pricing, stability, and shorter contract durations. Three-year contracts, which were unusual not long ago, are now standard, but one and two-year contracts are also possible. 

Geography matters as well. Not all qualified suppliers can serve all zones competitively. Yucatan, for example, is genuinely difficult for industrial clients because of energy scarcity and the resulting price levels at the local marginal prices. The combination of zone, client size, client sophistication, and specific energy needs is what defines the niche, and it remains a large one.

Q: As clients have become more sophisticated and demanding, how does Tuto Power ensure it keeps up with client demand?

A: We act as a boutique supplier. In areas where we have a meaningful presence, we can offer bespoke solutions. No two clients pay the same rate, because no two clients have the same needs. There are still clients who arrive asking for a discount relative to CFE's basic tariff. That framing is less common than it used to be, but it has not disappeared entirely. We work with each client individually. There is no single formula to apply uniformly, and any supplier who tries to do that will struggle.

Q: The risk of industrial clients seeking energy supply at the last minute has been raised repeatedly. What does Tuto Power do when a client arrives in crisis, and is there an opportunity to help those who have been left without coverage?

A: This situation is becoming more common. Clients arrive having realized their current supplier relationship is ending in three months and believing they can switch quickly. The honest answer, and this is where transparency is the only appropriate response, is that a three-month transition is not feasible. The administrative requirements of the system, combined with the reliability and safety protocols involved, make rapid switching impossible. What typically happens is that the client who wants to leave ends up extending with their existing supplier, often on less favorable terms than they would have had if they had started the process earlier.

A proper supplier transition involves deregistration by the outgoing supplier, registration by the incoming one, new diagnostic studies required by CFE, and a full review of load flows and operational scenarios. This is not like switching an internet provider. 

What we offer in these situations is clarity. We lay out the actual timeline, explain what needs to happen in what sequence, and help the client understand the realistic path forward. The message we want clients to take away is this: start looking at your options well before you need to make a change, and give yourself the time the process genuinely requires.

Q: What role do distributed generation and self-consumption play in Tuto Power's portfolio?

A: While not part of our core, we do work in distributed generation projects. We have executed 14 distributed generation plants. The criterion is simply that the client has to already be our client. We are not going to install a plant for someone whose supply we do not manage, because it would create unnecessary complexity. If a client we already serve requests it, we do it — and we make competitive, well-structured proposals for it.

We also have a self-consumption project underway. We are developing a small solar-plus-storage installation in Yucatan, which will generate between 2MW and 3MW, depending on SENER study outcomes. This project is structured as isolated self-consumption under the new regulatory framework, which allows up to 20MW in this modality. The plant will be connected to the network at the load level, but its generation will be limited to what that load consumes, no surplus injection. This will be our first project in this format and among the first of its kind in the country. It is important to us because it extends our capability into a niche we can serve well given our expertise.

The business model for this type of project involves long-term contracts, often 20 to 25 years, with the asset ultimately transferring to the industrial client after the amortization period. The durations are long and the commitments are real, but the BOT structure makes it workable. Not every industrial client needs it, but there are segments — such as paper mills, facilities requiring cogeneration, and energy-intensive manufacturers — where it has always made sense.

Q: Are batteries genuinely delivering on their promise in the Mexican market?

A: For large-scale projects, batteries were genuinely challenging for a period because the regulatory framework had not caught up. But in installations under 700KW, batteries have been working well and have been widely deployed. The technology has improved dramatically, and prices have declined substantially, with further declines still to come.

The recent mixed-contract and priority project tenders are all coming with battery requirements baked in, which will accelerate regulatory clarity and cost curve compression simultaneously. Chile's experience is instructive. The country had encountered significant transmission bottlenecks and found that batteries adapted well to that challenge. Mexico has its own dynamics, but in congested zones and in areas where one can charge economically during solar hours and dispatch strategically during peak demand, the projects work. Batteries will undoubtedly continue to be deployed at an increasing scale. The technology supports it, the finances are moving in the right direction, and the regulatory framework is finally catching up.

Q: What are Tuto Power's primary objectives for 2026?

A: We have three main priorities. We will be participating in the Contratos Mixtos process and we will continue the self-consumption project, which represents a meaningful diversification from the company's historical trajectory. We are also focusing on consolidating the growth of the qualified supply business. The nature of client onboarding in qualified supply means that contracts signed today do not translate into active supply for nine months or more in many cases. The work we are doing commercially in 2026 will produce double-digit growth in qualified supply volumes in 2027. The pipeline is there, and the trajectory is strong.

We are also making significant investments in corporate governance and internal processes this year. We are investing in human resources, commercial operations, and marketing. Building institutional maturity alongside business growth is something we are taking seriously.

Tuto Power is a prominent Mexican business group involved in the energy value chain, as well as in clean energy development, qualified supply and consulting.