Energy Transition in the Mining Industry

Mexico’s mining sector is confronting a dual challenge: soaring energy costs and the operational complexities of remote sites. In response, companies are adopting active energy management strategies that blend efficiency, self-generation, and advanced technologies to safeguard long-term operations.

Energy represents more than 30% of operating costs for many mines, making careful management critical. To mitigate price volatility, especially in isolated areas, operators are turning to long-term Power Purchase Agreements (PPAs) that lock in stable rates and reduce exposure to fossil fuel swings. Meanwhile, experts say adopting mobile and renewable energy solutions can cut costs by 30 to 50%, offering both financial relief and greater operational resilience.

In off-grid locations, self-generation has become the most effective solution. The declining costs of solar technology make on-site photovoltaic projects increasingly viable, especially when paired with Battery Energy Storage Systems (BESS). These systems allow mines to store low-cost solar power during the day and deploy it at night or during peak demand, ensuring continuity while reducing costs. The remote nature of mining makes reliability non-negotiable, which is why many operations already function in island mode. 

“Mining can take advantage of being in remote sites that are very large and located far from a robust electricity grid to implement … microgrid projects. You are going to reduce costs, transition toward cleaner energy, reduce carbon emissions, and move toward decarbonization, achieving ESG goals,” Paulina Beck, General Counsel, Energia Real, explained, at Mexico Mining Forum 2025.

Electrification of fleets and equipment has also gained prominence. Beyond emissions reductions, this shift improves health and safety by eliminating diesel particulates, reducing heat, and lowering vibration underground. Operational savings are achieved through decreased ventilation and cooling needs. While the upfront investment is high, industry estimates suggest total ownership costs for EVs are now roughly 17% lower than for combustion engines. Efficiency gains are further enhanced through faster acceleration, improved loading times, and artificial intelligence applications.

Regulation and Infrastructure: Opportunities and Hurdles

Large-scale projects face complex permitting, but government support for self-generation is growing, including proposals to raise the capacity limit for permit-exempt distributed generation. Structuring a long-term energy supply contract like a PPA requires ensuring price certainty, supply guarantees, and clear penalties for non-compliance. Regulatory risks must be addressed with “change in law” clauses, while securing interconnection and transmission permits often requires close collaboration with CFE.

Yet one obstacle stands out above all others: infrastructure. “The mining industry has developed at a much faster pace than energy infrastructure has been developed. I believe a very viable option is on-site generation in the absence of infrastructure, and what could be better than generating your own energy, where you do not depend on any third party,” said Juan Paulo Cervantes, Commercial Director, Solensa.

At the same time, industry leaders caution that the decarbonization story must be told carefully to avoid overpromising. According to Diego Arriola, Partner, Nxtlab, “there is a significant risk of greenwashing in a sector like this. The granularity of the Mexican market is sufficient to ensure full traceability of energy and to make correct accounting when incorporating new technologies, beyond any one specific technology. I would suggest that as you move forward with integration, you must tell that story correctly to avoid the risks that have already emerged in such a highly scrutinized sector.”

The hybrid model is becoming the industry standard to balance reliability and profitability. It addresses the primary challenge of balancing sustainability, energy security, and economic competitiveness by combining a renewable PPA, grid backup, and on-site BESS to manage peaks and guarantee supply.

Beyond Established Solutions: Advanced Technologies

The next stage of this energy transition lies in advanced solutions such as microgrids. By integrating local generation, storage, and consumption into an intelligent system, microgrids maximize resilience and give mines full control of their energy supply. Energy storage remains the key enabler of this shift, particularly for fleets and heavy equipment now moving away from diesel. While natural gas is being adopted as a bridge fuel, biofuels like renewable diesel (HVO) are gaining ground as a drop-in solution that cuts emissions without major modifications.

For companies like Industrias Peñoles, this shift is already underway. “Without a doubt the participation of clean energies is already a reality and one of the main drivers of deep decarbonization in this sector,” said Leopoldo Rodríguez, Peñoles’ Head of Energy. “But another big issue is precisely the transition toward equipment, toward electric vehicles, or those that run on gas or biofuels.”

Energy storage technologies also stand at the heart of this change. “Batteries help us enormously to integrate these solutions; they are fundamental for the integration of renewables and also help a great deal with the efficiency of thermal generation … To achieve reliability, we need to be able to have rolling capacity to handle the peaks, and so on. Batteries help us tremendously with that, while providing reliability as the sun sometimes shines, and sometimes it does not,” Mariano Souto, General Director of Aggreko, explained.

Looking further ahead toward deep decarbonization, the industry is exploring the potential of green hydrogen. Produced via electrolysis powered by renewable energy, it is seen as the leading long-term solution for achieving zero-emission heavy-haul trucking. Alongside hydrogen, other derivatives like green ammonia are also being explored as potential clean energy carriers for the future. While their implementation is still in the early stages, these advanced fuels are part of the long-term strategic roadmap for companies to transition to cleaner operations.