President Sheinbaum has committed Mexico to 45% renewables in its electricity mix by 2030 and launched a five-year low-carbon energy roadmap in April. But its strict rules around public and private sources are likely make privately-owned utilities think twice about investing in Latin American country.
When climate scientist Claudia Sheinbaum became Mexico’s president ten months ago, she opened a window of opportunity for private renewable energy companies – but how many of these companies feel confident enough to climb through?
Last week, the Mexican government’s energy ministry Sener opened online consultation to gather feedback about its National Renewable Hydrogen Plan. That plan follows major policies over the last ten months including a national renewable energy strategy that was published in November 2024 to increase the proportion of renewables in the country’s energy mix to 45% in 2030. This would be up from 25% in 2024, according to energy analyst Ember
On 15th April 2025, the government published a five-year roadmap to make the transition to low-carbon energy sources a national strategic priority, and boost energy security. The country’s National Energy Plan commits to investments in 51 projects totalling 22.7GW of solar, wind and combined-cycle gas turbine (CCGT) capacity. It hopes that such ambition will enthuse private investors.
The approach to boost renewables capacity is backed by policies to promote moves from fossil fuels to renewables; support the efficient use of energy resources to increase energy security; and promote the integration of renewable energy at all stages of the value chain.
Mexico is also seeking to increase electrification of public and freight transport; and grow the Mexican energy system in a way that guarantees domestic production.
However, some of the government’s priorities indicate rigid commitments to protecting the public sector, which are spooking private companies.
For example, the government said it will maintain a status quo where 54% of Mexico’s power generation comes from publicly-owned companies and the other 46% is from private companies. This decision appears to be based on political ideology rather than analysis of the optimal electricity mix, and such a rigid approach is unlikely to create an appealing environment for private utilities.
Spanish giant Iberdrola is one private utility stepping back from the Mexican market.
Iberdrola eyes fresh sale
In February 2024, Iberdrola sold 55% of its business in Mexico for $6.2bn to state power group Comision Federal de Electridad (CFE). The portfolio was made up of 13 CCGT plants, where 87% operated under the country’s independent power producer regime contracted with the CFE. At the time, the government led by Andrés Manuel López Obrador said the deal marked a time of “new nationalisation” of its power market.
Iberdrola is now looking to exit the remaining 45% and, according to Spanish newspaper El Confidencial on Monday (28th July), has agreed a $4.7bn sale to rival Spanish energy and water company Cox. These assets include six wind farms, three solar farms, and six CCGT plants. Iberdrola says it is selling them due to its concerns about the legal and tax stability of doing business in Mexico.
The Spanish giant has recent history of legal difficulties in Mexico after the country’s former Energy Regulatory Commission fined it $466m in 2022 for violating self-supply energy rules by selling electricity to its partners. Iberdrola said issues with legal uncertainty of doing business in Mexico included government moves to boost nationalisation in the energy sector and other constitutional reforms under Sheinbaum.
But Sheinbaum rejected claims that there is legal uncertainty in the country though as she argued: “When we talk about the rule of law, it means everyone must comply with the rules.”
Analysts have suggested that Iberdrola’s public statement is an indication that European firms more widely will look to withdraw from Latin America due to wider geopolitical and regulatory risks. These include nationalisation of the type seen in Mexico, as well as in countries including Chile.
Latin America is also strategically important in the global tussle for economic dominance between China and the US due to is significant lithium resources, particularly in the ‘lithium triangle’ region between Argentina, Bolivia and Chile. China has been a major investor in Latin America, and this may bring economic sanctions under the Trump presidency.
As a result, Iberdrola is focusing its investment on core markets. The utility is due to hold its 2025 Capital Markets Day next month, but its current plan involves targeting around 60% of its planned €36bn net investments between 2024 and 2026 in grid upgrades, to total €21.5bn, with the remaining 40% (or €15.5bn) focused on renewables generation. It plans to focus investment in the US (35%), UK (24%), Spain (15%) and Brazil (12%).
Iberdrola is not the only European utility to rethink its renewables investment plans in Latin America over the last decade, with others doing so including EDF, Enel and RWE. But its coolness on Mexico may indicate challenges for the country securing private investment despite the ambitions of Sheinbaum’s Morena party.
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