Mexico is attracting US data centers looking for faster power connections, but these facilities will initially rely on robust gas generation from the Comisión Federal de Electricidad (CFE), with renewables as a potential future option, Mexican energy expert Santiago Barcón said. pv magazine.
Mexico is increasingly attracting industrial energy investments, especially from data centers moving from the United States, said Santiago Barcón, CEO of PQBarcon.
There are bottlenecks in the US electricity infrastructure, especially in states like Texas, where projects requiring around 150 MW face connection times of up to seven years. This has made Mexico an attractive alternative, where power supply can usually be secured within about two years.
However, Barcón noted that data centers in Mexico, at least initially, will likely be powered by gas-fired power plants operated by the country’s national utility, the CFE. That said, renewable energy sources may become a viable alternative at some point.
“Although data centers can structure renewable PPAs, in practice they are heavily dependent on the electricity grid and solid gas generation to ensure quality and continuity of service, with only limited battery storage,” Barcón told us. pv magazine.
This industrial shift is driving interest in hybrid energy solutions, including behind-the-meter projects and cogeneration setups, which require electricity and steam or cooling at the same time.
Renewables may ultimately provide an alternative, as the Mexican PV market shows signs of tangible development, driven by regulatory changes and a renewed focus on technically feasible projects.
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Image: PQBarcon
“Mexico is starting to show clear signs of reorganization in its electricity market, after years of regulatory tensions and friction between the public and private sectors,” Barcón said.
A recent call for new renewable capacity reflects growing interest in solar and other renewable energy sources, even if it wasn’t a traditional public auction.
The process offered 6 GW of new capacity, received bids totaling approximately 10 GW and ultimately awarded 4 GW. Unlike previous arrangements, selected projects will not sell energy directly to the CFE, but instead to the wholesale electricity market or to end-users through bilateral contracts (PPAs), including hybrid structures between spot markets and long-term contracts. The call allowed only two weeks for submissions, with preference given to projects that had previously been licensed.
Barcón said this careful selection addresses a structural problem. In recent years, renewable permits were granted without fully considering system stability, leading to approvals totaling 35 GW, while peak demand at the time was around 42 GW. With renewable energy being prioritized, the system faced operational constraints, prompting authorities to now select only technically feasible projects.
A central element of the new regulatory approach is mandatory storage for newly approved renewable plants, requiring batteries equal to 30% of installed capacity for three to four hours – in line with standards used in California.
“Uniform rules may not reflect the needs of every interchange – some areas need more hours, others less – but a set standard provides regulatory clarity and facilitates planning,” Barcón said.
Another important change in the market is the increase in the threshold for behind-the-meter generation. The administrative limits without complex interconnection studies have increased from 0.5 MW to 0.7 MW, with simplified schemes now allowing installations of up to 20 MW, provided no electricity is injected into the grid. This change is expected to be a major growth driver, especially in regions with limited access to strong power.
Distributed solar power generation has already reached approximately 4 GW in Mexico and is growing strongly in both the commercial and residential sectors, especially among high-consumption domestic users. In cities like Mexico City, exceeding 500 kWh per month puts households in the highest tariff bracket, encouraging larger PV installations that can nearly eliminate electricity bills. However, residential storage remains marginal due to costs and stable supply.
Compared to other Latin American markets, green hydrogen has limited momentum in Mexico, mainly because cheap natural gas reduces its economic appeal in the short and medium term. Politically, the sector will see a gradual opening up under the current federal government as it demonstrates more pragmatism towards sustainable development and private participation.
“If transmission expansion keeps pace with this new phase, and technical selection mechanisms and clear requirements such as mandatory storage continue, Mexico could enter a more orderly and sustainable growth cycle, combining centralized generation with a strong expansion of behind-the-meter and distributed generation,” Barcón concludes.
Santiago Barcón is a Mexican entrepreneur, CEO of PQBarcon and founder of Energía Hoy, a platform specialized in the energy sector.rgy sector. He recently published the book ‘How to be a good engineer: ten commandments and 100 tips to achieve this.”
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