On 2 February, Foreign Affairs Minister Marcelo Ebrard and Sonora Governor Alfonso Durazo (see our Personality of the Week) hosted 87 ambassadors and representatives from 25 international organizations for a tour of the Puerto Penasco solar plant, which is still under construction. This was a prime example of renewable energy gaining some momentum in Mexico, despite efforts by President Andres Manuel Lopez Obrador (AMLO) to limit private investment in power generation and support SOEs instead. Mexico has enormous energy potential: not only significant crude reserves, but also world-class potential for solar and wind energy, estimated at 24,918,000 MW and 3,669,000 MW, respectively. However, recent periods of regulatory uncertainty and mismanagement of SOEs have hindered the power sector and the development of the country’s renewable potential.  

The AMLO administration has demonstrated a clear commitment to supporting both Pemex and the Federal Electricity Commission (CFE), although external pressure from the US and global trends toward energy transition have prompted the government to acknowledge that Mexico’s energy demand cannot be met without the involvement of foreign investors and companies. Since the start of the new year, several announcements have been made indicating a renewed push toward the renewable energy agenda. In our assessment, these developments suggest a gradual policy shift, likely driven by a combination of external pressures and Mexico’s own energy potential.  

The government’s stance on energy transition took a noticeable turn in November 2022 when Ebrard, a 2024 presidential hopeful, committed to accelerating the process. At the COP27 climate summit, he pledged to reduce Mexico’s carbon emissions by 35% from business-as-usual levels by 2030, a goal 8% higher than the Nationally Determined Contribution (NDC) that had been set in 2015. Additionally, the government aims to reduce carbon emissions by 51% (potentially up to 70% with external support) and generate 40,000 MW of renewable power by 2030. These ambitious targets have raised doubts among experts, as they appear unattainable without partnering with the private sector. Politically driven decisions have hindered private investment in the past, preventing several private wind and solar plants from connecting to the electric grid. However, according to Horizon contacts, the administration is currently banking on the Sonora Plan as the key driver of energy transition.  

The Sonora Plan is a $48bn strategy aimed at developing clean power and manufacturing, with the goal of strengthening supply chains with the US. The plan envisions the creation of the largest solar plant in Latin America at Puerto Penasco. The PV solar facility, spanning over 2,000 hectares, will also incorporate battery storage technology. Additionally, there are plans for lithium exploration and extraction projects, and the establishment of more solar plants in the region. Ebrard is leading this initiative, and has indicated that the solar parks will be built with preferential financing from the US. If this comes to fruition, it would represent a significant change in Mexico’s approach to renewable energy. However, at present, only a small portion of the Puerto Penasco project is underway, with about one tenth of the panels installed but not yet connected to the grid. CFE has been tasked with developing the project; the first of four stages is expected to be completed by April 2023, with the remaining three to be finished by 2027.  

Furthermore, the administration has been pushing forward a new electromobility agenda, supported by a US-Mexico working group on transportation electrification and a surge in investment announcements in the electric vehicle (EV) sector. The biggest investment on the horizon and key signpost to watch is the rumored entry of Tesla into the country with its next Gigafactory. AMLO has reportedly instructed CFE General Director Manuel Bartlett to ensure that the utility provides energy to Tesla at a competitive price without any cuts or interruptions. Additionally, Ebrard has hinted at “good news” coming soon amid mounting speculation over the investment decision.  

Data shows that electricity demand in Mexico has grown nearly 3% annually since 2000, which highlights the need for increasing installed capacity and forming more public-private partnerships in the power sector. If large investments like Tesla’s planned entry into Mexico materialize, the country will need to ensure more affordable and reliable access to energy. This may open potential opportunities for investors, particularly in the power sector. However, our forecasts remain conservative. Hurdles will remain even as the calls for green energy mount. With the 2024 presidential election approaching, we do not expect any drastic changes in the coming months unless the administration establishes a concrete plan to add more renewable capacity to the country’s energy mix – an unlikely prospect. Similarly, the target of achieving a 50% market share for electric vehicles by 2030 is very unlikely to be met, due to the lack of proper fiscal incentives for consumers and sufficient charging infrastructure in Mexico.  

In addition, the administration has been vocal about using gas as a transitional fuel. It has entered into strategic partnerships between Pemex, CFE and North American companies to undertake new gas distribution projects, further reinforcing the narrative of economic integration. This presents potential investment opportunities, particularly for LNG export plants along Mexico’s Pacific coast. We expect to see continued pressure on energy transition from the US until the end of President Joe Biden’s term. The next major development to watch for is US presidential climate envoy John Kerry’s upcoming visit to Mexico, his eighth during AMLO’s presidency. The agenda for the visit includes exploring potential energy projects in the southern Mexican region of Istmo de Tehuantepec, which the AMLO administration is promoting as an industrial corridor with 10 parks, four of which would be designated for wind energy.  


  • With external pressure from the US mounting, renewable energy appears to be gaining momentum in Mexico.
  • President Andres Manuel Lopez Obrador (AMLO) is currently banking on the Sonora Plan, a $48bn strategy focused on the development of clean power and manufacturing, as the key driver of energy transition.
  • Our forecasts remain conservative. With the 2024 presidential elections approaching, we do not expect any drastic changes in the coming months unless the administration establishes a concrete plan to add more renewable capacity to the country’s energy mix – an unlikely prospect.


personality of the week

Alfonso Durazo

Governor of Sonora

Durazo is an experienced political strategist. He counts on three decades of experience in Mexican politics, having worked with the Institutional Revolutionary Party (PRI), the National Action Party (PAN) and the National Regeneration Movement (MORENA). Durazo holds a law degree from the Metropolitan Autonomous University and studied civil engineering at the National Autonomous University of Mexico (UNAM).

He joined AMLO’s presidential campaign in 2006 and was later elected as a federal deputy in 2012. From 2015-2018, Durazo directed MORENA’s Executive Committee in Sonora. He subsequently served as a senator, but requested a leave of absence from his seat after AMLO appointed him minister of public security and citizen protection. Durazo resigned as minister in 2020, and was elected governor of his home state in 2021.

We expect Durazo, one of AMLO’s closest allies, to play an important role in the 2024 elections. He is also the head of MORENA’s National Council, thanks to the support of many governors who see him as a guarantor of impartiality in the succession race – in contrast to MORENA President Mario Delgado, who appears to favor Mexico City Mayor Claudia Sheinbaum.

Durazo is known for adjusting his political views to suit the times. Recently, he has hosted the three potential presidential candidates in Sonora. Of note, he has stated that Mexico is ready for a female president, referring to Sheinbaum, while also inviting Interior Minister Adan Lopez to speak during his first performance report as governor. Meanwhile, he says that Ebrard has been preparing to become president his whole life.

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