BBVA Mexico Backs Mixed Model for Power Generation
Carlos Serrano Herrera, chief economist at BBVA Mexico, published an analysis on June 18 in El Financiero supporting a mixed investment approach to expand Mexico's electrical grid. He called it positive that the Federal Electricity Commission (CFE) combine public and private capital given the current fiscal climate.
Serrano argued that the Mexican government faces tight fiscal constraints, with programmable spending representing just 8% of GDP. Under these conditions, the mixed model allows the nation to boost generation capacity without straining public finances. The recently awarded package of 37 projects spanning 7,411 megawatts equals the total of all electricity auctions held between 2012 and 2018, illustrating the scale of the initiative.
Key Points
- 37 contracts awarded to 31 private developers for 7,411 MW
- Total investment near $7.4 billion across solar and wind projects
- Reliable electricity supply is Mexico's primary constraint for attracting foreign investment to industrial parks
- Recommendation to expand the model to rail, highway transport, and upstream Pemex operations
A Competitive Edge
Serrano emphasized that adequate power supply has become the main bottleneck limiting foreign investment in Mexican manufacturing hubs. Expanding capacity supports Mexico's strategy to attract production relocating from Asia to North America and strengthens its competitiveness against rival manufacturing destinations.
As of June 18, the Energy Ministry had not confirmed a construction timeline for the 37 projects. Additional capacity will be needed as Mexico's National Energy Control Center projects peak summer demand reaching approximately 54,000 megawatts.
Frequently Asked Questions
**Who supports Mexico's mixed electricity investment model?**
Carlos Serrano Herrera, BBVA Mexico's chief economist, published an analysis on June 18 in El Financiero endorsing the CFE's mixed investment model. He argues it allows capacity expansion without burdening public finances, given that programmable spending represents just 8% of GDP.
**How many megawatts did the CFE award under its mixed scheme?**
The Federal Electricity Commission awarded 37 contracts to 31 private developers totaling 7,411 megawatts. The roughly $7.4 billion investment equals the sum of all electricity auctions from 2012 to 2018, according to BBVA Mexico's analysis.
**How much additional electrical capacity does Mexico need by 2026?**
The National Energy Control Center projects that peak summer electricity demand will reach 54,000 megawatts.