Solar in Mexico has two separate stories running at once, and an industrial buyer has to keep them apart. The cost and resource story is as good as it has ever been. The policy and grid-access story got worse, and it is the one that decides whether a given project reaches commercial operation.
As of today the reform to the Ley de la Industria Eléctrica published in the DOF on 9 March 2021 is law but is largely blocked in practice by amparo suspensions, an acción de inconstitucionalidad against it is pending before the Suprema Corte, and a constitutional electricity reform initiative sits before the Cámara de Diputados. No long-term auction has been held since 2017 and none is scheduled.
Our read is that the outlook for solar in Mexico is strong on economics and weak on route to market, and that the gap between those two is where a plant director should be spending attention. The one route that stays open through all of it is generación distribuida, which is capped at generating capacity below 0.5 MW and does not require a CRE generation permit.
Where installed solar capacity actually stands
Figures for Mexican solar capacity circulate on inconsistent bases, and the difference between them is larger than most of the movement being described. Two counts matter, and they are not the same count.
SENER's PRODESEN put solar photovoltaic capacity in the Sistema Eléctrico Nacional at 5,149 MW at 31 December 2020, against 6,504 MW of wind and a total installed capacity of 83,121 MW on the same date. Separately, CRE's distributed generation statistics recorded 1,551.09 MW across 211,098 interconnection contracts at 30 June 2021, predominantly solar, as reported by pv magazine México on 26 June 2021. CRE data reported by Energía Estratégica has distributed generation passing 2,000 MW during 2021.
ASOLMEX gave a combined figure of 5,510 MW of total installed photovoltaic capacity as of 31 March 2020, comprising 67 utility-scale plants across 16 states plus 818 MW of distributed solar across 112,660 contracts, reported by Global Energy in April 2020. That combined number is not comparable to a utility-scale-only figure, and mixing the two is how a 10 GW claim gets made. On any consistent basis, Mexican solar in early 2022 is a mid-single-digit gigawatt fleet, not a ten gigawatt one.
The resource and the cost curve
SENER and the Instituto de Investigaciones Eléctricas reported that roughly 90% of Mexican territory receives daily global solar irradiation between 5 and 6 kWh per square meter per day, with the strongest resource in the northwest across Baja California, Sonora, Sinaloa, Chihuahua, Coahuila and Durango, and the weakest along the Gulf and in the southeast. That characterization was presented at COP16 in Cancún in December 2010.
On cost, IRENA put the global weighted-average total installed cost of utility-scale solar photovoltaic at USD 883 per kW in 2020, down 81% from USD 4,731 per kW in 2010, with a global weighted-average levelized cost of USD 0.057 per kWh, in Renewable Power Generation Costs in 2020, published June 2021. Those are global utility-scale figures in nominal USD. They are not a quote for a Mexican rooftop system, and a per-watt price taken from a residential market in another country is not one either. Anyone benchmarking a proposal should insist on a delivered price per MWh at their own site rather than a per-watt hardware figure.
What the clean energy target actually says
Mexico's target is 35% clean energy participation in electricity generation by 2024, set by Transitorio Tercero of the Ley de Transición Energética, with interim steps of 25% by 2018 and 30% by 2021. It is not a 2012 climate law target and it is not a renewables target.
The distinction has money attached to it. Energía limpia is defined in Article 3 of the Ley de la Industria Eléctrica and includes nuclear generation and efficient cogeneration meeting CRE criteria alongside wind, solar, hydro, geothermal and biomass. Laguna Verde's output counts toward the 35%. A corporate buyer with a renewable-specific commitment, whether from a parent company or a customer, cannot discharge it with a clean energy certificate alone without checking what generated it. That is a procurement specification question, and it belongs in the contract rather than in the sustainability report.
The route to market is the constraint
CENACE suspended the fourth long-term auction on 3 December 2018 and announced its cancellation on 1 February 2019. That was three years ago, not a recent event, and nothing has replaced the process since. For a developer, the auction was a bankable 15-year offtake with a state counterparty. Its absence pushes new projects onto bilateral contracts with private offtakers, which changes the credit analysis and the cost of capital behind every offer an industrial buyer receives.
The 2021 LIE reform compounds it. Its operative changes were a dispatch order favoring CFE's own generation ahead of private wind and solar, and an extension of clean energy certificate eligibility to CFE legacy plants, which diluted certificate value for post-2014 private renewables. It did not amend the Constitution, eliminate the Mercado Eléctrico Mayorista or abolish private generation permits. Its application has been widely suspended by amparos. The honest description as of March 2022 is a statute in force whose effects are mostly held back by courts, with the constitutional question still open.
Land and transmission are the physical constraints behind the legal ones. Sites with the best irradiation in the north sit far from the largest loads, and interconnection capacity, not module supply, sets the queue.
Why onsite generation is the part that still moves
Generación distribuida in Mexico is capped at generating capacity below 0.5 MW. The threshold comes from SENER's Manual de Interconexión de Centrales de Generación con Capacidad menor a 0.5 MW, published in the DOF on 15 December 2016, and from CRE Resolución RES/142/2017, published in the DOF on 7 March 2017. There has never been a simplified permit track for projects between 500 kW and 2 MW.
Two details get misstated often enough to break project schedules. The limit applies to the generating capacity of the plant, not to the facility's load, so a large plant can host a compliant sub-0.5 MW array and keep buying the balance from CFE. And the limit is written in MW of capacity, not in kWp of DC panel rating, which is a different measurement and normally the larger number on a modern system.
Staying below 0.5 MW removes the CRE generation permit. It does not remove the paperwork. The project still requires an interconnection contract with CFE Distribución under the small and medium-scale interconnection regime, and CFE Distribución controls the study, the meter and the energization date.
CRE RES/142/2017 sets three contract modalities and the choice is commercial rather than technical. Under medición neta, exports are netted against the site's own consumption and surplus accrues as energy credits usable for up to 12 months, with only unused credits paid out at the Precio Marginal Local. Under facturación neta, generation and consumption are metered and valued separately, with exports compensated at hourly market prices. Under venta total, all output is sold at PML values and there is no associated consumption contract at the interconnection point. Migration is allowed only after one year of operation. Medición neta is not selling power back to the grid. Only venta total is an outright sale.
What a savings figure is measured against
Savings from onsite solar are commonly quoted in a 20% to 40% range. Savings in this range are measured against current CFE supply and vary with tariff class, region, load factor and consumption profile. The figures are illustrative. No range can be confirmed for a specific site without interval data and 12 months of billing. Structures that require no upfront capital are available subject to credit review and contract term.
The reason the spread is that wide is the shape of a GDMTH bill. Solar output lands in the base and intermedio hours and does little for a punta-period demand charge after sunset. Two plants with identical annual consumption and identical tariffs can land at opposite ends of the range on load shape alone.
What would change our view
Three things would move this. A resolution of the constitutional question that leaves the Mercado Eléctrico Mayorista intact would restore bilateral contracting confidence and compress offered prices. A new long-term auction, or any state-backed offtake mechanism, would reopen the utility-scale channel. A rise in the distributed generation threshold would change what onsite generation can cover at a large industrial site, and it is the change with the most direct effect on the readers of this note. None of the three is scheduled.
Our work on utility-scale solar and on distributed generation in Mexico covers both sides of that split in more detail.
Test a solar proposal against your own load
Mexico Energy Partners can benchmark a solar offer against your current CFE cost, separate the energy saving from the demand charge it does not touch, and set out the interconnection sequence and its timing. The review needs 12 months of CFE billing, interval data where the meter records it, and the proposal or term sheet under consideration.