For a plant deciding whether to put solar on its roof, the technical questions are usually settled quickly. The commercial question that decides the payback is which of CRE's three distributed generation contract modalities the project signs under, and it is the one most proposals leave out.
The regime is set by CRE Resolución RES/142/2017, published in the DOF on 7 March 2017, and by SENER's Manual de Interconexión de Centrales de Generación con Capacidad menor a 0.5 MW, published in the DOF on 15 December 2016. Between them they cap generación distribuida at generating capacity below 0.5 MW, define how the project connects, and define three ways of valuing what the system exports. CRE is the regulator here, not CFE, and not CENACE.
Mexico now has more than 2,000 MW of distributed generation installed, almost all of it solar. Our read is that the growth is real, that the 0.5 MW cap is the binding constraint on how much of a large industrial load it can reach, and that the modality choice is where most of the value is won or lost.
Where the market actually is
CRE's semi-annual distributed generation interconnection statistics recorded 1,551.09 MW across 211,098 interconnection contracts at 30 June 2021, as reported by pv magazine México on 26 June 2021. CRE data reported by Energía Estratégica shows installed distributed generation capacity passing 2,000 MW during 2021, with roughly 480 MW added over the year. CRE's own statistics page has not been reliably accessible since, so we treat the end-2021 figure as "more than 2,000 MW" rather than quoting a precise number.
The composition matters more than the total. This is a fleet of hundreds of thousands of small systems, dominated by residential and small commercial sites, with average system size well under 10 kW. An industrial site putting in a 450 kW array is an outlier in that distribution, not a typical participant, and it will find the installer market shaped accordingly.
The 0.5 MW cap and what it limits
Generación distribuida in Mexico is capped at generating capacity below 0.5 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. A 6 MW plant can host a compliant sub-0.5 MW array and continue buying the balance from CFE Suministro Básico or from a Suministrador de Servicios Calificados. Nothing about the size of the load disqualifies the site.
And the limit is written in MW of capacity, not in kWp of DC panel rating. Those are different measurements, and on a modern system the DC panel rating is normally the larger of the two. A proposal quoted at "495 kWp" has not yet answered the question the regulation asks. Reconcile the basis before signing, because the consequence of getting it wrong is a project that needs a CRE generation permit it was never scoped for.
NREL's April 2022 assessment, Mexico: North American Clean Energy Powerhouse, recommends that Mexico consider expanding the 500 kW capacity limit. Nothing has been proposed to that effect. For planning purposes, 0.5 MW is the number.
Staying under the cap removes a permit, not the paperwork
Below 0.5 MW no CRE generation permit is required. The project still requires an interconnection contract with CFE Distribución under the small and medium-scale interconnection regime. CFE Distribución runs the technical review, authorizes the bidirectional meter and sets the energization date. That sequence sits on the critical path and the EPC contractor does not control it. A schedule that assumes no approvals at all is a schedule that will slip.
The three modalities, and why the choice is commercial
CRE RES/142/2017 sets out three contract modalities. Migration between them is permitted only after one year of operation, so the initial choice holds for at least twelve months.
- Medición neta (net metering). Energy flows between the generator and its associated load centers are netted across the distribution network. Surplus generation accrues as energy credits carried forward against future consumption for up to 12 months, and only credits still unused after that period are paid out, at the Precio Marginal Local. This is the default regime.
- Facturación neta (net billing). Generation and consumption are metered and valued separately and independently. Exported energy is compensated at hourly market prices rather than netted against the retail tariff.
- Venta total (total sale). All output is sold at Precio Marginal Local values. It applies where there is no associated consumption contract at the interconnection point.
Medición neta is not selling energy back to the grid, and describing it that way overstates what exports are worth. Under medición neta a surplus kilowatt-hour offsets a retail kilowatt-hour you would otherwise have bought, and only if the site consumes it within twelve months. Only venta total is an outright sale.
The choice follows the load shape. A plant running three shifts consumes almost everything it generates and gains little from export treatment, so medición neta and the simplest possible design is usually right. A single-shift plant with quiet weekends generates surplus it cannot absorb, and under medición neta those credits can expire unused. That site should either size the array to its weekday daytime load rather than to its roof, or model facturación neta and compare hourly market compensation against the retail tariff it would otherwise offset. Neither answer comes out of an annual consumption figure. Both require interval data.
What NREL's modeling says about the next two years
NREL published Mexico: North American Clean Energy Powerhouse, DOE/GO-102022-5721, in April 2022, authored by Riccardo Bracho, José Alvarez, Alexandra Aznar and colleagues. It models three deployment scenarios. The reference case is business as usual. The ARE scenario adds 3,935 MW from renewable projects at more advanced stages of permitting, financing, interconnection or early construction. The ARE+ scenario adds 6,485 MW from projects at less advanced stages.
Two of its findings bear on distributed generation directly. NREL projects 2,336 MW of solar distributed generation capacity added by 2024 across all three scenarios, meaning the DG build is not sensitive to which utility-scale path Mexico takes. And under ARE+, solar's share of electricity generation rises from 4.4% in the reference scenario to 10%, including distributed generation, which would make it the second-largest single source of clean electricity. NREL associates the solar build with roughly 22,000 construction jobs and about 1,000 operations and maintenance positions. Those are NREL's modeled figures, not observed outcomes and not our forecast.
Distributed generation below 0.5 MW does not queue for transmission, does not depend on a long-term auction and is not exposed to dispatch order. It is the segment of Mexican solar that policy uncertainty touches least, which is precisely why it kept growing through a period in which utility-scale development stalled.
Where the limits are
Distributed generation does not solve a reliability problem on its own. A grid-tied array without storage disconnects when the grid goes down, because anti-islanding protection requires it. Continuity through an outage requires storage or generation configured for island operation, which is a separate capital decision covered in our work on battery storage.
It also does not scale to a large load. At below 0.5 MW of generating capacity, a heavy industrial site is covering a fraction of its consumption. For loads above 1 MW of demand, the larger question is whether the site should register as a Usuario Calificado with CRE and contract supply competitively, where porteo and nodal Precio Marginal Local exposure become the variables that matter. Distributed generation and qualified supply are complementary decisions, not alternatives.
Five things to reconcile in the proposal
- Whether the quoted capacity is MW of generating capacity or kWp of DC panel rating, reconciled to the 0.5 MW basis.
- Which modality the proposal assumes, and what the model does with surplus after twelve months.
- The CFE Distribución interconnection timeline, from CFE Distribución rather than from the installer.
- The share of generation the site consumes directly, from interval data rather than annual totals.
- What happens to the array and the contract if the site's shift pattern changes or the lease ends.
Our note on the benefits of onsite solar in Mexico covers the sizing and financing side, and energy procurement covers the qualified supply route for the load a rooftop array cannot reach.
Decide which modality your site should sign under
Mexico Energy Partners can model a compliant sub-0.5 MW system against your actual load shape under each of the three CRE modalities and show what surplus is worth in each, alongside the CFE Distribución interconnection sequence and its timing. The review needs 12 months of CFE billing, interval data where the meter records it, the site address and a single-line diagram if one exists.