Skip to main content


Global Solar PV Market Report

Key Regional Markets


Solar PV Capacity


GDP (Current Prices) USD (2022)
GDP Growth Forecast (constant prices) (2023-2027)
Mexican peso
Country Credit Rating (S&P)


Renewable Energy capacity (2022)
Solar PV Share in Renewables (2022)
Renewable Energy Target
35% of electricity generation from clean energy sources by 2024, 39.9% by 2033 and 50% by 2050
GDP Source: IMF WEO, S&P and IRENA
Thanks to its favourable geographical conditions, Mexico lends itself well to renewable energy development. Solar power is one of the most promising forms of energy generation among all renewable sources in Mexico because of the country’s excellent radiation. It is expected to play a crucial role in the expansion of renewable energy and in meeting Mexico’s net-zero carbon emissions target by 2050. An average of 300 days of sunshine every year provides significant potential for the growth of the technology. The Government of Mexico’s energy transition law, which aims to achieve 35% of its electricity generation from clean energy sources by 2024, 39.9% by 2033, and 50% by 2050, sets the base for overall renewable deployment in the country.


  • Distributed generation increasingly permeating the Mexican energy mix
  • Investment plan largely targeted towards the development of untapped solar potential at locations suitable for large utility-scale solar PV plants


  • Decrease in solar PV deployments due to unsupportive government policies
  • Permit delays, transmission constraints, policy changes, and a lack of return on investment discourages private sector participants from developing and participating in renewable energy projects

Renewable Energy Mix

Source: IRENA Renewable Capacity Statistics April 2023
Mexico’s renewable energy mix is dominated mainly by hydropower. However, solar and wind energy is gradually displacing hydropower from the leading position. In 2022, the share of solar power increased by 3% YoY, displacing the other technologies marginally. The marginal growth was facilitated by the distributed generation segment following the slowdown of utility-scale generation due to controversial energy reforms. The share of solar power grew sharply in the last six years to 2022 – it was only 5.7% in 2017. According to NREL, solar has the greatest untapped potential, which could attribute 77% of new renewable energy additions in the next decade. The remaining goes to wind (8.2%), geothermal (7.7%) and additional capacity from existing hydropower facilities (3.7%).

Installed Capacity: Status and Trend

Trend in Installed Solar PV Capacity

Source: IRENA Renewable Capacity Statistics April 2023

The jump in solar PV capacity addition can be observed since the end of 2017 – a period after capacity auctions led to the market entry of leading developers in utility scale PV projects. However, after registering a record capacity addition of 1.8GW on an average between 2018 – 2021, Mexico has seen a decrease in solar PV deployments in 2022 when capacity addition dropped below GW level. In the last decade until 2021 the constitutional reforms allowed the renewable sector to expand, resulting in significant growth in utility-scale solar and wind sectors. However, since 2021, the pro-fossil López Obrador administration’s policies have slowed renewables growth, by granting state-owned entities more control and suspending construction permits. This has stalled a significant portion of the large PV pipeline of the country to be materialized during the last year.

Demand Drivers

Although energy regulations have changed, Mexico has taken significant steps toward achieving its energy transition by allowing companies to invest in rooftop solar, also known as  distributed  generation, and generate their own electricity within their facilities. By policy norms, distribution generation refers to  the plant capacities up to 500kW. Such smaller systems are increasingly permeating the Mexican energy mix, especially now that larger-scale projects are being put on hold due to sector uncertainty.

In Mexico, distributed generation is gaining traction because it is the only thing moving forward, unaffected by new policies. In contrast to utility-scale projects, DG projects do not need a generation permit and can be approved in a matter of weeks instead of months or years. Distributed generation has become very competitive in recent years, and local incentives around it are growing quickly, although space and capacity are limited. Consequently, companies are increasingly turning to smaller-scale renewable options to reduce their carbon emissions while avoiding regulatory complications in Mexico. The sector enjoyed an annual growth rate of 45% between 2020 and 2021 and installations have increased significantly over the last decade.

At COP27, Mexico committed to expand its combined solar and wind capacity from 16GW currently to over 40GW by 2030. To expand clean energy capacity as targeted, Mexico also presented a preliminary investment plan for up to $46 billion, which will be largely targeted towards the development of untapped solar potential, as the country has some of the best locations for large utility-scale solar PV plants that remain to be commercially exploited by prospective investors and developers seeking projects at locations with competitive costs. The country’s southeast region is particularly rich in this regard.

Market Opportunity

Solar thermal energy is progressing at an accelerated pace in Mexico. With c.4GW of installed solar thermal capacity, Mexico has the largest number of solar heating systems for industry in the world. Despite its dynamism, it still has enormous potential that could trigger investments worth at least US$634 billion. Solar thermal energy along with distributed generation are boosting solar energy’s installed capacity, since large-scale projects are being stopped because of uncertainty generated by the new energy policy.

As a result of the energy reform (2013-2014), the industrial sector has expressed a strong interest in renewable energy projects. Private sector participants recognize that there are still challenges to developing and participating in these projects, including permit delays, transmission constraints, policy changes, and a lack of return on investment. It is important to note that small-scale projects face lesser permitting hurdles than larger projects. While these challenges exist, the industrial and commercial sectors offer significant opportunities for energy exports.

Commercial deployment of energy storage solutions could be a catalyst for the Mexican solar PV market, especially in the small-scale or rooftop solar segment. Although, compared with more widespread developments in the US and several European countries, Mexico’s energy storage operations are in their infancy, the advancement of battery materials and related technologies is making this segment more attractive, while at the same time falling battery costs are encouraging smaller energy companies to invest. To combat more frequent blackouts, Mexico has recently developed hybrid power stations that generate solar power and store battery power. In January 2023, The Ministry of Environment and Natural Resources (Semarnat) authorised the construction of a transmission line for the Puerto Peñasco Photovoltaic Power Plant. Once completed, the full $1.6 billion project will have a generating capacity of 1GW of solar PV and 190MW of battery energy storage.

Meanwhile, the grid infrastructure has a significant scope of investment considering the rising demand on the network from varied renewable energy generation resources. In this regard, on June 1, 2022, the Secretariat of Energy (“Secretaría de Energía or SENER”) published the 2022- 2036 National Electrical System Development Program (“PRODESEN”), which specifically includes provisions concerning the modernization of the electrical system, which includes combined cycle, transmission, and distribution projects. In addition, Mexico has all of the key characteristics to develop into a robust smart grid market. Earlier in 2020, Mexico’s energy regulator Comision Reguladora de Energia (CRE) developed a smart grid Roadmap that highlighted the potential of the smart grid market to reach $12.1 billion by 2023, with annual spending ramping up from $205 million in 2014 to $2.1 billion per year in 2023.


Source: BNEF Global PV Market Outlook
Note: The above data, as sourced from BNEF, are based on a ‘low’ investment scenario

Mexico’s renewable energy industry is poised to play a key role in decarbonizing the economy, electrifying rural areas, and strengthening the country’s transport system through renewable energy. The US Department of Energy estimates that Mexico has the technical potential of 24,918GW of solar PV across its entirety.

Despite ample opportunities for solar investment in Mexico, recent legal and regulatory changes are hampering  investors’  appetite  big time due to risks associated with new project development. A number of reforms have been implemented by the Mexican government that will impede the development of private renewable energy projects. A new set of rules will allow the country’s state-run electric company, the CFE, to prioritize fossil fuel-produced electricity instead of less expensive electricity produced from solar and wind. In turn, this fuelled the trend of renewable projects being shelved, mothballed, or cancelled (a total of 11.6GW), which reveals the challenging development conditions in the country, including a lack of legal authority and long approval processes.

These policies are expected to impede the deployment of renewable energy further, at least in the near future, as there is no sign yet for these regulatory uncertainties to be alleviated. As a result, a spike in fossil fuel investments has been observed in recent times. The Global Gas Plant Tracker estimates Mexico has 13.3GW of prospective gas projects, more than twice its prospective solar and wind projects combined (6.7GW). The López Obrador administration has been upholding policies that favor fossil fuel power plants owned by the Federal Electricity Commission (CFE). Therefore, utility-scale solar and wind development interests are unlikely to increase due to the shift in policy focus. Moreover, legal barriers are curtailing foreign direct investment into the renewable sector.