Overview of the energy reform in Mexico

The Energy Reform passed in October 2024 promises to transform the country’s energy landscape by returning control of energy to the state, reversing the opening up to private sector investment that had been in place since 2013.

The new legislation establishes Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) as public institutions of the State, with a focus more on social welfare than on economic profitability. This new reform has generated controversy and expectations that deserve careful analysis.

What is the energy reform?

The Energy Reform, both at a constitutional level and in terms of secondary legislation, is the result of the study and evaluation of different political initiatives presented in Congress. It seeks to modernize the energy sector in Mexico, but without privatizing the public companies that are dedicated to the production and use of electricity and hydrocarbons.

This initiative modifies articles 25, 27 and 28 of the Mexican Constitution and confers on the State the responsibility for the transition to renewable energy sources. It also establishes that Pemex and CFE are once again considered state-owned public companies and that under no circumstances should private companies prevail over state-owned companies.

The Energy Reform has caused a great stir, as there are many factors that can affect its development and its impact on the population. Some specialists mention that it will be in 2025 when it will be clearly defined, essentially due to the following key aspects:

• The conflicts in the Middle East and Ukraine: Two critical areas for the production and trade of natural gas and hydrocarbons.
• The energy policy of the United States: With Donald Trump at the helm, a potential change in the energy landscape at the regional and global level is expected.
• National Development Plan: By the end of February 2025, the vision, mission, objectives and projects of the current government will be clearly set out.
• The secondary legislation of the Energy Reform: This will aim to establish the new nature of Pemex and CFE as public companies, as well as clearly defining the concept of the “prevalence” of the state actor over the other participants.

What does the energy reform consist of?

The main changes approved by the Chamber of Deputies and sent to the Senate contained in this reform are as follows:

• Article 25 of the Constitution: The fifth paragraph is amended to read as follows: “The state-owned enterprises lose their operational independence when they return to being public enterprises”. This makes it clear that the government will retain ownership and control over the state-owned agencies and enterprises related to the CFE and Pemex.
• Article 27 of the Constitution: The sixth and seventh paragraphs are amended in the following points:
• – No concessions will be granted for the exploitation of lithium.
• – In activities where there is private sector participation, the private sector will not have precedence over the state-owned company.
• – The essence of Mexico is to fulfill its social responsibility and guarantee an accessible and constant public electricity service at reduced rates.
• – The possibility of the State entering into contracts with private individuals related to energy is eliminated if the terms established by law are not fulfilled, under a clear regulatory framework of equity and sustainability.
• Article 28 of the Constitution: The fourth paragraph is modified:
• The non-establishment of monopolies is added for the functions that the State exercises in the exploitation of lithium, the state internet service and the activities carried out by public companies.
• For the national electricity system, the objectives of preserving the energy security of the nation and its self-sufficiency are added, in addition to providing the people with electricity at the lowest possible cost.
• Rail transport services are included as a priority area for the country’s development.
• A figure is included in the allocations for satellite communication and rail service.

Objectives and premises of the Energy Reform

These are the fundamental objectives of the reform:

• To maintain the property of Mexico over the hydrocarbons located in its subsoil.
• To modernize and strengthen Pemex and CFE as productive state enterprises.
• To reduce the country’s exposure to geological, environmental and financial risks in hydrocarbon exploration and extraction activities.
• Allow the State to exclusively plan and control the electricity system.
• Attract investment to the energy sector to favor the country’s development.
• Have a greater energy supply at better prices.
• Ensure international standards of quality, efficiency and reliability of transparency, supply and accountability.
• Fight against corruption in the energy sector.
• Strengthen the management of oil revenues and boost savings.
• Stimulate responsible development and protect the environment.

How does the energy reform affect this?

The most notable benefits that Mexicans will obtain thanks to the Energy Reform are the following:

• Lower electricity and gas prices.
• Percentage of proven oil and gas reserves restored to over 100%.
• Increase in the production of oil barrels (from 3 million in 2018 to 3.5 in 2025) and increase in the production of natural gas.
• Generation of two percentage points of economic growth by 2025.
• Creation of more than two and a half million jobs by 2025.
• Replacement of the most polluting electrical systems with natural gas and clean technologies.

However, the reform has also been criticized, with business organizations such as Coparmex (the Mexican Employers’ Confederation) expressing concern about some of the disadvantages of the Energy Reform:

• Although private investment is being considered, some experts describe the initiative as incomplete and driven by ideology rather than by a constitutional basis.
• Preference for the CFE as a public company, which may make it less competitive. In turn, granting this preference without considering environmental impacts and costs could turn it into a subsidized entity, with the substantial problems that this entails.
• The electricity reform may lead to a lack of interest in investing in renewable projects by private enterprise.
• Legislative and supply problems, which can lead to blackouts and social conflicts due to lack of electricity.
• The reform could reduce the competitiveness of the country and have a negative impact on treaties with Canada and the United States.

How does Industronic contribute to energy reform?

Within the Energy Reform, the transparent and sustainable participation of the private sector is a fundamental piece that helps to fulfill objectives. In this respect, Industronic offers cutting-edge solutions for energy quality for the protection, backup and generation of energy in different industrial sectors.

In addition, with the aim of continuing as a pioneering company in the technological development of energy quality, expansion of its products and socially responsible action, Industronic has consolidated its position as a leader in the regulation, backup, optimisation and generation of electrical energy.

Tools for maintaining quality energy

The devices created by Industronic’s research and development division are characterized by their efficiency and sustainability, their cutting-edge design and their commitment to continuous improvement.

Photovoltaic system or solar panel

These provide electrical energy from solar energy.

• Connected to the grid: They are used in conjunction with traditional electrical installations. They guarantee high performance, as energy is used efficiently. Furthermore, solar panels are made with materials for extreme climates.

Electricity monitor

The energy monitor is a device for commercial or industrial use that monitors anomalies related to electricity consumption. By providing real-time data, it is possible to make appropriate decisions regarding electricity consumption:

• It allows detecting the moment when appliances start to consume excess electricity.
• It favors the saving of resources, as it identifies vulnerable equipment and indicates the best time to replace it.
• It contributes to the reduction of greenhouse gases by maintaining optimal energy consumption.
• It facilitates the programming of electrical appliances at the best time.
• It helps to monitor the efficiency of lighting and air conditioning systems to ensure better use.
• It detects electrical problems in the grid that could be affecting your machines or critical equipment.

The MDE-IND energy monitor has additional functions, such as historical data storage, alert systems and compatibility with different applications.

The current Energy Reform represents a profound and significant change in Mexican energy policy, with the power to restructure the relationship between the state, the energy sector and private enterprise. Although it seeks to strengthen energy sovereignty and ensure access, it also poses challenges in terms of investment and sustainability. Fortunately, it can travel the road alongside companies such as Industronic, which offers a wide range of energy solutions aimed at efficiency, innovation and energy quality.