CFE sees energy reforms sparking up to US$9bn of private sector renewable energy investments

Mexico's federal power company CFE expects private renewable energy firms to invest up to US$9bn in the country by 2030 following the approval of wide-ranging power reforms by congress.

In an earnings presentation published Monday, CFE estimated that the private sector could invest US$6bn to US$9bn in developing 6.4GW to 9.6GW of renewable power capacity.

Under energy reforms approved by congress on Wednesday, CFE must maintain a share of at least 54% of the power generation market. The remaining 46% will be available to private sector producers.

The reforms will become law one day after their publication in the official government bulletin, which is expected for March 18.

CFE says it already generates 72% of Mexico's electricity, including power it purchases from independent producers.

That gives ample scope for the private sector to invest in new clean power projects in the country.

As well as developing their own generation projects, the new laws allow private companies to establish joint ventures with CFE up to a maximum stake of 46%.

CFE said these schemes would be one way of financing its US$12.3bn capex plan for generation in 2025-30.

Increased hedging

Meanwhile, amid rising natural gas prices, CFE increased its hedging program to 59% of its daily needs, up from 46% in Q3.

CFE generates more than 60% of its electricity using natural gas, of which an estimated 70% is imported from the US.

CFE's portfolio of hedges consists of call options which allow the company to buy natural gas at a price of US$2-4 per million British thermal units (MMBTU).

This protects the company against price increases while still allowing it to benefit as prices fall.

Prices rose above US$4/MMBTU at the end of 2024, CFE said.

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