Electricity & Industrial Buildings in Mexico

One of the fundamental aspects for a foreign company that has decided to start operations in Mexico is the purchase or lease of an industrial building for its production plant. Therefore, during the selection process, additionally to the considerations of location, labor force available, roads and infrastructure of the area, and recently the availability of sufficient electricity power, it is highly recommended to have an experienced team to advise them throughout the selection, in order to ensure the timely fulfillment of their production plans and financial forecasts. 

In March 2025 and in continuance with the project of the former President Andrés Manuel López Obrador, President Claudia Sheinbaum enacted a sweeping energy reform package that restructures Mexico’s power sector in favor of state-owned companies (Federal Electricity Commission “CFE” and Petroleos Mexicanos “PEMEX” ), these reforms represent a "reverse" of the 2013 energy reform, implemented during the government of former President Enrique Peña Nieto, which opened the energy sector to private and foreign investment. Under the new laws, at least 54% of the electricity dispatched to the national grid must come from the (CFE) plants, leaving up to 46% for private sector producers, this 46%, combined with other technical and operational restrictions, is insufficient to meet the current needs of the industrial sector in Mexico. The agenda of President Claudia Sheinbaum aims to add 22 gigawatts of new power generation capacity by 2030, meanwhile, there is a lack of electricity generation by the CFE to fulfill the requirements of the industry and homes in Mexico. 

During the last years, industrial developers have faced the lack of capacity of the Federal Electricity Commission (CFE). The later has become a serious problem for either companies and industrial developers, because even if there are industrial buildings available, in many cases they can’t guarantee the supply the electrical demand required by their clients, which in certain cases becomes a determining factor when choosing an industrial building and sometimes involves the relocation of their establishments. 

Once the parties have reached an agreement to lease or buy an industrial building, it is very important that the company knows the amount of energy available at the property, and if it’s under a lease before the signing of the lease agreement. Typically at the time of the negotiation of the Letter of Intent, the parties must reach out the terms and conditions under which the electricity will be supplied to the leased property. Although the landlord may have sufficient KVA’s rights to fulfill potential tenant’s requirements, this cannot be understood as a guarantee that the Federal Electricity Commission (CFE) will supply to the tenant all the KVA offered by the landlord. Therefore, it is advisable to include some considerations in the lease agreement: 

1. Ensure that the landlord has the KVA´s rights offered under the letter of intent and lease agreement; if applicable, include the obligation of landlord to assign the KVA’s rights in favor of the tenant. 

2. Tenant must take into consideration that, as mentioned before given the limited availability of KVA’s, the Federal Electricity Commission (CFE) will request the tenant an engineering study that demonstrates the use by the tenant of the KVA’s required before granting the full load. If the tenant cannot prove use of the full load, CFE will only authorize up to the load that can be demonstrated. 

3. Another important issue that must be considered within the lease agreement is the specific work required by the Federal Electricity Commission (CFE) to supply the required load; specific works are understood as the construction of infrastructure from a specific point to the location of the leased property (poles, wiring, etc.) this can be  a distance of a few miles. The parties must determine who will pay and be responsible for the specific work. 

Industrial leases are long-term business relationships, in which both parties are interested in a win-win negotiation. It is essential to establish achievable commitments from the beginning in order to avoid future problems, therefore in the specific case of the supply of electricity, the lessor must provide certain information about the amount of KVA that can be guaranteed to the lessee, and the lessee must provide a calendar with the demand for electricity that will be required for its project to establish the necessary agreements . 

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