Families and businesses across Mexico face a frustrating and costly problem: the electricity grid is not reliable. Power outages, or “apagones,” happen often. Sometimes they last for just a few minutes, and sometimes for hours.
These blackouts are more than just an inconvenience. They disrupt daily life, force schools and hospitals to use expensive backup generators, and make it harder for Mexican companies to compete. The heart of this problem is the country’s national electrical grid, which is largely controlled by the state-owned company, the Federal Electricity Commission, or CFE.
Aging CFE Infrastructure
A big part of the issue is that much of Mexico’s power comes from old and tired infrastructure. Many of the CFE’s most important power plants run on fuel oil and diesel. Built decades ago, these plants are inefficient, expensive to operate, and fail frequently. When one of these large plants suddenly stops working, it creates a massive hole in the country’s power supply. The rest of the system has to strain to cover the loss, which can lead to cascading failures across many states.
The problems continue beyond the power plants themselves. The vast network of cables, transformers, and substations that carry electricity from plants to cities and homes—known as the transmission and distribution network—has suffered from years of not enough investment.
To make matters worse, Mexico’s grid is highly centralized, meaning a serious fault in one region can quickly ripple across the country. There aren’t enough modern safeguards or alternative power pathways to isolate a problem and keep it from becoming a national blackout.
In the face of this reality, the Mexican government and the CFE have launched a major effort to strengthen the grid. The central pillar of their strategy is a significant reinvestment in the CFE itself. The government’s policy is centered on “energy sovereignty,” the idea that Mexico should produce its own power without over-relying on foreign energy. While on paper, this path sounds optimal, it should be noted that Mexico has long been a net energy importer, with between 55% and 75% of its fuel coming from abroad.
In practical terms, this means the CFE is building new power plants, with a focus on modern natural gas plants that are more efficient and reliable than the old oil-burning ones. They are also spending billions of pesos to repair and upgrade the existing fleet of old plants to make them less prone to failures.
But there is the fact that even with new, more efficient generators built to work on natural gas, several facilities like those recently refurbished in Mérida have not procured the infrastructure to fuel the plant.
Public Partnerships
At the same time, the CFE is setting up new frameworks to work with private companies. A recent announcement laid out clear rules, called “Mixed Development Schemes,” for how the CFE can partner with private firms on specific energy projects. While the CFE will remain firmly in control, these partnerships are designed to bring in private investment and technical expertise to build new power generation more quickly. The goal is to combine public oversight with private efficiency.
The problem with this scheme is that it places all of the risk on private investors, while the CFE sets the rules and can change pricing models with little to no notice.
“In the end, the CFE holds all the cards, and we are not only responsible financially, but also legally. This is not what one would call a win-win,” said Manuel Gutierrez, Director of the Spanish energy firm Energía Pueblo Solar.
Corruption, the Elephant in the Room
Corruption has long been a serious issue at the CFE. It typically involves complex schemes rather than simple theft, costing the public heavily. A common problem is with government contracts, where companies win lucrative deals by paying bribes to officials, not by being the best bidder. This leads to overpriced, poorly built, or delayed projects, which weakens the national grid and raises costs for everyone.
The CFE has also often been used as a political tool. Leaders frequently award jobs and contracts to allies for political gain, not based on skill or need. Major decisions are influenced by politics, preventing the CFE from operating as an efficient, modern service provider. Fighting this deep-rooted corruption is seen as essential to building a reliable and affordable electricity system for Mexico.
Another major form of corruption involves the powerful electrical workers’ union and company management. For years, there have been widespread reports of “ghost” employees—people on the payroll who do no actual work. This drains funds meant for critical maintenance and modernization, directly contributing to the grid’s frequent failures and blackouts.