Mexico is one of the countries best suited to meeting increasing electricity and heat demand with solar energy. According to think tank EMBER, solar energy coupled with batteries could successfully cover 90 per cent of Mexico’s total electricity demand, leaving just 6 per cent of excess supply. Mexico currently has the second largest solar energy industry in Latin America, with 12.6 gigawatts (GW) of installed photovoltaic (PV) capacity by the end of 2024, according to Mexican Solar Energy Association ASOLMEX.
Nevertheless, EMBER states that only 7.7 percent of electricity produced in 2024 was solar. To achieve Mexico´s clean energy goals of 38 percent of clean electricity by 2030 and 45 percent by 2035, government is trying to speed up PV deployment.
Following a decree from October 2025, which sets clearer rules for private investments, different large-scale PV and battery proposals popped up in the market, dominated by activities of Mexican state-owned utility CFE. At the same time, Mexico is a booming market for solar heat: With 4.5 gigawatt thermal (GWth), it is also the second largest market for solar heat in Latin America, showing excellent business growth in niches like solar process heat.
The Power Sector Development Plan (PLADESE) 2025 – 2039 from Mexican Energy Ministry SENER foresees nearly 25 GW of new clean energy capacity by 2030, including renewables and storage, with solar accounting for the largest share of new additions. Market development follows a dual structure: large-scale PV projects are closely linked to grid expansion and public-sector participation via the state utility CFE, while distributed generation continues to expand through private investment driven by self-consumption economics.
The solar thermal sector grew constantly over the past decades, achieving the highest annual growth rate worldwide in 2024 with 14 percent, according to the report “Solar Heat Worldwide” from SHC.
Legal uncertainty and higher costs for large-scale PV systems are main obstacles for a quicker solar energy application in Mexico. With strengthening Mexican state-owned CFEs role in electricity planning and generation with a new mixed investment scheme for renewable power generation, requiring a minimum 54 percent direct or indirect participation by CFE, legal uncertainties for private capital increased. This raises operating costs and undermines competitiveness in the global market.
Comparatively higher costs for PV plants are another challenge for Mexico: EMBER states that according to International Renewables Agency IRENA and CFE data, “solar costs in Mexico are 38 percent higher and battery costs nearly double global level”. At the same time, Mexico’s binding planning framework PLADESE signals sizeable upside for solar. In addition, the new 0.7 megawatts (MW) permit-exempt threshold and simplified permitting for 0.7–20 MW self-consumption projects could unlock faster growth in commercial and industrial behind-the-meter PV.
For solar heat, having to compete with US-prevenient gas and missing decarbonization goals for the heat sector are challenges that hinder a broader implementation. Nevertheless, payback time of solar heating systems in the commercial and industrial sector range between 2 and 4 years with collectors locally manufactured.
Mexico is a standout global player in solar heat for industrial processes (SHIP), even though the segment remains niche worldwide. Solrico data shows Mexico has installed at least 273 SHIP plants since 2016, the highest number globally; 22 plants totaling 2.6 MW were added in 2024 (four more than in 2023). Notably, four Mexican turnkey SHIP suppliers have each delivered 10+ installations.