Mexico’s geographic location and its world-class solar resources make it a prime candidate for solar energy development. To date, however, investment in the sector and government support for the industry has been quite limited, and solar energy has lagged far behind wind and geothermal generation. This paper argues that the northern border states of Mexico provide an extraordinary opportunity for investment in solar energy for local consumption by businesses and residential customers. Nonetheless, it is unlikely that large-scale generation for the national grid or for export to the United States will make economic sense in the near future. Several barriers continue to hold back the sector. Initiatives at Mexico’s state and national level are needed to pave the way for private investment. In the long run, solar energy holds the potential to significantly strengthen Mexico’s energy sector and economic development.