As the second-largest economy in Latin America with more than 40 million electricity customers, growing demand for power, and significant potential untapped renewable energy resources, Mexico is well positioned to expand its power generation from renewables. The energy reform has created many incentives to facilitate investment in renewables. However, a number of challenges remain.

To overcome these hurdles, Mexican policymakers should focus on three key areas. First, they should improve grid management by increasing the capacity and efficiency of the transmission and distribution system, improving demand-side management, and incentivizing distributed energy. Second, they should make renewable energy more competitive by expanding fiscal incentives for certain technologies and building up the local industry. Third, they should garner local community support for renewable energy infrastructure by improving the process for land consultation and disputes and developing community energy systems.