Introduction
Mexico is currently facing a critical shortage of electricity, with reserves falling below 6% of the supply capacity. This information was previously readily available but has since been concealed behind the guise of national security, according to Roberto Mercado, a partner at energy consulting firm Epscon.
Historical Context and Previous Crises
Mexico experienced a similar crisis last year, with power outages occurring in various regions. The government’s solution was to restrict information starting in 2023, and the National Energy Control Center (Cenace) decided not to disclose the Operating Reserve Margin starting in 2024, citing national security.
This opacity is a hallmark of the regime, but it does not prevent power outages. In May of last year, alerts were issued at least four times. On July 7, 2024, power outages affected at least 21 states, exposing the operational emergency that lasted for three consecutive days.
Following a minor uptick, two more emergencies were declared on May 17, 2024. This situation was exacerbated by the extreme heat of 2024, which has been somewhat mitigated this year by a more abundant rainy season. However, the misguided attempt to monopolize the electricity industry, which had begun to find balance with private participation, has also contributed to the crisis.
The Regime’s Misunderstanding of Energy Sovereignty
The current regime views energy sovereignty as the recovery of state bureaucracy rather than ensuring timely and adequate energy availability, regardless of the capital that generates it. Electricity is an industrial product, but populist misunderstandings have clouded this reality.
This year, Mexico has experienced more rainfall and lower energy consumption due to cooler temperatures. The economy is on the brink of recession, limiting many productive activities. However, relying on these factors to explain the electricity shortage is unreliable.
The government’s policy shift to prioritize the unproductive operation of the Federal Electricity Commission and impose barriers on private investments has only worsened the bottlenecks, primarily evident in power outages.
Impact on Competitiveness and the Economy
The lack of energy availability, whether electricity or other fuels, results in a decline in competitiveness during critical periods when energy should be readily accessible.
The Cenace has even requested the industrial sector to reduce electricity consumption, particularly in northern regions, to prevent blackouts. This request comes as the economy is heading towards recession, with three consecutive months of job losses and near-zero growth projections for the year.
Despite these challenges, the industrial sector has shown resilience. For instance, the automotive industry achieved a record half-year performance. However, the electricity shortage now threatens to hinder this progress.
Key Questions and Answers
- What is the current electricity situation in Mexico? Mexico is experiencing a critical shortage, with reserves falling below 6% of the supply capacity.
- Why has information about the crisis been concealed? The government has used national security as a pretext to restrict information disclosure.
- What factors have contributed to the electricity crisis? Extreme weather conditions, misguided attempts at monopolizing the electricity industry, and government policies prioritizing unproductive state operations have all played a role.
- How does the electricity shortage affect Mexico’s economy? The shortage contributes to a decline in competitiveness during critical periods, exacerbating the economic challenges already present due to job losses and near-zero growth projections.
