Energía Estratégica obtained a draft of the Mixed Investment Contract that will govern the mixed call for bids by the Federal Electricity Commission (CFE) , a document that reveals a scheme based on trust, reinforced guarantees, limited profitability and majority state control, which begins to give signs about the real conditions under which private capital will participate.
The first distinctive feature of the model is that it does not replicate a conventional auction or a traditional IPP scheme, but rather structures private participation through a Mixed Investment Trust , where CFE and the investor participate through differentiated units, with specific economic and political rights.
Among the most sensitive elements is the majority stake held by the state-owned company —at least 54% of the share capital— along with veto rights over key decisions and a shared governance logic.
This design is precisely what raises questions about the financial appeal of the scheme, since those in the sector warn that the massive interest generated by the call for proposals does not necessarily imply a structural improvement in the investment environment.
“Rather, it reflects a change in how investors perceive and learn to manage risk in Mexico,” said Jaime Delgado , legal and risk manager of Abeinsa Juárez N-III, in dialogue with Energía Estratégica .
Rather than a full reopening of the market, Delgado interprets the call for bids as “an intermediate adjustment” to incorporate private investment without the Commission losing control. And that control is not merely corporate: the private sector contributes capital for development, financing, operation, and maintenance, while CFE retains strategic levers of the project.
In addition, there is another key element of the contract: profitability is not entirely left to the market. The document stipulates that the Internal Rate of Return will be limited to the Target Return offered by the developer, a clause that introduces an explicit cap on the financial upside.
“The challenge will be the bankability of the projects, which will largely depend on the definition of the price per kWh that CFE will pay for this energy, since, in a project where CFE retains ownership of 54% of the project, the profits generated by a 100% private project are also reduced,” Delgado pointed out.
But the economic equation of the scheme is not limited to the limitation of returns. The contract reinforces the requirements for execution through a robust guarantee structure and a highly conditional path to achieving the commercial transaction.
To declare the Commercial Operation Date , the investor must demonstrate a series of technical, regulatory and operational milestones: completion of construction in accordance with the law, satisfactory performance tests, obtaining government authorizations, signing of the interconnection contract and the contract as a market-participating generator, Declaration of Entry into Commercial Operation by CENACE, delivery of the interconnection works to CFE, establishment of the Operational Guarantee and signing of the Commercial Operation Date Certificate by both parties.
With an oversupply of nearly 580% —37,749 MW submitted for an initial need of 7.5 GW— , CFE will have to discriminate between more than 200 proposals, so the guarantees seem to operate not only as coverage against defaults, but as an additional filtering mechanism for projects with greater technical and financial maturity.
The contract provides for three guarantees:
- The Development Guarantee , required from the signing of the contract, is equivalent to $15,000 per MW installed and covers obligations until the start of investment.
- Then there is the Investment Guarantee , for an amount equivalent to 3% of CAPEX , designed to cover penalties and deviations until the commercial operation is achieved.
- And finally, the Operational Guarantee emerges, required ten days before the start of commercial validity and calculated as $50,000 multiplied by 70% of the installed capacity of the plant , an obligation particularly observed by financiers for its impact on the structuring of the project.
Beyond its coverage function, the scheme reinforces the interpretation that CFE seeks to prioritize offers that are not only price-competitive, but also capable of sustaining more demanding financial and operational obligations under this new model.
In this context, Delgado warns that this combination of extreme competition and higher demands can even lead to an "inflated pipeline," where some projects compete to position themselves in the call for proposals without necessarily having the required strength to pass that filter.
But perhaps the most disruptive aspect of the draft lies in the investor's exit strategy. Clause 4.03(e) stipulates that, no later than three months after the date on which the investor has achieved the Target Return corresponding to each project partnership , the developer must transfer all of its Participation Units to the Commission without additional compensation , which then becomes the sole owner of the project.
However, the scheme offers safeguards designed to make the business viable. To balance this free transfer, the contract establishes an absolute priority of cash flows : all distributable cash generated by the plant will be given preferentially to the developer until it reaches its Target Return, leaving CFE without receiving any profits until the private company recovers its capital and agreed-upon profit.
Additionally, the document includes a key safeguard to protect bankability against dispatch risk. If, by year 24 of the contract, the investor has not achieved profitability due to forced shutdowns ordered by CENACE, the agreement may be extended for up to five additional years to ensure financial recovery.
The contract also incorporates a detailed network of remedies for defaults, another key aspect for assessing bankability. If the investor defaults, CFE must notify the financial creditors and grant them 120 days to remedy the situation before acquiring the private stake through a Purchase Price or enforcing guarantees and penalties. If the default is attributable to the Commission, the private investor can demand the purchase of its stake under a compensation mechanism stipulated in the contract itself.
The big question now is not only which projects will win, but whether this contractual design —with returns, reinforced guarantees and future transfer of assets— will attract long-term capital or end up limiting the universe of players capable of participating.
In this context of regulatory redefinition, the sector will have a key forum for discussion on May 19 at the Future Energy Summit (FES) Mexico , where the participation of 500 executives from the public and private sectors is expected. The event is shaping up to be a strategic meeting point to analyze new calls for proposals, regulatory challenges, and investment opportunities emerging from this new framework for renewables and energy storage.