Mexico's energy recovery opens a window for energy storage, but the profitability of projects will depend on both their location and the ability to combine different revenue streams. Aurora Energy Research estimates that certain BESS systems coming online around 2028 could achieve internal rates of return exceeding 15% , in a market where capacity payments still outweigh energy arbitrage.
The opportunity coincides with a new phase of expansion. Mexico is moving forward with a call for bids to incorporate 935 MW of stand-alone electrical energy storage systems, all with a duration of three hours , while solar developments of several hundred megawatts are beginning to reappear after years of less activity.
“There is a lot of interest in batteries. This is also common throughout Latin America,” said Laura Picardo, Senior Associate at Aurora Energy Research , in an exclusive interview during Future Energy Summit Mexico .
The consultancy views the country as one of the largest energy markets in the region, with more than 100 GW installed , growing demand and a need to incorporate new capacity.
This scenario emerges after a prolonged period of limited private development.
“There was a seven-year hiatus where no new projects were developed, and now, with this new government, it seems that private development, but also mixed development, is being reactivated,” Picardo explained.
The new binding planning and public-private calls for proposals are putting projects back on the table, although there is still uncertainty about how the new mechanisms will work and at what pace they will translate into effective investment.
Capacity first, arbitration later
For Aurora, one of the central points of the BESS business will be to identify what revenue each project can capture .
“The revenue streams that we now see as more secure are power payments and capacity payments, which are very important in batteries and all firm capacities,” Picardo explained.
Energy arbitrage currently presents a different scenario. The Mexican energy mix retains a high proportion of thermal energy, which reduces, at certain nodes, the price difference that a battery can exploit through charge and discharge cycles.
“Currently, given the high concentration of thermal energy, the battery won't be able to capture a very high spread . As the renewable energy sector strengthens in the Mexican market, it will likely be able to access more of these revenue streams,” he added.
Continue reading
This shift could begin to gain momentum with the new renewable energy portfolio. Suppliers present in the country have already identified photovoltaic projects of 230, 300, 700, and even 800 MW , while companies like Chemik project supplying equipment for more than 1 GW during 2026 and around 2 GW in 2027.
In addition to generation, there is the pressure of consumption. New data centers could demand approximately 1.5 GW of electrical capacity and mobilize investments of around USD 18 billion, while existing industries are accelerating self-consumption and storage solutions in response to power constraints and operational continuity needs.
Location will be another decisive factor. Mexico operates within a nodal market, and price signals can vary considerably between regions.
Picardo pointed out that less interconnected systems have particularly high prices. In Baja California, prices can exceed USD 100/MWh , while areas with a greater presence of renewable energy show different trends.
This dispersion helps explain why Aurora does not identify a uniform return for all BESSs. Performance will depend on the node, the contractual scheme, capacity revenue, available arbitrage, and financial structure.
The call for bids for 935 MW itself reflects this territorial logic. The greatest need is concentrated in the Northern Regional Control Management, with 245 MW , followed by Eastern, with 180 MW; Northwest, with 160 MW; Baja California and Peninsular, with 140 MW each; Baja California Sur, with 50 MW; and Western, with 20 MW.
These economic variables are in addition to regulation.
“It is very important to have regulatory certainty, that the procedures and operation are clear. And then to have a clear financial model so that a project is profitable,” the specialist stated.
Aurora also closely monitors fuel prices. Due to the weight of thermal power generation, international gas prices continue to be one of the main determinants of Mexican electricity prices in the short term .
The storage equation, however, could change as the energy mix transformation progresses. More renewable generation would increase the need for flexibility and could widen the available spreads for batteries.
Mexico thus has two races happening in parallel: incorporating new firm capacity to sustain demand growth and building enough renewable generation to change price dynamics.
The allure of returns exceeding 15% exists, but it will be reserved for projects capable of positioning themselves in the right nodes and properly stacking their revenue streams.