Why Photovoltaic Energy Regressed in Mexico and How It Affected the Switchgear Market
- Grupo Edmar
- Nov 3
- 4 min read
November 03, 2025 - Why Photovoltaic Energy Regressed in Mexico and How It Affected the Switchgear Market
Why Photovoltaic Energy Regressed in Mexico and How It Affected the Switchgear Market.
For nearly a decade, Mexico was one of the countries with the greatest potential and growth in solar energy in all of Latin America. From the arid north to the Bajío states, photovoltaic projects transformed the country's energy landscape. However, starting in 2020, this momentum began to fade. The combination of regulatory changes, political uncertainty, increased logistics costs, and a lack of tax incentives led to a slowdown that directly impacted multiple industrial sectors.
One of the most affected sectors was that of medium and high voltage electrical components , especially switchgears , essential equipment for the operation, safety and maintenance of solar plants.
Today we analyze the causes of this setback, its consequences, and how Mexican companies— like Grupo Edmar —are adapting to this new context, betting on innovation and diversification in the electricity industry.
Promising growth that stopped.
Between 2015 and 2020, Mexico experienced an unprecedented boom in photovoltaic energy. Long-term electricity auctions , driven by the Energy Reform, attracted multimillion-dollar investments and positioned the country as a regional leader in solar power generation. International companies built large-scale plants, such as the one in Villanueva (Coahuila) , one of the largest in Latin America, while thousands of photovoltaic systems were installed on industrial, commercial, and residential rooftops.
But starting in 2021, growth began to slow. New energy policies prioritized public over private generation, auctions were canceled, and the number of permits for new plants decreased drastically. The result was a 40% reduction in annual installed capacity , according to reports from the Mexican Solar Energy Association (Asolmex).
Policies and regulations that discouraged investment.
One of the most decisive factors was the change in the rules of the game . The cancellation of electricity auctions and the reforms to the Electricity Industry Law (LIE) created legal uncertainty among investors. In addition, procedures before the CRE (Energy Regulatory Commission) and CENACE became slower, which affected the planning and execution of solar projects.
This is compounded by the dispatch priority given to CFE plants, displacing renewables from the electricity market. Without tax incentives and with regulatory barriers, many companies decided to postpone or cancel their investments, which directly impacted the demand for specialized electrical equipment , including switchgear .
Less development of solar plants, less demand for switchgear.
Every photovoltaic plant, regardless of its size, requires switchgear to protect, isolate, and distribute the generated energy. These devices ensure the system's safety against overloads or failures and allow maintenance to be performed without interrupting overall operation.
When the number of solar projects decreases, so does the need to acquire new switchgear . This affects manufacturers, distributors, and electrical contractors alike. For example, if a 100 MW solar park previously required dozens of switchgears for its infrastructure, that same level of demand has now been reduced to a fraction due to the lack of new developments.
The impact has been most visible in regions such as Sonora, Coahuila and Chihuahua , where large solar investments were concentrated and, therefore, a high demand for electrical distribution equipment.
The impact of the electricity supply chain.
The photovoltaic downturn affected the entire Mexican electrical value chain . Transformer manufacturers, electrical material distributors, installers, and technical service providers have had to reorient their business approach . Companies like Grupo Edmar , which historically supply the energy sector with power transformers , switchgears, and customized solutions , have responded by expanding their presence in other areas: manufacturing, mining, automation, and hybrid energy industries.
The lack of large solar projects led many distributors to focus on maintenance, modernization of existing plants , or supplying wind farms and conventional industrial projects . This diversification has been key to sustaining growth despite market conditions.
The role of the Federal Electricity Commission (CFE).
The CFE has once again assumed a central role in the generation and distribution of electricity in Mexico. While its presence ensures a stable supply, it also limits private participation, especially in the renewable energy sector. The preference for state-controlled thermoelectric and hydroelectric plants has reduced the installation of private solar infrastructure , slowing the turnover of new-generation electrical equipment.
Furthermore, CFE projects typically use their own approved suppliers, which excludes small and medium-sized enterprises from many tenders. This creates an environment where the demand for industrial or commercial switchgear decreases , affecting the ecosystem of independent manufacturers and distributors.
Economic and Market Factors.
Beyond regulation, the economic environment has further complicated the situation. Global inflation , rising exchange rates , and post-pandemic logistical challenges have driven up the costs of electrical materials: copper, steel, aluminum, and dielectric insulation. Since many electrical components are imported , the final prices of solar projects have increased significantly.
This created a vicious cycle: projects became more expensive, investors withdrew, and distributors reduced their inventories of transformers and switchgear . At the same time, the delays in delivery times affected the profitability and planning of clean energy projects nationwide.
The international context and future opportunities.
While Mexico has slowed its solar growth, countries like Brazil, Chile, and Colombia continue to expand their photovoltaic parks. This highlights a missed opportunity for Mexico, which has one of the highest levels of solar radiation on the continent. However, with a medium-term perspective, the potential remains.
If clearer policies are implemented and incentives are reinstated in the coming years, the market could experience a strong revival , once again driving demand for advanced electrical equipment . In that scenario, companies with experience and a solid reputation—like Grupo Edmar —will be ready to provide efficient, safe, and customized solutions for clean energy projects, both public and private.
A temporary challenge with great potential for return.
The decline in photovoltaic energy in Mexico does not signify the end of the sector, but rather a pause caused by the political and economic context. The country has all the natural conditions to once again become a regional leader in solar power generation. To achieve this, it will be essential to establish a transparent, accessible, and stable regulatory environment that incentivizes investment.
When this happens, the market for switchgear, transformers, and electrical distribution systems will grow again, driving a new wave of innovation and efficiency. At Grupo Edmar , we remain committed to offering products that meet the current and future needs of the Mexican electrical industry , promoting sustainable development and clean energy.
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