On April 16, 2026, the National Energy Commission published the General Administrative Regulations for the Generation of Power under the Cogeneration Modality (the “Regulations”) in the Official Gazette of the Federation.
Cogeneration is regulated as power generation that: (i) is carried out jointly with steam or another form of secondary thermal energy, or both; (ii) utilizes residual thermal energy from the permit holder’s industrial processes for the direct or indirect generation of power; or (iii) uses fuels generated in such industrial processes to produce power, whether directly or indirectly.
In this context, cogeneration constitutes a scheme for the sequential production of power and heat from a single energy source, aimed at maximizing the overall energy efficiency of the process. Additionally, it enables the optimization of fuel consumption, the reduction of associated emissions, and the lowering of production costs, as well as, potentially, power sale prices.
The Regulations set forth the applicable frameworks for Cogeneration, including the relevant schemes, additional requirements for permit applications, interconnection, and participation in the Wholesale Electricity Market (“WEM”).
Cogeneration is a type of power generation permit under the Law of the Electricity Sector (“LSE”, per its acronym in Spanish) and may be carried out under either the self-consumption or WEM generation schemes.
Cogeneration systems may take one of the following forms:
a. The joint production of electricity together with steam or other forms of secondary thermal energy, or both.
b. Direct or indirect power generation using residual thermal energy not utilized in the permitholder’s industrial processes.
c. Direct or indirect power generation using fuels produced within the permitholder’s industrial processes.
The holder of a cogeneration permit must have an associated thermal demand. Under the self-consumption scheme, such demand may correspond to the permitholder or its users. Under the WEM generation scheme, the thermal demand or associated electrical load may belong to the permit holder or to a third party under a contractual arrangement, in which case the agreed thermal or electric power must be directly supplied to such third party.
Depending on the scheme, to apply for a permit, applicants must comply with the certain provisions, for a WEM power generation permit the applicable regulations are the General Administrative Regulations establishing the legal, technical, and financial terms for applying for the issuance and modification of permits for the generation and storage of electrical energy, as well as their validity (for more information, access our client alert here), and, for self-consumption, with the General Administrative Regulations to Regulate the Concept of Self-Consumption of Electric Power” published in the DOF on December 12, 2025 (the “Self-Consumption Regulations”).
In addition to complying with the requirements set forth in the aforementioned regulations, as applicable, applicants must submit a description of the relevant Cogeneration system, including:
a. Thermal demand values.
b. Associated electrical loads.
c. Maximum and minimum values of committed power.
d. Maximum and minimum values of dispatchable power.
e. Piping and instrumentation diagram.
f. An energy balance reflecting the system’s technological configuration.
The WEM participant representing a Cogeneration power plant must submit to the National Energy Control Center (“CENACE”, per its acronym in Spanish), for purposes of physical asset registration, information regarding: (i) the power demand of ancillary uses, (ii) the consumption of associated electrical loads, and (iii) total power production, broken down into committed and dispatchable power (including maximum and minimum values).
Such data must be determined under steady-state operating conditions, considering scenarios of maximum thermal demand, minimum thermal demand, and the expected thermal demand during 80% of the annual operating time.
Cogeneration power plants participating in the MEM must enter into a generator agreement with CENACE and comply with the Market Rules or alternatively operate through a duly accredited market participant.
For interconnection purposes, such plants must obtain the required interconnection studies and execute the corresponding agreement in accordance with the Manual for the Interconnection of Power Plants and Connection of Load Centers (the “Interconnection Manual”). CENACE will assess these studies under various operating scenarios, including:
a. Simultaneous operation of the load center at its maximum power demand and the power plant at its maximum net capacity.
b. The power plant operating at maximum net capacity with the load center out of service.
c. The power plant out of service with the load center at its maximum power demand.
Additionally, these plants must have metering systems at the interconnection point, and energy will be settled based on such measurements under a double-settlement scheme in accordance with the Market Rules.
The LSE also provides for the concept of “Efficient Cogeneration,” to which it grants the status of clean energy. In this regard, the Regulations establish that power plants may obtain Clean Energy Certificates in accordance with the criteria and methodologies to be issued by the CNE. Until such criteria are published, the regulations that set forth the criteria under which cogeneration systems may be certified as efficient and, consequently, qualify for clean energy treatment continue in force.
a. The Regulations entered into force on April 17, 2026.
b. While the Market Rules are amended, Cogeneration plants must submit their offers in the short-term energy market using the format applicable to thermal power plants. For such purposes, they must define:
(i) A minimum dispatch limit equal to the greater of their technical minimum generation and the committed power.
(ii) A maximum limit based on available capacity, net of self-consumption and ancillary loads.
(iii) An incremental offer covering the full range between such limits.
Additionally, committed energy must be offered under an “must-run” status, ensuring its dispatch but rendering such plants ineligible for revenue sufficiency guarantees.
c. While the Interconnection Manual is amended, requests for interconnection studies for cogeneration projects in the WEM will follow a simplified framework:
(i) A single study request must be submitted to CENACE.
(ii) For existing facilities, a fast-track interconnection study will determine whether additional analyses are required; if not, the process may proceed directly to the execution of the interconnection agreement.
(iii) If additional studies are required, their scope, timing, and cost will be determined in accordance with applicable regulation, taking into account the relevant net capacity or power demand.
(iv) For greenfield projects, studies will be defined based on the higher of the plant’s net capacity and the load center’s electricity demand.
d. Cogeneration plants holding permits issued under prior legal regimes that migrate to the WEM generation scheme under the LSE will retain their original dispatch conditions until the expiration of their permits.
e. The CNE must publish, within 30 calendar days following the entry into force of the Regulations, the official forms for the filing of Cogeneration permits.
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