Conor Beakley, associate director at BMI Research: “The government’s deal with Iberdrola achieves a key aim of the AMLO administration, strengthening CFE’s position in Mexico’s electricity market despite the failure of proposed constitutional reforms. The manner in which the deal was agreed will, however, curb private investment in Mexico’s power sector, which had been the key driver of non-hydro renewables growth. This will leave Mexico reliant on gas-fired generation and affect the government’s ability to achieve climate commitments. We expect foreign power companies to shift investments, particularly clean-energy investments, to neighboring North American markets, which have become increasingly competitive amid new low carbon energy incentives. We remain of the view that the broader implications for foreign direct investments are limited, with the ‘nearshoring’ phenomenon likely to see persistently strong inflows in the coming years into sectors like manufacturing. AMLO’s resource nationalist streak and…”