US-based power company AES and Mexico's Grupo Bal have agreed to establish a 50/50 joint venture (JV) to invest up to $2.5bn in new power and infrastructure projects in, over the next five years.

AES Mexican unit head Juan Ignacio Rubiolo was quoted by Reuters as saying: "In terms of scale, the idea is to grow our portfolio in the next five years at least by 2GW with estimated investment of between $2bn and $2.5bn."

About three-quarters of the investment plan is targeted for generating electricity from both conventional and renewable sources while the rest will be used for projects involving liquefied natural gas, water desalination and energy storage.

AES will operate the jointly developed power plants, subject to signing agreements with Grupo Bal.

AES chief executive Andres Gluski said that Mexico would require 25GW of new or replacement generation over the next decade to meet its demand.

The joint venture intends to participate in the Mexico’s new independent grid operator Cenace’s auction planned in October for new power generation projects.

At present, AES operates three existing power plants, which have a combined generation capacity of 1,055MW, in Mexico.

Grupo Bal launched a new oil exploration and production subsidiary Petrobal, in February, with an aim to take advantage of opportunities in the Mexico’s energy sector.

The Mexican Government has announced new reform last year to open the power sector to private investment as well as allow oil production by private companies.