Overview

The SCF is providing Technical Assistance to a large-scale Battery Energy Storage System (BESS) in northern Chile’s Antofagasta region to address solar energy curtailment and improve grid stability. The project will store excess daytime solar power and release it during evening peak demand, replacing fossil fuel-based ramp-up energy and supporting Chile’s clean energy transition.

By combining grid-connected storage, clean energy optimization, and strong ESG compliance, the project aligns with Chile’s national Energy 2050 plan and strengthens the country’s climate resilience and renewable energy infrastructure.

The Challenge

Chile has experienced a rapid expansion of solar PV capacity, particularly in its northern desert regions. However, grid bottlenecks and timing mismatches between generation and demand have led to significant curtailment of solar energy—with renewable power going unused. The lack of battery storage prevents shifting clean energy to evening hours, forcing reliance on coal-fired ramp-up generation.

Without sufficient storage infrastructure, solar power continues to be wasted while fossil fuel plants meet evening demand.

SCF’s Involvement

To enable project bankability and scale, the SCF TA Facility provides grants for pre-feasibility and a feasibility studies covering:

● Advanced financial and market modelling

● Foundational engineering design

● ESG-compliant technology selection

● Enhanced environmental and social impact planning

● Strategic legal and commercial structuring

This technical assistance ensures the project can meet high sustainability, financial, and regulatory standards while maximizing clean energy utilization.

The investment described above is a potential pipeline investment of SCF.  There can be no guaranty that the investment will be completed on the terms described or implied above, that SCF will be able to successfully invest in such investment or that impact targets will be achieved. 

Overview

The Subnational Climate Fund (SCF) is providing technical assistance to a project in Mexico that aims at addressing water scarcity and enhancing food security through the development of a solar thermal desalination and hydroponic facility in Mexico.

The proposed facility leverages seawater and solar energy—two abundant resources in Mexico’s coastal arid zones—to produce fresh water for agricultural irrigation in a zero-waste, circular production model. By utilizing advanced desalination and hydroponic technologies, the project seeks to provide a sustainable solution to the environmental challenges faced by Mexico’s agricultural sector, including the over-extraction of groundwater and the escalating impacts of climate change. This approach not only aims to ensure a reliable water supply for crop production but also to minimize resource use and emissions compared to traditional agricultural practices.

Moreover, the project aligns with Mexico’s National Water Program (PNH) 2024-2030, which emphasizes improving water use efficiency, enhancing water availability for agriculture, and ensuring sustainable management of water resources. It also supports the objectives of the National Climate Change Strategy by promoting climate-resilient agricultural practices and reducing the vulnerability of rural communities to water scarcity.

Through this initiative, this project has the potential to make a significant contribution to the resilience and sustainability of Mexico’s agricultural sector, ensuring compliance with international best practices and regulatory standards.

The Challenge

Mexico’s agricultural sector is grappling with an increasingly severe water crisis, driven by a combination of climate change and unsustainable groundwater extraction practices.

Rising temperatures and shifting precipitation patterns have exacerbated drought conditions, significantly reducing the availability of freshwater resources essential for irrigation and crop production. At the same time, excessive withdrawal of groundwater, often exceeding natural recharge rates, has led to the depletion of aquifers, land subsidence, and increased salinity in the soil.

In addition to water scarcity, the sector faces different sets of environmental challenges, including, soil degradation, salinization, and wastewater pollution from agricultural runoffs. These challenges jeopardize food security and the livelihoods of those who depend on farming.

Addressing this crisis requires urgent and sustainable water management solutions that can adapt to the evolving climate realities.

SCF’s Involvement – Technical Assistance

SCF Technical Assistance has commissioned a pre-feasibility study to support the development of this project, focusing on:

• Assessing the quality of seawater and identifying potential contaminants to ensure safe and efficient desalination processes
• Evaluating the environmental impact of constructing and operating a hydroponic and desalination facility, with an emphasis on protecting local ecosystems and complying with regulatory standards

This study will provide a further understanding of the environmental, social, and economic benefits of scaling up in Mexico and support the project’s growth in alignment with global sustainability goals.

Overview

The SCF is providing technical assistance to a solar energy project in northern Nigeria, applying solar mesh grids and mini-grids with regular maintenance and a technology-driven fault monitoring system. The project aims to provide affordable solar power solutions to rural Nigerian communities.

Nigeria is the largest economy in sub-Saharan Africa with a population of over 218 million. Over 86 million Nigerians have no access to electricity, with 73% of rural areas having no access to grid-connected electricity.

Aligning with the expanding scale of solar-powered mini-grids in recent years, the reduced equipment costs and increased panel efficiency make such infrastructure a critical solution for affordable electricity in Nigeria. With the support of the federal government’s rural electrification programs and incentives, private sector entrepreneurs can now enter the solar PV mini-grid space with business models attractive to domestic and international investors.

The project aims to develop a significant amount of solar mini-grids to reach nearly 64 communities in rural northern areas, including household consumers, commercial users, and public users (schools, hospitals, etc.). By installing a solar panel, a battery, and a Pod in every house/building, the technology-mesh grids can generate solar energy, connect close neighbors, and redistribute the energy efficiently and reliably.

The Challenge

As the largest off-grid population on the African continent with millions of people lacking access to grid electricity, the lack of liquidity in the grid-connected sectors is a big challenge for Nigeria. To achieve universal access to electricity by 2030, Nigeria would need to connect between 500,000 to 800,000 households per year. The national grid is not able to expand access outside of the current network infrastructure in the short term.

With an installed power capacity of 16,384 MW, the current electric system is only able to dispatch around 3,500 MW on most days. In consequence, approximately 66% of Nigerians are currently unserved or underserved by the national grid. Meanwhile, distributed natural gas generation as the mainstay for commercial and productive use is becoming more costly in terms of capital and carbon emissions.

SCF’s Involvement – Technical Assistance

To further support and inform the development of this project, the SCF’s Technical Assistance Facility is commissioning a feasibility study to conduct:

• The Nigerian Electricity Regulatory Commission (NERC) and Rural Electrification Agency (REA) registration.
• The Nigerian Electricity Management Services Agency (NEMSA) inspection

The SCF’s Technical Assistance Facility is also commissioning an Environmental and Social study to conduct stakeholder consultation with the communities.

Overview

The SCF’s Technical Assistance Facility has commissioned a market study to analyse the current challenges and barriers to green hydrogen production in Chile, which has the potential to decarbonize energy-intensive industries and electricity production in the region and beyond. It is estimated that Chile could produce up to 160 megatons per year of green hydrogen and become the leading low-cost exporter by 2040. The need for a market study emerged from SCF’s conversations with the developer of a green hydrogen project in Chile’s Antofagasta region, where many green hydrogen projects are currently under development, but only a handful have gone past the pre-feasibility stage. Based on interviews with stakeholders and project developers, insights from the market were collected regarding barriers and challenges in the sector. The main insights identified related to supply were regulation, permitting, supply chain, and environmental challenges. From the demand sector, export market challenges were the main challenges identified. A cost analysis was also performed identifying costs for electrolyzers and renewable energy infrastructure cost as the most relevant. Finally, some recommendations to monitor and identify investment opportunities for Chile were provided.  The report provides robust information for a potential future engagement of the SCF in the Chilean green hydrogen industry.

The Challenge

Green hydrogen (GH2) has become a topic of growing interest in the transition to a low-carbon and sustainable economy. It is produced from renewable energy such as wind, solar, hydroelectric, or biomass, through a process of water electrolysis that does not generate greenhouse gas emissions. Due to its versatility and ability to significantly reduce carbon emissions in hard-to-abate sectors, such as heavy industry and transportation, green hydrogen has become a key pillar in achieving decarbonization and climate neutrality goals.

However, despite its promising potential, the widespread deployment and adoption of green hydrogen face several challenges that are important to analyze in detail, including;

• Costs
• Infrastructure
• Regulatory framework and policies
• Funding

Chile is currently embarking on an ambitious journey to become the world’s leading producer of green hydrogen and its derivatives while striving to ensure that its production is highly competitive in terms of costs. The National Hydrogen Strategy stands out, aiming to achieve a cost of $1.5 USD/kg of hydrogen by the year 2030. The interviews that were conducted with stakeholders across industry, academia and investment in the context of the market study provided valuable insights into the landscape of green hydrogen, addressing essential matters such as the current market situation, existing regulations, permitting processes and the supply chain.

SCF’s Involvement – Technical Assistance

SCF has conducted a pre-feasibility study to assess the market dynamics, current challenges/barriers, and potential for green hydrogen in Chile.

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Overview

SCF received a proposal for a renewable Distributed Generation (DG) platform in South Africa that provides power to private offtakers by utilising the National (Eskom) or Municipal transmission infrastructure (“Wheeling”). At term, the project is expected to produce 192,000 to 216,000 MWh/yr​ of renewable energy and contributing to decarbonize South Africa’s power production which still relies strongly on coal fired power plants.

In July 2022, the President of South Africa, Cyril Ramaphosa, announced far reaching measures to address the country’s unstable and insufficient power supply, including an increase of the threshold for self- or distributed generation power plants from 1 MW to 100 MW.  One of the main impacts of those announcements is the liberalization of the power sector and the entrance of new private sector players This announcement has also placed a renewed focus on the wheeling of electricity, potentially facilitating renewables-based energy transmission from sites with good wind and solar radiation to customers whose locations may be less conducive to renewable energy production.

The Challenge

Currently, Eskom, the South African public Electricity provider, generates around 95% of South Africa’s electricity, with a generating capacity of approximately 48GW of which coal fired power stations makes up 83%.

Power supply from the public utility, Eskom, is very polluting and unstable with degrading power, distribution and transmission infrastructure. This results in frequent load shedding, describing a lowering or stopping of electricity distribution for a short period of time. This poses a risk to wheeling projects, as off takers will not receive electricity even if the plant is operational.

In 2021, load shedding resulted in an estimated 1136hours of outages and 2455 Gwh of energy shed, a real issue for many businesses and jobs across the country.

Additional challenges with independent power production and distributed generation projects concern 1) Potential legal and other risks due to undeveloped market for distributed generation and wheeling as regulation develops further​, 2) Continuous currency depreciation with bouts of higher volatility over the last 5 years​ and 3) a political situation which can be unstable.

SCF’s Involvement – Technical Assistance

The SCF has commissioned a legal and market study to further clarify the future market situation for independent power production projects in South Africa. The study’s objective was:

• To gain a solid understanding of South Africa’s energy market, current legislation (related to independent power producers and wheeling), the electricity tariff regime, return and risk expectations, current market players and opportunities within the Distributed Generation and Wheeling sector.

• To identify additional acquisition targets for the SCF , whether it be C&I / DG platforms, developer assets and/or stranded developer assets

Overview

SCF plans to invest USD 43 Million in Luxun, a leading Mexican renewable energy company that offers turn-key, rooftop solar energy installations for businesses and enterprises without up-front investments. The company has a four years of track record in the Distributed Generation scheme (<500kW of capacity), providing Power Purchase Agreements, leasing and long-term financing for the commercial & industrial (C&I) Sectors. The companies are involved across all steps of the value chain from marketing, development, procurement, construction (supervision), operation and asset management.

The Challenge

Mexico’s energy mix is dominated by oil and gas, with oil accounting for almost half of the total. Mexico has a constant growing electricity sector, with demand increasing on average by 1.6% per year since 2000.

Distributed generation (DG) solar projects can help Mexico reduce its reliance on fossil fuels and avoid emissions. They are smaller and less regulated, with a threshold of 500 kilowatts – enough to power about 200 households.

In addition, it will contribute to the generation of direct and indirect employment and skills development in the communities, given that there will be multiple installations across the country.

SCF’s Involvement

1. Proposed Investment

The planned five-year, USD43 million capital investment by the Subnational Climate Fund is expected to finance the construction of +160MW of solar panels and battery storage projects.

2. Technical Assistance

The project has received technical assistance from SCF in the form of an Environmental & Social Impacts Assessments (ESIA) and Environmental and Social Management Plan (ESMP), as well as the evaluation of the principles and safeguarding requirements of the Gold Standard for the Global Goals.

The ESIA serves to identify potential environmental and social risks and impacts arising from Luxun’s activities at the company level. The methodology observes the International Finance Corporation (IFC) Environmental and Social Sustainability Performance Standards and the General EHS Guidelines, Gold Standard standards, as well as other applicable international best practices.

Based on the findings of the ESIA, an ESMP was prepared for the prevention, mitigation, and performance improvement measures, processes, and procedures to address the identified ES risks and impacts.

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Overview

SCF is considering an investment in Shire Oak, a platform for the sourcing, development, and operation of renewable energy assets. In the context of SCF’s investment, the project would have a particular focus on Indonesia and South Africa.

In Indonesia, the platform is developing :

• rooftop commercial and industrial (C&I) solar assets
• remote island diesel genset replacements
• ground mount solar for industrial users

In South Africa, it is pursuing :

• C&I solar
• and the development of wheeled wind and solar projects with batteries

With 50MW+ of operating assets in Southeast Asia today, the platform has proven its ability to develop assets effectively. With SCF capital, the experienced Shire Oak’s management aims to deploy their extensive project pipeline to become one of the major sustainable energy developers and power producers in the target regions. By replacing vastly unsustainable sources of energy in the target geographies, like diesel generators on remote Indonesian islands or coal energy in South Africa, Shire Oak is expected to rapidly decrease CO2 emissions.

The Challenge

Indonesia and South Africa, both suffer from high emissions from their energy production mix but also from an unreliable production resulting in frequent power outage. Indonesia’s energy mix consists of more than 90% of supply from coal, oil, and natural gas. With Indonesia’s simultaneous economic growth, an anticipated $154bn in additional annual energy investments is anticipated to be needed to cope with energy demand until 2025. Likewise, South Africa’s energy mix consists of more than 90% of supply from coal, gas, and oil, with more than 72% originating from coal alone. As a result, both countries are in urgent need for a transition towards distributed, reliable, and less CO2 intensive renewable energy sources to provide more sustainable and continuous electricity throughout their countries. This is important not only for the reduction of CO2 emissions but to support their countries’ economic prosperity, enable more predictable livelihoods, and improve general living standards for their people.

SCF’s Involvement

Proposed Investment

SCF intends to inject its capital directly into the platform to support the ongoing development as well as construction of first pipeline projects in Indonesia, South Africa, and potentially Ecuador. A smaller portion of SCF capital will be used to support the platform more generally.

The investment described above is under development by SCF.  There can be no guaranty that the investment will be completed on the terms described or implied above, that SCF will be able to successfully invest in such investment or that impact targets will be achieved. 

Overview

SCF is providing technical assistance to a project in Brazil for Roof-top and potentially ground-mounted solar, with an expected capacity of 150MW.

The Challenge

Brazil is largely dependent on fossil fuels and large-scale hydropower. The country is at continuous high risk of power outages due to water crisis and high dependency on large-scale hydro.

SCF’s Involvement – Technical Assistance

The project has received Technical Assistance from the SCF for a pre-feasibility study whose objectives to:

• to gain a better understanding of Brazilian macro risk for this and further projects as well as understand the Brazilian energy market dynamics
• to assess the risk and upside associated with the project regarding macro-economic and market-specific risks

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