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.
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.
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.
Our Target Impact
Our aim, alongside our local partners, is to support and scale up the renewable energy platform to develop, install and operate solar PV assets to offer clean energy to the C&I clients that currently have a reduced number of options for their electricity supply. We expect the project will positively impact the following Sustainable Development Goals:
SDG 7 Affordable and Clean Energy
The project should generate 256,000 MWh of clean and affordable energy for industrial and commercial use per year.
SDG 8 Decent Work and Economic Growth
Create direct and indirect employment and skills development in the communities, given that there will be multiple installations across the country. Integrate more women into the processes, such as in the operation and maintenance phase.
Additionally, we expect that the reliable supply of electricity at a constant and cheaper tariff will attract more companies to Mexico as a nearshoring effect supporting the growth of the Mexican economy.
SDG 13 Climate Action
We estimate that from 2027 onwards thanks to the project 119,311 tons of CO2 will be avoided emissions per year by replacing power generation from primarily coal-powered electricity sources.