Financing will support climate change mitigation in the public lighting sector of Mexico
The Inter-American Development Bank (IDB) has closed the financing of a 25,000 luminaire municipal LED street lighting project for the Municipality of Ensenada, Mexico. The $16 million debt financing will enable Optima Energía, a Mexican energy service company (ESCO), to replace older, less efficient lighting technology with the high efficiency LED luminaires.
“Through IDB’s financing, Optima Energía is able to be among the first to implement a municipal lighting project developed under an energy savings performance structure in all of Latin America. This will enable a demonstration effect that could lead to the transformation of street lighting systems in Mexico,” said Enrique Gomez Junco, CEO of Optima Energía.
The investment is expected to reduce Ensenada’s electricity consumption by 260 million kWh over the life of the project and generate cost savings to the municipality in the form of a of 59 percent reduction in electricity expenses. These operational savings pay for the entire investment and allow Ensenada to improve its infrastructure with no additional capital or operational expenditures. The LED technology will boost the quality of light in the streets and contribute to improved public safety in Ensenada, the third largest city in the state of Baja California.
“The project will allow Optima Energía to demonstrate the benefits of investments in LED street lighting projects by providing operational savings and improved public safety to Ensenada. The IDB is also helping Optima Energía implement a gender inclusion program which will strengthen its operations, as well as promote gender equality efforts in Mexico,” said Kelle Bevine, Chief of Strategy Management in the IDB’s Structured and Corporate Finance Department.
The project, which is being co-financed by the Canadian Climate Fund for the Private Sector in the Americas (C2F) and a guarantee from the Clean Technology Fund, will reduce CO2 emissions by about 150,000 tons over 20 years. The project demonstrates an innovative approach to improving energy efficiency that can be replicated in municipalities throughout Mexico by using the savings generated to finance the upgrade to LED.
This transaction is being financed under the IDB’s Climate and Clean Energy Facility, which offers $100 million in financing for energy efficiency and self-supply renewable energy projects throughout the region. The Facility was established by the IDB with support from a combination of donor resources: the Nordic Development Fund and the Climate Investment Funds. Through this Facility, the IDB plans to continue to provide loans to other innovative energy efficiency roadway lighting projects throughout Latin America and the Caribbean.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
- John Ferriter