Development and finance
Capital sources: who finances an energy project in Mexico
A generation project is financed with two kinds of money: equity, which takes the risk and receives what is left, and debt, which is paid first at an agreed rate. Each source has its own appetite for stage, tenor and size. This is a general guide to the market; the mix is set project by project.
Equity and debt
Two different roles in the same SPVEquity comes from the shareholders of the project company (SPV). It goes in first, takes development and construction risk, and is paid last in the waterfall. That is why it asks for a higher return.
Debt comes from banks, credit funds or bond investors. It is paid before equity, secured by the SPV's assets and contracts, and that is why it costs less.
The split between them depends on the quality of the energy contract and how much risk remains in the project. See project finance and SPV structure.
When it is not a fit
- Seeking third-party equity if your company can fund the plant itself and wants the full savings.
- Going to the capital markets with a small project: issuance and reporting costs weigh too much.
- Seeking debt before the energy contract, permits and interconnection have a clear path.
The market
Sources of equity and debt
A general overview, not a list of partnersCommercial banks
Project loans and construction bridge loans. They require a firm energy contract and a full security package; medium to long tenors.
Development banks
Public institutions that finance infrastructure with longer tenors, guarantees or lending alongside commercial banks.
Multilateral institutions
International financial institutions that lend to or invest in infrastructure and clean energy, with their own environmental and social requirements.
Infrastructure and energy funds
Private capital investing in projects under development, construction or operation, project by project or as a portfolio.
Listed vehicles
CKDs and CERPIs channel institutional investors' money into projects; FIBRA E invests in energy and infrastructure assets already in operation.
Green bonds
Debt issued to finance projects with environmental benefit, under a use-of-proceeds framework with impact reporting.
General overview of the Mexican market. GIS Power does not claim a relationship with any particular institution.
Which source comes in at which stage
Risk falls, and so does the cost of money| Stage | Main risk | Usual sources |
|---|---|---|
| Development | The project fails to secure permits, site or contract | Developer equity and funds with a development mandate |
| Construction | Cost, schedule and commissioning | SPV equity, commercial and development banks, multilaterals |
| Operations | Performance and offtaker payment | Long-term refinancing, green bonds, FIBRA E, operating-asset funds |
Tax incentives for investment
Income Tax Law and Plan México100%
Solar and efficient cogeneration
Deductible in the year of the investment, if the equipment operates for at least 5 years (Income Tax Law, art. 34, sec. XIII).
56%
Other electrical equipment
Immediate deduction in 2025–2026 (49% in 2027–2030) for generation, transformation and distribution equipment outside the 100% rule, instead of 5% a year (Income Tax Law, art. 35; Plan México decree).
Certificate
Plan México requirement
A certificate from the Evaluation Committee; the equipment must stay in use for at least 2 years.
SPV
Who uses it
The company that owns the plant, as the legal entity investing in the new equipment.
Income Tax Law, arts. 34 and 35; Plan México tax incentive decree, Official Gazette, Jan 21, 2025, arts. One and Two; guidelines, Mar 21, 2025. Each case is reviewed with your tax advisor.
Frequently asked questions
Does GIS Power put equity into the projects?
GIS Power develops the projects and seeks third-party equity and debt to take them to construction. Each SPV's structure is shared with investors under a confidentiality agreement.
What kind of investor are you looking for?
Infrastructure and energy funds, family offices, development banks and commercial banks, for project equity or debt.
What is a CKD or a CERPI?
They are listed trust certificates that let institutional investors, such as Mexican pension funds (afores), invest in infrastructure projects and private equity through the stock exchange.
Can a solar project issue a green bond?
A renewable generation project can be eligible, but an issuance carries structuring and reporting costs that only pay off with a large amount or a portfolio of projects.
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