What a fund reviews in a C&I energy project in Mexico

The starting point: an asset with its own cash flow

In a C&I (commercial and industrial) project, a solar-plus-storage, hybrid or cogeneration plant is built to supply a specific user: an industrial park, a process plant or a data center. GIS Power develops each project in its own special purpose vehicle (SPV), which owns the plant and sells the user energy or a service under a long-term contract.

For the investor, this means the object of review is a ring-fenced asset, with its own contract, debt and cash flow, not the user’s or the developer’s balance sheet. The review is organized in five workstreams: technical, legal, commercial, financial and operational. A finding in any of them can change the price or stop the deal.

1. Technical: that the plant produces what it promises

The financial model rests on a production figure. The technical review checks where it comes from:

• Resource and yield. The solar study with its P50 and P90 scenarios: the expected output and the output exceeded with 90% probability. Debt is usually sized against the conservative case.
• Balance against the load. The user’s hourly profile against generation, battery and backup. If the plant produces when the user is not consuming, the energy contract feels it.
• Engineering and equipment. Design, manufacturers, equipment warranties and expected degradation over the term.
• Construction contract. Price, completion date, liquidated damages and who is liable if the works run late. The technical review also looks at the builder’s track record: the group has delivered critical power projects since 1983 and has 56+ MW of cogeneration developed.

Lenders commonly appoint an independent engineer to review these points. What shortens that work is receiving complete, traceable information from the start.

2. Legal: permits, grid, environment and land

The legal review confirms that the project can be built and operated under the figure the model assumes. In Mexico, under the Electricity Sector Law (DOF March 18, 2025), the points a fund reviews are:

• Generation permit. The National Energy Commission (CNE) grants generation permits (art. 151). A plant under 0.7 MW is exempt (art. 19); self-supply of 0.7 MW or more requires a permit and, between 0.7 and 20 MW, may qualify for a simplified procedure (art. 30). The fund checks that the permit exists, or that its path and timeline are clear, and that the figure matches the contract.
• Interconnection. CENACE determines the interconnection and reinforcement works required (art. 48), which are paid by the applicant or folded into grid expansion programs (art. 49). The fund wants to see the studies, the cost of the works and who pays for them. More on interconnection.
• Environment and community. The environmental impact statement (MIA) before SEMARNAT, in the cases set by the General Law of Ecological Balance (LGEEPA, art. 28), and the Energy Sector Social Impact Statement (MISSE) before SENER, which has a 90-calendar-day resolution period (Electricity Sector Law, art. 139). More on environmental permits.
• Land and corporate. The right to use the land for the full term, the incorporation of the SPV and bylaws that allow the security the debt requires.

A generation permit is not a prerequisite to request interconnection studies (Electricity Sector Law, art. 49), so a well-developed project advances both tracks in parallel and reaches financial close with both resolved.

3. Commercial: the contract and who signs it

The energy contract is the source of the cash flow, and the commercial review is largely a review of that contract and its counterparty:

• Scheme and term. Power purchase (PPA), energy as a service or a build-own-operate-transfer scheme. Terms run from 48 to 180 months, depending on the scheme. The fund compares the contract term with the debt tenor. More on power purchase agreements.
• Rate and indexation. How the price is set at the outset and the rule by which it is updated.
• Volume and availability. Whether the user pays for the energy it consumes, for available capacity or a combination, and what happens if it consumes less than expected.
• Counterparty. The user’s financial strength, its payment security and how anchored it is to the site. A user who can relocate before the end of the term is a risk, even with good credit.
• Termination. What happens if the contract ends early: early termination payments, the option to buy the plant and who keeps the asset.

4. Financial: structure, trust and model

The financial review looks at how the contract becomes payments for debt and equity.

• The SPV. One company per project, owning the plant, the contracts and the debt. The risk of one project does not contaminate the others. More on SPV structure.
• The payment trust. The user’s payments do not go straight to the SPV: they go to a trust (fideicomiso de fuente de pago) that applies them in an order agreed with the lenders. Taxes, operations and debt first; shareholders last. That waterfall is what makes long-term lending against an energy contract possible.
• The financial model. Assumptions traceable to the documents in the data room: P50 and P90 yield, rate, operating costs, degradation, debt schedule and taxes. The fund runs its own sensitivities on that model.
• Taxes. Mexico’s Income Tax Law allows a 100% deduction of investment in generation equipment using renewable sources or efficient cogeneration, provided it operates for at least 5 years (art. 34, sec. XIII). The deduction goes to the equipment owner, which in these schemes is the SPV. More on equity and project finance.

5. Operational: who is accountable over the term

A 48- to 180-month contract is paid with years of operation, not with the start-up date. That is why the operational review weighs as much as the others:

• Operations and maintenance contract. With contracted availability, how it is measured and what happens if it is missed. GIS Power operates the plants after close for the life of the energy contract. More on operations and maintenance.
• Reporting. What the lender receives and how often: production, availability, failures and maintenance.
• Spares, warranties and insurance. Who holds critical inventory, how manufacturer warranties are enforced and what the policies cover.
• A single point of accountability. When the same company develops, builds and operates, the lender has one counterpart for the whole cycle rather than a split of blame among contractors. The full cycle is on project life cycle.

How information is shared

Project information is shared in order, from aggregate to specific, and the detail only once confidentiality is signed. It is the same process described on the investors page:

1. Confidentiality agreement. An NDA is signed before pipeline information is shared.
2. Teaser. The pipeline with its size, terms and structure, project by project.
3. Data room. Financial models, contracts, permits and engineering for due diligence across the five workstreams.
4. Terms. The participation structure in each SPV and the closing conditions.
5. Close and construction. Financial close, construction and reporting during operations.

A data room organized by workstream, with each model assumption linked to its document, saves weeks of questions and answers. It is what to ask for from the teaser onward.

Sources

• Electricity Sector Law (Ley del Sector Eléctrico), DOF March 18, 2025, arts. 19, 30, 48, 49, 139 and 151.
• General Law of Ecological Balance and Environmental Protection (LGEEPA), art. 28.
• SENER, General Administrative Provisions on the Energy Sector Social Impact Statement, DOF February 16, 2026.
• Income Tax Law (Ley del Impuesto sobre la Renta), art. 34, sec. XIII.
• GIS Power, contracting models: terms of 48 to 180 months, depending on the scheme.
• Group project track record (PMI International and GIS Power track records).

This article is for information only. Each investment is reviewed with your legal, tax and technical advisors.