Decarbonization Strategies Must Spread Across Value Chains

Q: How has Finsolar’s business grown during the past two years?

A: Finsolar started operations a year before the pandemic, so our processes had to be developed under trying circumstances. We seek to be a partner for our customers to help them achieve their sustainability and decarbonization goals. We work closely with their sustainability, energy and finance departments to create tailor-made solutions. Creating this rapport with customers to strengthen partnerships was one of the main challenges we had to overcome during the pandemic, as face-to-face contact was limited. 

In 2021, we launched our ultra-flexible power purchasing agreement (PPA) which, together with the Finsolar Model, are the two solutions we offer. Both solutions saw slow growth during the first year of the pandemic as many companies postponed decarbonization decisions. In addition, the regulatory uncertainty regarding renewable energies contributed to the decision to postpone investments in clean power. 

In 2022, we have seen a shift that favors Finsolar’s growth. After a year and a half of maturation, we have had several projects come about through our ultra-flexible PPA. Now that regulatory uncertainty has diminished somewhat, more companies have brought back their sustainable investment initiatives. This has opened up a great opportunity for us.

Q: Why should companies prioritize investment in sustainability and environmental, social and governance (ESG) strategies?

A: First, sustainability makes businesses more competitive. Companies that have specific ESG goals are generally also the most profitable and competitive. In addition, companies that commit to sustainable goals generate more confidence in their brand. The trend also shows that investors are increasingly interested in having their capital allocated to business projects with ESG perspectives. 

On the other hand, those that already have clear decarbonization targets for 2030 and 2050 must achieve a 12 percent reduction of their total decarbonization this year. Achieving this target requires heavy investment and a firm commitment to change, as they are up against the clock. 

Q: What challenges do Mexico’s value chains face when trying to decarbonize?

A: The first challenge is related to access to information. Companies intend to decarbonize but often do not know where to start. Therefore, it is recommended that enterprises invest in software to help them map and measure the environmental impact of all their activities before taking action to reduce emissions. We cannot analyze the progress of what is not measured. This measurement capability must be extended to the entire value chain to then drive joint strategies. Finsolar helps its clients and their suppliers to perform this initial mapping so that, with the right information, we can design joint strategies toward achieving their sustainability goals. 

Q: How does the Finsolar Model work and how does it add value to the energy consumption of large companies?

A: Our Finsolar Model is aimed at large companies with decarbonization objectives that extend to their supply chain. We create a communication platform to identify which companies within the chain have the potential to generate solar energy through Distributed Generation (DG). Finsolar contacts these companies to encourage them to invest in renewable energy. The solar panels that we operate with third parties belong to the investing company, so they get the benefit of sustainable investments. At the same time, Finsolar maps out the opportunities so these value chain partners can further enhance their ESG strategies beyond DG. 

In Mexico, current regulation limits DG to 0.5MW. Companies that are investing in DG consume much more energy than this limit and are left without alternatives to continue expanding their energy decarbonization strategies. Our Finsolar Model offers a solution to this limitation, allowing companies to continue investing in DG within their value chain and gain returns.

Q: Why is Finsolar’s PPA solution the best option for medium-sized companies with sustainability goals?

A: Although Finsolar has only been operating in the market for just a few years, our managing partners have more than 10 years of experience in the renewable energy industry. As a result of this experience, we understand that SMEs have very specific needs concerning their energy consumption. Unlike large companies, SMEs are looking for the best short-term benefit. They prefer to save as much as possible at the beginning and have flexibility in their commitments, as they are exposed to changes in strategy due to market uncertainty. Finsolar offers SMEs free energy during the first three to six months of a contract’s first year. This allows companies to save on additional energy consumption. In addition, we offer flexibility in contract terms. SMEs can choose terms starting as early as five years, unlike traditional PPAs that start with minimum terms of 10 or 12 years. This flexibility allows these companies to weigh the outcome of renewable power production and decide whether the results align with their objectives.  

Finsolar develops innovative financing schemes aimed at medium and large companies that want to get into the distributed generation solar segment but are unwilling to commit to large investments of time, effort and capital.