The biggest energy efficiency opportunity worldwide today lies in street lighting systems. In Mexico, street lighting is the second largest expenditure for municipalities only after payroll. Yet with at least 15% of Mexico’s street lighting infrastructure out of service (affecting both safety and security), they are also the public service that receives the most community complaints. Cities are not able to develop or implement a sustainable energy efficiency project in compliance with environmental regulations due to the lack of budget and access to capital, and even when available, they rarely have additional debt capacity.
Low carbon street lighting solutions are provided under the “Performance Contracting” model by a private sector company (Optima Energia, OE) to the municipalities, which do not require any initial investment, but instead generate positive cash-flows since the beginning of the contract and at the end of the contract period they gain ownership of the system and receive 100% of the proceeds from the energy savings.
Municipalities can reduce up to 60% of their electricity consumption and at the same time increase luminosity by 50%, which enhances public security, promotes healthy municipal finances, and has a positive social impact. Also environmental benefits of each average project allow the municipality to reduce 75 thousand tons of CO2 during the project’s lifespan.
Today, the biggest challenge for a massive implementation is the availability of long term financing (10 to 15 years). Having a financing facility to provide the vehicle for municipalities to develop their street lighting projects will create the conditions for a massive application.