THE ENERGY INCLUSION INITIATIVE
Making Energy Work for Micro Entrepreneurs
ADA (Appui au développement autonome) and MEI (MicroEnergy International) combine their expertise in the fields of microfinance and renewable energy to create the Energy Inclusion Initiative (EII). This innovative project aims to increase clean energy access in developing countries through inclusive financial and technical services.
ADA – MEI Partnership
In 2010, MicroEnergy International (MEI), a Germany based consulting company consisting of a team of international experts and practitioners in the fields of energy and microfinance, partnered with Appui au Développement Autonome (ADA), the Luxembourger NGO specialized in the area of technical and financial assistance for MFIs worldwide. In order to systematically develop a business case for the implementation of microenergy solutions into MFIs’ portfolios, the partnership began with the development of the ME Atlas, with the goal of identifying a country with a high market potential for microenergy products. As a tool to map the microenergy potential for each country, the atlas analyzes qualitative and quantitative data from both macro and micro perspectives. The data focuses on factors related to the financial and energetic infrastructure of the respective country. Further, special focus is put on the end user‘s micro energy absorption capacity. In this case, Peru was identified as the most promising country for project implementation.
INITIAL PROJECTS IN PERU
Selection of MFIs
The first on-site mission assessed the suitability of various MFIs for the integration of energy loans into their portfolios and built up a network of potential public and private partners. Selection criteria for institutions included the requirement of a high degree of motivation and commitment to the project, among other quantitative factors. Caja Municipal de Ahorro y Crédito (CMAC) Huancayo in Junín and Fondo de Desarrollo Regional (Fondesurco) in Arequipa met all the required criteria.
The second phase of the assignment (Field Research), conducted in October-November 2010 by ADA and MEI, focused on the research of usage, needs, expenses and costs of energy in the rural working areas of the MFIs. The field studies assessed the market demand situation in both MFIs current clientele and potential areas for intervention. Results highlighted the market opportunities for different products: solar thermal water heaters, solar dryers, improved cooking stoves and ovens, energy efficient fridges, biogas installations and solar home systems. After a detailed examination of the potential products and the respective market environment, Solar Water Thermals, Solar Coffee Dryers and Improved Cooking Ovens were identified to optimally suit clients' needs and facilitate the largest micro business growth opportunities. Furthermore, the selection criteria for energy products considered the institutional challenges of an appropriate supply chain design and product quality issues (ME validation and certification process). A business plan has been developed in close collaboration with both financial institutions, differentiating three phases of product implementation within the institutions’ portfolios, namely: Pilot Phase, Small Scale and Large Scale Commercialization Phase. Throughout this process we benefited from the valuable contribution from our local technical partner, the GIZ Endev, which has contributed its valuable expertise in product validation, suppliers selection and other activities pertaining to local technical assistance. In the course of the different phases, the business plan will be continuously adjusted according to the pilot results and implementation.
Through the implementation of the EII, a triple bottom line, namely economic, social and ecological objectives are addressed. By going beyond the goal of financial inclusion towards energy inclusion, local development is promoted in a sustainable manner, carbon emissions are offset and public health and hygiene are improved. The financial return will be twofold, consisting of both profit share as well as carbon finance revenue. In the course of the EII, ADA and MEI continuously assist the MFIs in the coordination of activities such as field research, business planning, stakeholder communication, product quality assurance and certification, capacity building within the MFI and service providers, and carbon finance implementation.
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