The Energy Inclusion Initiative (EII) is the result of the partnership between MicroEnergy International (MEI), a small German firm, and ADA (Appui au Développement Autonome), a Luxemburgish NGO whose motto could be "Inclusive finance. Increasing autonomy. Improving lives.".
MicroEnergy International is specialized in the local micro-production of renewable energies and ADA in micro-finance as a means to empower the poor. Their fields are different but both organizations have the same purposes of global inclusion and economical autonomization. They joined in this project aiming at developing a business case for the implementation of microenergy solutions into micro-finance institutions' (MFI) portfolios.
The first step of the Energy Inclusion Initiative was to identify the best place in the world to run the project, which would be a country with a high market potential for microenergy products. The Atlas ME, mapping the microenergy potential for each country, enabled the two partners to choose Peru in July 2010 for the following reasons:
- 1 person out of 5 has no access to electricity.
- Its exceptional annual sunshine rates: around 2300 KWh/m2 per annum, which is about twice the medium annual sunshine rates in Europe.
- Microfinance is an already well-developped sector: the 3.2 billion micro-borrowers in Peru represent 10% of the population.
The next step was to go on-site and find partner MFIs who would be able to integrate energy loans into their portfolios. After meeting various MFIs and assessing their suitability against the selection criterias (among which were quantitative factors but also qualitative factors such as high motivation and commitment to the project), MicroEnergy International and ADA selected Caya Huancayo and Fondesurco.
Third, in October-November 2010, MEI and ADA have basically conducted a market study, focused on the usage, needs, expenses and costs of energy in the rural working areas of the partner MFIs. This led MEI and ADA to identify 3 main products suiting the population: solar water thermals, solar coffee dryers and improved cooking ovens.
By May 2011, a business plan had been developped with both MFIs and 3 phases of product implementation within the institutions’ portfolios had been identified:
- Pilot phase: May - December 2011
- Small-scale commercialization phase: 2012
- Large-scale commercialization phase: 2013 - 2014
What's the added-value ?
Since July 2011, 200 people have bought a solar water thermal, a solar coffee dryer or an improved cooking oven.
Those products improve the quality of life of individuals, and on the entrepreneurs' side, the benefit of the investment is quick to see: after buying a solar water thermal, an innkeeper, now offering hot water, could increase by 20% the night's price.
More broadly speaking, a project like this has advantages on many sides:
- On the ecological side: development of solutions for green sources of energy, implementation and research on best practices, etc.
- On the economical side: the homes and businesses equipped with these products reduce their costs and/or improve their revenues, enabling the businesses to re-invest in their activities or developping new ones. This is local and sustainable development.
- On the social side: the people benefitting from these micro-credits and/or from higher revenues access to higher standards of living, diversify their food supply, and improve their hygiene, which contributes to public health. For example, improved cooking ovens, by reducing and driving the cooking smoke outside of the house, improve the air quality in the home and lower cancer and other diseases risks.
What strikes me here?
For me, this project is a powerful example of how micro-finance, renewable energies, social business and global interconnexion separately and synergically can transform people lives and make the world better.
It is here very understandable how micro-finance leverages financing capacities to make the borrower "become productive and independant", says Mia Adams-Bormans, founding member of ADA.
And I would add "included", because the micro-credit makes the person a borrower and an entrepreneur rather than a poor person trying to make ends meet in a rural and isolated area. It gives them a dignity that includes them in a global community. And don't take me wrong : I don't think these people deserve pity before they receive a micro-credit. On the contrary, I think they deserve a global community looking at them with respect and therefore offering micro-credit solutions rather than free well-thinking humanitarian aid.
You can also see in the Energy Inclusion Initiative how the caracteristics of renewable energies are used in a smart way. Sources of renewable energies are often spread and not concentrated (sun, wind, waterstreams, etc.). It is easy to collect them in small quantities about everywhere in the world. And those Peruvian entrepreneurs don't have access to energy (through the centralized energy grid) although their homeplace is in one of the most sunlit countries on Earth. So instead of connecting their isolated home to the electric grid, let's enable them to produce their own energy!
About global interconnexion, I just would like to pinpoint how international the project team is. The organizations come from Peru, Germany, Luxembourg, Norway, the Netherlands... And I don't even speak about the individuals behind the organizations, who may have even more different nationalities and cultures. This would never have been possible without internet and more largely, all communication technologies that have developped in the last decennies.
Finally, I want to come back on the social aspect of the project. Although none of the actors are social entrepreneurs, the whole project is in the end about making business... in a social way. Because enabling those Peruvians homes and businesses to buy these products improve their day-to-day lives.