Green energy for all


Access to reasonably priced energy is vital in creating and developing income-generating activities. ADA and its partners innovate by enabling the poorest households to access low-energy (or even carbon-neutral) equipment, thus limiting costs and pollution.


  • Green energy
  • Green energy
  • Green energy
  • Green energy

 

Almost 18,000 kilometres separate the Altiplano mountains of Peru from the beaches of the Filipino archipelago. Nevertheless, it is in these two countries that ADA launched its green microfinance projects.  Despite their lying thousands of kilometres apart, the two different geographical areas encounter the same problem with access to green energy. In fact, “we are now using what we did in Peru for the Philippines, and conversely lessons will be learnt from the Philippines for Peru...” explains Carla Palomares, who is in charge of green energy at ADA.

In 2011, ADA launched its “green energy” project with the technical support of MEI and EnDev/GIZ, in partnership with two Peruvian microfinance institutions (MFIs), Caja Huancayo and Fondesurco. It involved providing the most-needy with access to low-energy equipment – ovens, driers, lamps, water heaters – and even zero-energy equipment – solar energy installations.

This has yielded three benefits. Firstly, financial benefits – as it reduced energy costs, thus increasing entrepreneurs’ incomes. Secondly, in social terms – protecting health – as the ovens produce less toxic fumes. Thirdly, the environment – as it reduced energy consumption and CO2 emissions. By the end of 2014, almost 550 000 euros of microloans had been lent to around 950 persons in Peru.

The project extended to the Philippines

“The MFIs in the Philippines were interested in this project from the very outset” adds Carla Palomares. The microfinance market is very different in the Philippines, and ADA had to adopt a different methodology there. For that reason, ADA joined forces with the MCPI network, in order to replicate its green loan projects together with two MFIs, ASKI and PBC.

In the archipelago, which is seriously affected by natural disasters (typhoons, earthquakes, etc.), the issue of climate change and its consequences is a major one. With hundreds of isolated islands, access to cheap energy is vital for a population that lives simply, from fishing or farming. Electricity networks often have unreliable connections and encounter frequent power cuts. The microloans enable the purchase of solar energy lamps (at a cost of between 50 and 200 euros), facilitating children’s education and allowing individuals to work later in the evening.

In the Philippines, ADA works together with MCPI (Microfinance Council of the Philippines, Inc.), which is a national network of MFIs. MCPI has set up its own green energy unit comprising two local consultants: an Energy Business Advisor and a Technical Energy Advisor. One of the lessons learnt in Peru, and applied in the Philippines, is that local teams working on the project should give the MFIs their ongoing active support. ADA and the green unit have, together, been developing methodologies and tools enabling green loans to be made by the MFIs selected for the project. The green unit passes on its knowledge to the MFIs. Bearing significant social benefits, this product should be especially promoted and monitored, in a way distinct from other microloans. For example, MFIs need to familiarise themselves with a new process that includes selecting suppliers and technologies, and maintaining contractual relationships with suppliers (follow-up, after-sales service, spare parts, training, etc.).  In a context in which qualified staff is sought after, training, retaining and passing on expertise are key. Lessons learnt locally should be capitalised upon at regional and national levels.

Pooling the two experiences

First marketed in the summer of 2014, green microloans have already made it possible for more than 300 families to purchase energy-saving equipment. “The markets are different, as are needs” explains Carla Palomares. However, the organisation and set-up of microfinance services is the same. That is why the two experiences, gained in Peru and in the Philippines, can be pooled in order to draw conclusions about new innovations and best practices.

In the Philippines, loans are smaller – amounting to 60 euros on average. Among beneficiaries, 70% are new clients to the MFIs, people who might otherwise not have engaged with inclusive finance, had this simple solution not been available. For the MFIs, green microloans provide an entry point, and it is thus not surprising that two further MFIs, PMPC and NWTF, will now also be offering this type of service.

Next stage, Peru, with the development of the “Hub”, a service that brings together equipment suppliers, MFIs and beneficiaries to ensure that the entire value chain is taking part. From the loan to the sale of the equipment and its repair, all fits into the sustainable long-term view. ADA is working on this project with its local partner, COPEME.

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