Going Green: The Energy Inclusion Initiative

Energy access at the grassroots

Energy access in the vast majority of the rural towns in the Philippines remains to be a major challenge for both the national government and private institutions. Expensive, inefficient and unreliable sources of energy also reduce the productivity of income generating activities and further contribute to the worsening impacts of climate change.

Business planning workshops and energy needs assessments in PBC (top photos) and ASKIBusiness planning workshops and energy needs assessments in PBC (top photos) and ASKI

Several renewable energy programs and energy efficiency solutions have been implemented to reduce the dependence on biomass and diesel, while simultaneously improving business opportunities. However, only a fraction of this potential has been tapped, since rural customers generally have insufficient financial capacity to purchase the technical systems or have no access to respective loans because of missing credit worthiness. Microfinance institutions (MFIs) can step in to tackle this problem by providing loans for these potential clients.

The Energy Inclusion Initiative in the Philippines
In the first quarter of 2013, the Microfinance Council of the Philippines, Inc. (MCPI) entered into a partnership with the Appui au DéveloppementAutonome (ADA), MicroEnergy International (MEI), with co-financing from the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance to pilot the Energy Inclusion Initiative (EII) to two microfinance institutions in the MCPI network coming from a successful first pilot in Peru in 2010.

The project aims to enable the provision of green energy technologies to micro and small businesses through MFI-based energy financing. EII also intends to build the capacity of MCPI to provide technical assistance and to replicate the model to other MFIs in its network.

The Pilot

In August 2013, AlalaysaKaunlaran, Inc. (ASKI) in Nueva Ecija and Peoples Bank of Caraga (PBC) in Agusan del Sur were selected from a pool of highly qualified institutions in the MCPI network for the pilot phase of the initiative.
The initiative provides the pilot MFIs with technical assistance and expertise to support them in building an infrastructure to sustainably extend loans for relevant renewable/clean energy solutions to their clients. The TA support for the pilot includes client energy needs assessment, technology/supplier assessment, product selection, energy loan product design, business development, implementation, and evaluation.

The pilot MFIs are currently in the last phase of preparing for the pilot roll out, scheduled in March 2014, of the two technologies they selected for their EII pilot branches. The methodologies learned and processes established during the pilot will prepare the MFIs to eventually scale up the program and to explore additional renewable/clean energy solutions according to the needs of their clients.