MicroEnergy Credits will use the proceeds of the OPIC loan to assist qualified microfinance institutions launch and scale clean energy lending programs. The program aims to significantly increase the availability of microfinance capital for low-income populations to afford quality clean energy products in categories which include high-efficiency stoves, water purification, and solar lighting.

Microfinance institutions that partner with MEC use carbon finance to cover the upfront costs of offering microloans for clean energy products and reduce the effective cost to the households of accessing efficient and renewable energy. Individuals who receive microloans to purchase clean energy not only benefit the planet; they benefit from improved health due to reduced indoor air pollution and increased savings from reduced expenditure on traditional fuels.

“Making clean energy technology available to individual micro borrowers and micro entrepreneurs on a widespread basis is an important – and often overlooked – part of the international effort to reverse climate change,” said OPIC President and CEO Elizabeth Littlefield.  “This landmark project has the potential to transform low-income populations’ access to affordable clean energy products, and in the process improve both their health and prospects for economic growth. Partnering with MicroEnergy Credits to deliver innovative financing through the use of carbon credits only makes the project more remarkable.”

“We believe microfinance institutions, with their enormous market reach, have an important role to play in providing access to clean energy products and services to people at the bottom of the economic pyramid,” said April Allderdice, CEO, MicroEnergy Credits. “OPIC’s investment will help MicroEnergy Credits accelerate our growth in high potential markets with significant unmet demand for affordable clean energy products.”

For more information, please contact:

Timothy Harwood
OPIC  202-336-8744

Josie Noah
MicroEnergy Credits
josie.noah@microenergycredits.com

About OPIC

OPIC is the U.S. Government’s development finance institution.  It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy.  Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad.  OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.

Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported nearly $200 billion of investment in over 4,000 projects, generated $74 billion in U.S. exports and supported more than 275,000 American jobs.

www.opic.gov

About MicroEnergy Credits

MicroEnergy Credits is a s a financial intermediary which links microfinance institutions to the carbon markets when they lend for clean energy. Founded in 2007 and based in Seattle, Washington, MicroEnergy Credits works with Microfinance Institutions and Carbon Emission Reducers around the world. MEC is a for-profit social enterprise financed by impact investors. Today, MEC reaches over 80,000 households with clean energy services in partnership with 20 microfinance institutions.

The partnership will be MicroEnergy Credit’s first in both Senegal and Madagascar and will expand clean energy access to MicroCred’s microfinance clients in those countries. Senegal and Madagascar both suffer from deforestation and energy poverty, creating a need for clean energy products. The partnership will allow clean energy products to go to scale at affordable costs to clients beginning in 2012.

XacBank’s Vice President of Retail Banking, Delgerjargal Bayanjargal and MicroEnergy Credit’s CEO, April Allderdice, participated in the session, Accessing Carbon Finance through Clean Energy Lending Programs, which detailed how microfinance institutions can scale clean energy lending programs.

For more information about the MEC fellowship and other openings at MEC please view our Careers Page

Today MEC is headed to Mongolia to work with our partner XacBank, a microfinance institution that has started lending for clean energy products like efficient housing and efficient stoves.  We are prepared for cold weather: (-30 degree Fahrenheit), and pollution, that in the winter is the worst in the world. Puffy coats, and pollution masks are in our bags.

Tuesday

Most of the pollution in the city is caused by the burning of coal in gers (yurts) and inefficient buildings in low-income districts of the city. The smell of pollution in noticeably worse as you enter the ger districts. We visited a household that had bought an efficient ger blanket. This is a type of home insulation made of felt that reduces heating requirement by 50%.  This gentleman’s comment was:

“I’ve heard of you but never met you. We are so grateful that you have made these ger blankets available to us. We can have the best intentions to reduce air pollution and protect our health, but unless there is an affordable product to buy, we can’t do anything. The ger blanket is a wonderful product that was offered at an incredible price. Last year my three grandchildren suffered in a house that was too cold. This year we have an efficient ger that stays warm through the night with only half the fuel we used to use. Now my grandchildren can sleep in a warm place.”

Creating a Market

MEC’s local partner XacBank is a microfinance institution that has introduced local product centers to educate people about energy efficient products. At these local marketing outposts in the ger districts energy efficient products are displayed, financial packages offered and clients take delivery.  These product center associates amazed us with their smooth and confident sales pitch. It is no wonder they’ve done more than 3000 products in this district alone.  This product center demonstrated efficient ger blankets and efficient stoves.  For those that can afford it, there is also an efficient house for sale.

 Wednesday: Testing the stoves

 While efficient stoves sound like a good idea, they only work if they can demonstrate a reduction in CO2e emissions. Also, poorly designed stoves may actually leak more smoke and gases into a household than the traditional one. This small stoves lab conducts world class testing on emissions from the efficient stoves. Stoves producers from around Mongolia bring their stoves here to be sure they are achieving the air pollution standards that are required to participate in the program. This lab also enables a research team to innovate development of even cleaner and more efficient stoves.

 MicroEnergy Credits meets the President of Mongolia

Today we met with the President of Mongolia. How did this come about, you may well ask! Well, I don’t think it would be an understatement to say that what started as a program at one microfinance institution has become a national priority. In fact, by reaching only 150,000 households with the clean energy products, the program could remove 50% of the air pollution in the city. President Elbegdorj has prioritized air quality and introduced the first air quality legislation in the country. He learned about the clean energy lending program by viewing MEC’s Yurtcozy website. Then we received an email inviting us to meet with him and present at the Mongolian Economic Forum-our colleague from Climate Care, Ed Hanrahan is pictured here. During our 30 minute conversation with the President,  his question to us: How can my office help this program to scale up?

“…microfinance institutions may lack the funds to identify reliable energy suppliers, educate loan officers about clean-energy technologies and build a support network for energy schemes. One way to solve this problem, being pursued by MicroEnergy Credits, a social enterprise, is to plug microfinance institutions into carbon markets. Projects can then be funded by selling carbon credits when a microfinance customer switches from kerosene to solar lighting, for example.”

So how is this working on a daily basis? I’d like to share some insights from my recent field visit to our partners in Northern India. I learned quite a bit on this visit both with respect to the impact of clean energy on people who’ve never had electric light before, and some signs of a turning point in the market for microfinance and renewable energy in India

Growth in our Indian operations

India is one of the largest global markets for clean energy. It is home to over 400M people without access to the electric grid. On my trip I met with the leadership of two of our rural bank partners, AGB and Prathama Bank, and signed a third partner, Gurgaon Gramin Bank bringing MEC’s bank portfolio up to 4 in India and 15 globally. These existing partners have massive reach: between them they have the capacity to reach over 10 M households with clean energy in the next five years.

The vital funding channeled through the MEC platform is providing resources to the banks and accelerating adoption of a clean energy path for eventually millions of clients. These northern India rural banking giants are now reaching an inflection point in their ability to disseminate solar home lighting systems to their clients and carbon credits are a key part of that growth. The performance that was achieved by the first bank, AGB, is now being replicated by several other banks—each employing their own style to motivate and promote the program within their institution. 

On the ground with our partners

One bank’s General Manager explained, “We need the carbon funding to stage a client education event during our festival season in November.”  Another partner used a small sales incentive for branch managers to achieve competition across branches resulting in record sales.  AGB showed off pictures of their annual facilitator (technician) training held earlier this year. 200 facilitators (jobs!) reviewed basics of solar home system installation, maintenance and carbon monitoring. Their process is so effective that they are now reporting 100% of systems functioning. (Our independent audit last year showed a performance of 96%)   

MEC fellow Jennifer Gong has worked with these northern rural banks for  the past six weeks, providing training in carbon monitoring, and serving as our local contact. While there she helped the rural banks work out carbon monitoring processes implemented by staff at the local solar distributor and the bank branch. She presented MEC’s program to several other regional banks, and she helped ensure that the first year’s data was transmitted in a correct and timely manner.  Our field work has enabled our partners to overcome some initial data monitoring challenges at their 300 branches, and they now have a feasible commitment to send the data necessary to receive a significant payment in October. I was moved that AGB targeted this month as their goal in honor of Gandhi’s birthday. 

MicroEnergy Credits: a critical catalyst                                           

The carbon funding doesn’t cover the full cost of the solar energy system. What it does do is catalyze microfinance banks, that already reach millions of people, to design locally acceptable programs to disseminate clean energy products which are less expensive than the alternatives, and which are loved by households for their benefits to health, education and quality of life.   

With a small investment in MEC, we have an opportunity to bring over $8 Billion per year in carbon funding to microentrepreneurs.  Now at over 45,000 households receiving clean energy, MEC’s carbon platform will breakeven at 330,000 households. MEC is offering accredited investors the opportunity to realize financial returns while providing access to clean energy to microentrepreneurs around the world.  Our current funding round is closing soon, but there is still need for investment to fill the gap.  For information about this investment opportunity please contact me directly. We may also schedule time to meet at the upcoming SOCAP conference or the Opportunity Collaboration.

The conversation explored emerging trends at the service delivery, financing, and policy levels.   MEC’s leveraged approach to carbon financing to induce scale was notable at the Conference.

On March 18th and 19th, Aryavant Gramin Bank (AGB) and Tata BP Solar, held a training program for over 200 facilitators, who are employees of AGB. These facilitators are responsible for advertising the solar lighting home system (SLHS) program, overseeing installation, as well as answering maintenance requests within 48 hours.

The high integrity of MEC’s carbon credits in the market (and to the carbon purchaser) really depends on the facilitator’s work in the field. For example, to register a household for carbon credits, MEC requires not only information about the system and loan size, but also its gps coordinates to identify its location where addresses can be very difficult to pin down. Furthermore, MEC requires each system to be monitored at least once every quarter. It is the facilitators that will carry these tasks out.

During the training program, I had the pleasure of teaching a few facilitators how to use our gps trackers. When we practiced in one village, I realized how well they knew each and every customer. I was not surprised to later learn that the facilitators were able to collect the longitude and latitude information of over 1000 households in the following two weeks. 27,000 households were able to join the SLHS program on the strength of MEC’s carbon program, and so it is our hope to start producing carbon revenues from all of them in the next coming months.

That’s about 135,000 people with access to clean energy!