Fund for the promotion of renewable energy

Renewable energy:  the solution for energy provision in isolated rural areas

More than 6.5 million people in Peru have no access to electricity. The majority of these live in remote rural areas, where more than 67% of the population lack modern energy. This is one of the reasons for continuing poverty in these regions. However the mountainous terrain in Peru means that it is unlikely that grid electricity will ever reach its poorest and most isolated areas.

The most likely way in which these areas will gain access energy is through the provision of renewables. Since 1992 Practical Action Peru with financial assistance from the Banco Interamericano de Desarrollo (BID), have been implementing a project for the Promotion of Renewable Energies (FOPER).

A major environmental advantage of the is project is a reduction in indoor air pollution by the substitution of electric light for candles and kerosene. In addition 34,000 fewer tons of CO2 have been produced if compared with this amount of electricity generated from diesel.

The project has had social as well as environmental benefits, such as better communications through access to television and radio. Electric light enables students are now able to study in the evening and allows the use of computers and audio-visual equipment in schools along with extended teaching time.
Energy access for community and health centres improves services through the use of kettles, freezers, and sterilisation equipment. A secondary advantage is better communication within the public sector.

There are also important economic benefits. In general families save 70% by using renewable energy instead of batteries, candles and kerosene – amounting to between 112 and 340 soles per family per year. Many new enterprises have been set up including restaurants, mills and hotels leading to an increase in incomes in local communities.

This project developed and transferred technology to small businesses including techniques that reduce the costs of machinery. It was of primary importance that the technology should be affordable, easy both to operate and maintain and that local people could be trained in the administration of the systems for their communities. Thus, if necessary, local operators knew where to find specialised technical assistance and maintenance.

In total 47 micro-hydro and 50 photovoltaic systems have been installed, providing 1.57MW of energy to 48 rural communities. 5 094 families (around 30 000 people) have benefited from the project.

Funding for this project included support from the Inter-American Development Bank (IDB), donations from NGOs and other agencies, local investment and regional government funds. End users contributed about 20% of the cost of their system through work and loans.

Practical Action designed and successfully tested a system of payment for energy based on consumption. According to this, the rate payable per kWh decreases as energy consumption increases - this contributes to promoting the productive use of energy?

The major barriers to expansion in the use of renewable energy in rural areas are:
1. Lack of appropriate technologies available
2. Shortage of adequate financing,
3. Limited local capacity
4. Lack of models for decentralized management of basic services

These barriers were overcome by the use of appropriate technologies for low cost, small-scale use of micro hydro, a mixed funding model based management on local capacities to ensure sustainability of the system, and an outline pricing that promoted the productive use of energy.

One advantage of the experience gained from this project is that the lessons learned can be applied individually or collectively. This is because the strategy was designed to overcome specific problems. Therefore, it is possible to implement a micro hydropower program in another country replicating one, several or all components of this experience. Under this premise, in 2006 the project began a new phase under the name of the Fund for the Promotion of Renewable Energies (FOPER), to include other types of renewable energy and involving other Latin American countries such as Bolivia, Ecuador and Colombia.

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