FreemE - Bringing Renewable Energy to the Masses Via Microfinance

The problem

The Millennium Development Goals confirmed the central place of energy in poverty eradication efforts for the 1.6 billion people that do not benefit from access to modern energy services. Just as energy is considered a vital need, energy efficiency and the development of renewable energies are significant issues at the economic and social levels, as well as contributing to the fight against climate change. Developing countries face significant challenges in modernizing energy services, especially for people with low incomes and in situations of energy poverty: price and access to financingare the main constraints in obtaining equipment for the poorest households and small income generating activities. Morocco and Egypt fit within this frame, with high poverty rates, regional disparities, a large dependence on fossil fuels and a high number of micro-enterprises. Despite heavy subsidies, energy bills represent a substantial cost to consumers.

The Idea

Launched in 2010 by PlaNet Finance and French NGO Geres, with support from public and private sector partners, the FreemE project aims to reinforce the technical capacities of local actors in Morocco and Egypt, whilst encouraging microfinance institutions to create financial schemes to facilitate clients’ access to renewable energies and energy efficient systems. More precisely, the objective is to support the development, access and sustainable use of these technologies in Morocco and Egypt for vulnerable population groups in urban and rural areas. PlaNet Finance is supporting MSMEs and small local distributorsin creating and diversifying their energy efficient products for end users, for whom the organization has developed adapted and sustainable financial services that seek to increaseawareness about issues related to renewable energies. 

The project plans to benefit 12,500 different stakeholders in the two countries - from both the private and public sectors - for three years. Specific activities include: institutional strengthening of energy efficiency and renewable energy entities and actions adapted to the national energy policies proposed to target groups, strengthening of microenterprises’ and small distributors’ technical capacities in order to create and diversify energy products and services, the development of adapted microfinance models and establishment of a credit fund for partner microfinance institutions, and the organization of awareness campaigns targeting local populations.

Potential Impact

To date, FreemE is midway though its project cycle. Four hundred small enterprises have been trained to become capable of marketing more energy efficient equipment and diversified local energy services. Approximately 4,800 micro-entrepreneurs and low-income families have benefited from renewable energy and energy efficiency technologies. FreemE is seeking to create synergies between the projects in Morocco and Egypt and to facilitate the development of best practices which can be replicated in other countries in the Mediterranean region. The high degree of complementarity between partners and the energy-related political initiatives being taken in both countries, along with policies in Europe and various bilateral initiatives, are considered especially suitedto promoting the South-South relations that will provide long-term sustainability for the project’s activities.

Social Value

The social value in the FreemE project lies in its commitment to addressing the ‘energy poverty’ of those at the base of the developmentalpyramid. The financial crisis aggravated the gap between the richest and the poorest: at least 3.7 billion people still lack access to financial services and 3 billion participate, in spite of themselves, in the emission of greenhouse gases, due to a lack of financial resources to use clean technologies and modern energy systems. The absence of adapted financial services reinforces, even more strongly, this energy poverty. The implication of microfinance institutions financing new markets that are more respectful of the environment necessitatesa behavioural change by all players. Financing innovative technologies is not only positive in limiting global warming but also brings permanent jobs.

Policy makers often question whether economic and social development can be reconciled whilst taking into account environmental issues. This potentially represent a new challenge for microfinance institutions. PlaNet Finance and its partners believe that the establishment (and success) of pilot projects like FreemE will make it possible to reconcile these seemingly competing objectives and to show that such multi-faceted challenges are able to be overcome.


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