Access to Clean Energy: From Pilot Project to Sustainable Enterprise
In 2011, armed with a grant awarded under the Energy and Climate
Partnership of the Americas (ECPA), nonprofit organization Trees, Water &
People launched an initiative to increase the use of clean technologies in
several Latin American countries. That pilot project has since spawned a social
enterprise that is making solar lighting products accessible to customers in
rural areas of Central America.
It all began with a three-year, $1.2 million ECPA grant awarded
by the U.S. State Department to Colorado-based Trees,
Water & People (TWP)
for an initiative called “Improving Access to Clean Energy in Latin America.”
The goal was to develop effective ways to reach off-grid markets with
climate-friendly products such as clean cookstoves, solar lanterns, and small
solar home systems.
While such products provide tangible benefits—cleaner indoor
air, reduced expenditures on conventional energy, and higher-quality lighting
and cooking—a major challenge is how to create a sustainable supply chain to
reach markets with the greatest need. Last-mile distribution is complex,
unpredictable, and expensive. Roads are sometimes impassable, mobile
communications are often unreliable, and many rural households have no access
TWP worked hand in hand with a social enterprise called
PowerMundo—which had tackled some of these problems in Peru—and with partners
in Nicaragua, Honduras, and El Salvador to develop a sustainable commercial
model for hard-to-reach areas in Central America.
After trying several different approaches, TWP found that
existing rural institutions such as agricultural cooperatives, nongovernmental
organizations, and rural savings and loans groups could be effective
distributors and retailers of the clean-technology products. Since such
groups often already have a credit relationship with small-scale farmers for
agricultural investments, they can provide these same farmers with the payment
terms they need to invest in products that have a true impact on their lives.
Last year, TWP took a step toward making the initiative
sustainable by establishing a social enterprise called Luciérnaga LLC
(the name means “firefly”) to serve Central America with solar lighting
products. “We wanted to create a vehicle through which the project could
continue to grow,” explained TWP International Director Sebastián Africano.
Luciérnaga fills a business niche by providing a link between
manufacturers and small local distributors. It imports solar lighting products
in bulk to a central location in El Salvador, handling logistical details and
ordering in large enough quantities to keep the price per unit low. The items
can then be distributed over land to partners and clients throughout the region,
in Nicaragua, Honduras, and Guatemala. Any profits would be reinvested in the
The growth of this business model and the birth of Luciérnaga as
an independent company with an international presence show how short-term grant
funding can be leveraged toward longer-term sustainable development objectives,
according to Africano.
Today, TWP is working to standardize its methods in each country
and implement a mobile phone-based monitoring system where distributors can
keep track of their sales, collections, and warranty processes through a common
online database. The goal is to keep costs low and provide a new source of
income for rural individuals and institutions while potentially reaching
millions of households in Central America that don’t have access to
launching this program, Luciérnaga and PowerMundo have sold close to
10,000 solar lighting products through their networks, providing
illumination, device-charging capabilities, healthier households, and
over $200 in cash savings per year, per product, to more than 50,000
people in Latin America.