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IDB, Covelo Foundation to foster renewable energy use in Central America

As many as 6,000 low-income families in isolated rural areas in Honduras, El Salvador and Belize to get access to solar energy

The Inter-American Development Bank (IDB) will provide a loan of up to $3 million for Fundación José María Covelo to establish credit lines that will enable as many as 6,000 Central American families in isolated rural communities with no access to the electricity grid to buy solar power systems.

The project will also provide technical assistance to develop dedicated microfinance instruments to finance the purchase of solar photovoltaic systems tailored for household use in Honduras, El Salvador and Belize. It will support the development of a network of solar power suppliers that promote the use of solar systems through community-based methodologies, as well as provide quality post-sales service and maintenance, including a program to recycle rechargeable batteries and training and dissemination on how to best use such systems.

Solar photovoltaic systems (SPS) are used to generate and store electricity. In general, these systems are composed of a solar photovoltaic panel of at least 50 watts, sometimes with a voltage converter, a rechargeable battery, wiring, and at least three light sockets and one plug for charging electrical devices such as cellular phones. A 50-watt system produces at least eight hours of power at maximum daily use, meeting the requirements of the targeted low-income families that generally use power for four hours in the morning and four hours at night.

“By giving these families access to clean and reliable energy source, this project is contributing o help them break the cycle of poverty and become more productive,’’ said Carmen Álvarez-Basso, project team leader of the Opportunities for the Majority, the IDB initiative responsible for the project. “Moreover, this project will help improve health conditions because families will stop using kerosene to generate electricity, lowering the risk of respiratory illnesses caused by the emission of toxic gases and pollution.”

Fundación Covelo will promote partnerships between suppliers and microfinance institutions in the region to foster the sale of solar power systems packages, which will use the systems themselves as collateral for the microloans and require a commitment by suppliers to provide the necessary maintenance as well as retrieve the equipment in the event of default.

By working with suppliers and microfinance institutions in these “commercial packages,”, the project will close an important gap between the ability to pay of low-income families and the cost of these solar power systems, offering a solution that can be replicated in other countries to improve access to clean energy to the estimated 7 million Central Americans that today have to rely on fossil fuels for electricity.

About Opportunities for the Majority

The Opportunities for the Majority (OMJ) of the IDB supports the development and expansion of innovative business models that can improve living conditions and earning opportunities for people living at the base of the socioeconomic pyramid in Latin America and the Caribbean.