Microfinance
Microfinance and Energy Efficiency? What's the connection?
Many cities in the region have sought to secure large-scale loans - mostly from international financing institutions. Not surprisingly, cities that succeed tend to be larger municipalities or those with unique abilities to generate foreign currency - a port city, for example. Left out, however, are the smaller cities and towns that have little ability to finance improvements and continue to see the quality of their buildings and heating systems decline.
While many cities will wait years to get large-scale loans, local sources of financing do exist - from smaller banks, microcredit agencies and small/medium enterprise funds. In fact, in the end, smaller businesses doing modest-sized projects one after another may prove to be more sustainable. For this reason, MUNEE is looking at utilizing microfinancing - which is active in almost every country in the region - as a way to implement energy efficiency projects.
MUNEE is taking two approaches:
- Microloans to homeowner associations and municipal enterprises to improve energy use in multifamily buildings and heating systems. Loans could go to weatherizing apartments, installing new compact heat substations, or installing a control system in a school (to reduce heating from 168 hours a week, as is often the case, to 35-40 hours per week). The goal will be to reach the market in smaller communities where there are lots of modest projects with impressive paybacks.
- Microloans to small companies that are in the energy efficiency business. They may be loans to provide some up front financing to do a small project in a municipal building, or simply money to buy weatherization equipment. Whatever the purpose, the goal will be to enhance the capabilities of small businesses to implement energy efficiency and build a credit record upon which they can expand their scope and services.