Case Study 2: Peru Micro Hydro Projects

Micro hydro projects provide rural communities with access to a clean and reliable energy source. Access to energy is a vital stage in the development of remote communities. Access to reliable energy supplies can lead to swift and significant improvements in education, sanitation, healthcare and the overall standard of living. These benefits are achieved both directly - as in the provision of light - and indirectly - as the time and money that people save is redirected into other projects.

The project is a revolving fund that provides loans to farmers and other rural business people to implement hydro schemes either for productive uses or for village electrification combined with productive uses.

There are 33 completed units and some more are in negotiations or in process of installation. The loans are with lower interest rates than the average in the market and are done in hard currency (US$). The project also involves the provision of technical assistance, which includes needs and resource evaluation, feasibility and financial assessments.

Emission savings are created as hydro power displaces other more carbon intensive fuels that would otherwise be used to generate electricity in the area. The project creates emission savings that go beyond what would have been created in a business-as-usual scenario as it is financed primarily by charitable donations. The income derived from the sale of the offsets created by this project will be used by our project partner, Practical Action, to finance the ongoing promotion of the fund, technical and other assistance to local people and ensure good organisation and productive uses of energy.