This article offers an excellent analysis of the financial incentives and obstacles facing the largescale deployment of improved cookstoves in Africa, and the work being done in this area by GVEP.
By ClickGreen staff. Published Mon 11 Apr 2011 12:32
“(…) A fundamental reason why products like (improved cookstoves) aren’t more widely in use is that small and medium-sized energy businesses lack access to finance. Without investment or backing, small and medium-sized energy enterprises are staying just that: small.
International non-profit GVEP International (Global Villages Energy Partnership International), however, has been working to find innovative ways to encourage the financial sector to offer more investment and backing and to connect energy enterprises with sources of funds including ‘carbon credits’.
Over the last year GVEP-I set up loan guarantee arrangements with a number of financial institutions and energy businesses, which enable lenders to lend with acceptable risk, small and medium-sized enterprises to borrow to invest in their businesses, and customers to pay for products like solar lanterns and improved cookstoves in affordable installments.
The initiative is structured around a revolving guarantee fund, in which a portfolio of guarantees is made with different financial or intermediary institutions. This portfolio provides credit facilities to entrepreneurs, communities or clustered micro-enterprises. Once the guarantees have expired, the funds are then used to underwrite new loans.
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GVEP International has recently signed a memorandum of understanding with the Uganda Carbon Bureau, one of the pioneers of carbon finance in East Africa, to help improve access to carbon finance for small cookstove producers. The Ugandan Carbon Bureau runs a Clean Development Mechanism Programme of Activities (CDM PoA), which acts as an umbrella for small cookstove producers in East Africa and aims to help them to earn the maximum amount of carbon finance as cheaply and easily as possible.
SMEs producing and selling improved stoves will receive advice and assistance from GVEP International to help them understand what is involved in registering under a PoA. GVEP International will also assist them in meeting the standards required.
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