Catalyzing Enterprises in Peru

Case Summary: 

Peru is a rapidly developing economy with a nationally developed plan called Peru’s Planning for Climate Change (PLCC). Its industries rely heavily on natural resources and require high amounts of energy for steel manufacturing, component manufacturing, textiles, etc. Peru is unique because the majority (99.5%) of its registered businesses are small and medium sized enterprises (SMEs). These SMEs, due to business management and organization, use a disproportionate amount of energy compared to larger entities.

The PLCC recognizes that energy efficiency is key to meeting its climate goals and helping grow the economy while reducing emissions. The PLCC identified that helping SMEs achieve energy efficiency transformations could be a scalable way to reach climate and emission goals. The PLCC identified three major barriers to energy efficiency in the SMEs:

Lack of access to financial systems to obtain capital for the necessary investment.
Lack of capacity or employee experience in SMEs with energy efficiency upgrades
Lack of economic incentives as the price of electricity in Peru is one of the lowest in South America

To overcome these barriers the Peruvian government launched 12 pilot programs to help SMEs achieve energy efficiency upgrades. The pilot programs were selected to include a diverse set of industries and focused on highly re-producible methods. From the pilot studies several best practices were identified.

  • SMEs were more likely to implement energy efficiency upgrades if they understood the financial impact of energy efficiency. To demonstrate potential financial impacts a rigorous and standardized energy audit procedure was developed that could be applied to many businesses. The audit process was streamlined to quickly produce a financial impact estimate with minimal workhours and training.
  • Provide local grants and regulatory structure to build energy consultancy companies. Consultancy companies were found to be easily approachable by local business owners.
  • Work with local organizations to provide access to financing tools for SMEs to achieve energy efficiency upgrades. This was accomplished either through government financed loans or through local financial institutions.
  • Build outreach programs to educate SME owners on energy efficiency projects. Outreach included classes and educational materials.
  • When possible, build a relationship between the SME owner, the energy efficiency consultant, the financial institution, and the equipment provider for the upgrade. Communication between these entities was found to be highly important in the success of a project.

Some of the pilot projects required little capital but the SME owners were still wary or skeptical of the EE upgrades. In cases such as this it was discovered that a combination of these best practices was necessary for successful project completion.

Latin America and Caribbean
Action Area 
Planning and Implementation Activity 
Developing Strategies and Plans, Developing and Implementing Policies and Measures, National Adaptation Plans
Sectors and Themes 
Climate and Development Knowledge Network (CDKN)