MicroEnergy Credits (MEC) is a Seattle-based social enterprise dedicated to empowering people in developing countries to choose healthy, clean, and affordable energy alternatives. By providing established MFIs with the technical and strategic support necessary to develop new sustainable clean energy lending products, MEC aims to overcome the barriers currently preventing impoverished communities from accessing cleaner, more efficient technologies.
Established in 2007, MEC partners with microfinance institutions, trains them to start scalable energy lending programs, and then tracks the carbon emission reductions that arise when client households switch to clean energy. These valuable lifestyle changes are then monetized as the household emission reductions are converted into carbon credits and sold on the voluntary carbon market. Each program is designed to reach profitability within two years, generating income for the partner MFI and allowing for further growth.
Once approved for the program, MFIs receive technical assistance and strategic support from MEC to build out the new green loan products. Through the use of smartphone technology, MEC tracks the MFIs clean energy product sales and the resulting emission reductions in each household. Through its partnership with the Gold Standard, MEC sells the carbon credits, keeping a set percentage of the revenue generated to cover operating costs and passing the remainder to the MFI as a means of scaling the program.
To qualify for MEC’s loan product development program, each MFI must already be profitable, serve over 20,000 clients, offer a diverse portfolio of clean energy products, and present reasonable interest levels on all their pre-existing loan products. Each potential partner must also commit to reaching at least 12,000 households with clean energy products in the first two years as MEC aims to impact a wide range of underserved families.
MEC currently works with eight MFIs across India and Mongolia, and as the organization expands into East Africa, Kiva’s support will prove to be critical.
Through this partnership, Kiva lenders will be able to support MEC’s expansion into East Africa in 2014. For each new program, MEC currently invests $150,000 into the partner MFI over the course of two years. Through Kiva’s $50,000 interest-free Microfinance Clean Energy Product Loans to promising MFIs, lenders’ will be able to contribute to the expansion by funding a third of the capital necessary to implement the program.
Similar to more traditional loans, this partnership involves a Field Partner (MEC) and a borrower (the MFI). Loans will be repaid through the sale of carbon credits and the margins on product sales, rather than the borrower, allowing MEC and its partners to achieve sustainability.
Within its first year, MEC’s clean energy program is designed to offset 9,216 tons of CO2 -- the equivalent to planting 368,640 trees -- and save 12,000 families close to four million USD in energy expenditure. By replacing traditional stoves with cleaner, more efficient counterparts, the program’s first three years will save borrowers 1,537,293 days in wood collection, and within five years close to 3,300 Ugandan lives will be saved because they stopped using traditional stoves or gained access to clean drinking water, and close to one million households will face reduced harmful indoor air pollution.
Without MEC’s technical assistance, these established MFIs would be unable to successfully set up a green loan program. By helping these organizations to provide these products, Kiva lenders’ will in fact be helping tens of thousands of people to access cleaner, safer and cheaper energy.