Final Report forThe Terminal Independent Evaluation of UNEP Project

Brazilian Rural Energy Enterprise Development (B-REED)Project – MT/4040-01-08

Marcelo Khaled PoppeJune 2006

1. Executive Summary

In March 2001, the United Nations Foundation (UNF) and the W. Alton Jones Foundation (now Blue Moon Fund) approved $2.1 million to support the Brazil Rural Energy Enterprise Development Initiative for the Northeast of Brazil. This project sought to create a sustainable energy development path for the energy poor residents in the Northeast region of Brazil. It would do so by increasing the ability of the private sector to offer new energy services to customers based on clean, efficient, and renewable energy technologies. Adopting a method developed by project partner E+Co of coupling enterprise development services (EDS) with modest amounts of start-up financing, the B-REED initiative would help seed new businesses that supply affordable modern energy services to the rural poor. The long-term goal of B-REED is to provide the rural poor in the Northeast of Brazil with access to affordable and climate friendly energy services and, in doing so, to increase local economic activity, without detriment to the environment.

The objective of this terminal evaluation is to assess the extent to which the goals and expected objectives of B-REED have been achieved in an effective and efficient manner, providing recommendations and lessons in order to assist in determining whether to continue, replicate or modify project direction, associated outputs and activities, after completion of current phase.

The methodology applied for the present evaluation included field visits to ten projects and interview with the project management staff, entrepreneurs, their local partners and project stake holders, when the case (see list of persons met on Annex 4). A questionnaire used during the entrepreneur interviews was elaborated and it is accessible in the Annex 5 together with the company answers. The rationality behind this questionnaire is to obtain figures that allow the required quantification of each project performance and impact.

During the project implementation some flexibility in its principles were adopted in response to the market realities and opportunities for productive use and income generation from renewable energy activities. Among the portfolio of fifteen entrepreneurs, six are located outside Brazilian Northeast region. Also, six cases concern companies that are renewable energy consumers, not producers: two from them are industrial customers and the other four can be considered in the category of rural poor and under-served customers. Furthermore, among the nine remaining entrepreneurs, only two produce equipment that can be useful for rural poor and under-served populations. Therefore, only these two companies fulfill partially the B-REED project rationale that focused in local renewable energy enterprises offering clean

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energy services in rural areas. The summary of companies’ situation through November 2006 is shown in the item 2 of this report “Introduction and background”.

The evaluation found a non-uniform procedure for the enterprise development service (EDS). Some companies say they received a high standard service while others report they did not have this kind of support. In general, those that said they received a good EDS support have a more structured business. Companies that said they did not received adequate EDS have a less structured business, facing difficulties to run their activities and showing fragility to find their economic sustainability.

B-REED Project had also irregular results building up partnerships with local implementation NGOs. It varied from one place to another and along the project lifetime. The actions performed had limited efficiency. In some cases there is a close relationship between E+Co, B-REED national representative, the local implementation NGO and the entrepreneurs, and in others, this relationship turned to be tutorial, broke up or even did not exist.

A common point for all companies was about the importance of the start-up financing. This kind of financing, term and condition, is not currently available in Brazil. Therefore without the help of B-REED project, they could not expand or even start their business. Unfortunately, the richness of information produced during the B-REED project was not able to arrive to the financing and government sector. Despite some tentative activities to bring Brazilian financing institutions to join the project, none of them effectively gave support or opened credit lines for renewable energy development at the B-REED project level. The reason for this failure could be due to the size and complexity of Brazil. In order to bring awareness and mobilization in this field, a national action must be planned involving actors from the county level up to the federal level, bringing to action private and public companies as well as academic institutions. It should come together with the involvement of high level country decision makers and UN representatives, strongly supported by UN institutions, to give full credibility to the project rationale.

Actions in the policy area were focused on promoting renewable energy technology and rural electrification, but with a lack of alignment with the B-REED project objective what is to increase the ability of the small and micro companies to offer new energy services to under served population based on clean, efficient, and renewable energy technologies. Important contributions were done to the Brazilian Ministry of Mines and Energy (MME) and to the Regulatory Agency (ANEEL) through papers, talks and conferences. The policy paper developed deals about grid-connected renewables (up to 30MW) but also with the so called micro (up to 100kW) and pico (up to 10kW) and even considers some public, private and cooperative initiatives of promoting small energy suppliers for public service. In practice, the actions performed mainly helped to promote the use of renewable energy as a source of electricity to the national grid and facilitated electricity utilities to use photovoltaic system to attend isolated communities, but no action was really performed to promote in Brazil the concept of energy companies supplying electricity service to rural poor underserved population. Furthermore, most of the very good job done focused on power generation technologies, both for the grid and for off-grid, pointing technical solutions, institutional and regulatory barriers. Very little was done about how to promote the creation of new energy service companies with chances to obtain their long term sustainability. In fact,

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the concept of private companies selling electricity service is not well understood in Brazilian electricity sector and the legislation has barriers to the introduction of this concept.

A summary statement based on the eleven evaluation parameters used in this report shows that, taking a close look at the history of each company in B-REED portfolio, all of them show an improvement as consequence of the project action. This improvement was enough to higher the business quality but was not enough yet, in all cases, to guarantee their economic long term sustainability. Among the weak points, we can highlight the difficulty to establish a fair partnership with local implementation NGOs, the complexity related to the EDS implementation, and the failure to build a communication channel with the academic, financing and government communities to allow that the project output arrive to those sectors, motivating them to promote a friendly environment to local energy service companies. Actually, once they are aware of the success achieved for the concrete B-REED portfolio, certainly they will, in the long run, adopt the project rationality. Another achievement is that the B-REED project had a high effectiveness targeting micro-companies to supply renewable energy equipments and products to the productive sector. The replicability in these cases is easier and the projects are able to rapidly attract attention of new partners.

Two major lessons were learned in this evaluation. The first is about how effective the E+CO approach of energy enterprise development offering energy entrepreneurs a combination of enterprise development service and start-up financing. Second is about how difficult is to implement that approach largely due the fact that it depends on the quality of the human resources available.

Another point of concerns is the fact that most of Brazilian energy under-served populations are located in the Northeast and North regions. B-REED focused initially the Northeast, but the North region, with its electricity supply coming mainly from fossil fuels and with physical difficulties to increase the grid imposed by the rain forest, is an excellent option of future working area to B-REED. Electricity supply in Amazon is a no-solved problem, mainly to location far from the grid. Despite this problem, there are plenty of natural resources that can be used to generate power and this electricity can be used to add value to the traditional production and to achieve social energy needs. It turns Amazon region as an opportunity field for developing renewable energy enterprises.

Finally, partnership with distribution utilities, that can allow access to the public service regime to the rural renewable energy entrepreneurship, must be pursuit due their benefits in terms of carrying cross-subsidies for investments and operation of the energy installations and services. Furthermore it will avoid the risk of market screaming therefore leaving unattended the poorest population.

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Final Report forThe Terminal Independent Evaluation of UNEP Project

Brazilian Rural Energy Enterprise Development (B-REED)Project – MT/4040-01-08

Marcelo Khaled PoppeJune 2006

2. Introduction and background

In March 2001, the United Nations Foundation (UNF) and the W. Alton Jones Foundation (now Blue Moon Fund) approved $2.1 million to support the Brazil Rural Energy Enterprise Development Initiative for the Northeast of Brazil. This project seeks to create a sustainable energy development path for the energy poor residents in the Northeast region of Brazil. It will do so by increasing the ability of the private sector to offer new energy services to customers based on clean, efficient, and renewable energy technologies. Adopting a method developed by project partner E+Co of coupling enterprise development services (EDS) with modest amounts of start-up financing, the B-REED initiative will help seed new businesses that supply affordable modern energy services to the rural poor. The long-term goal of B-REED is to provide the rural poor in the Northeast of Brazil with access to affordable and climate friendly energy services and, in doing so, to increase local economic activity, without detriment to the environment. To help realize this long term objective, B-REED was structured to achieve four inter-linked project objectives by the end of 2004:

Establish enterprises (private sector, NGOs, public-private partnerships) in rural and peri-urban areas that offer energy services to the rural poor using clean and renewable energy technologies;

Empower local NGOs and development organizations to offer enterprise development services (identifying and supporting small and mid-size energy enterprises through their critical start-up phase);

Engage regional financial institutions to understand and increase willingness to invest in the renewable energy sector; and

Increase local, regional and national government support for business-like, private sector oriented solutions to the delivery of sustainable, rural energy services.

The B-REED initiative was implemented in three phases. During Phase I, the B-REED team prepared a detailed assessment of the current renewable energy and rural electrification market in nine of Brazil’s northeastern states. During Phase II, it was to develop capacity of regional and local financial institutions and B-REED’s Brazilian Partners to introduce rural energy enterprises as profitable and sustainable avenues for energy service delivery. During Phase III, the focus was on packaging investment opportunities for B-REED’s 1st stage seed funds and for subsequent 2nd and 3rd stage financing from social investors and commercial lenders.

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The following indicators were chosen to measure the project success:

Indicator i: number of local renewable energy enterprises established and offering clean energy services in rural areas (target: 9–12) and the sustainability and replicability of these initiatives.

Indicator ii: number of development organizations that begin to offer enterprise development services, either in conjunction with initiative partners or independently (target 2–3).

Indicator iii: increased financial community investment in renewable energy including the number of financial institutions that begin to finance sustainable energy enterprises/projects (target: 2–4); and the amount of co-financing leveraged ($2 to 5 million).

Indicator iv: government/policy development including the number of Brazilian government programs which involve B-REED (or related UNEP) support (target: 2-3).

Achivement of outputs and activities

The B-REED project was completed after five years, from 2001 up to 2005. The activities and outputs achieved in each year are described hereafter. Phase I indicated that Alagoas, Pernambuco and Bahia States presented the best opportunities for B-REED implementation. Also during the Phase I, B-REED made procurement and selected the Brazilian Partners. Instituto Eco-Engenho (IEE) was chosen as partner in Alagoas and BRASUS was chosen as E+Co’s in-country representative.

During year 2002, B-REED replaced Pernambuco for Ceará State and focused on the establishment of a pipeline of candidate enterprises. A list of enterprises was built, from them some received EDS training but none of them received a seed financing.

Related with policy support, there was decided that the first B-REED policy support activity will focus on how to integrate a role for these rural energy enterprises in the implementation of Law 10.438. This law aims the power sector regulation dealing with key issues for renewable energy and rural electrification, namely, tariffs, subsidies and universal supply of electricity by distribution utilities.

Related with the identification of co-financing partners, a seminar was held in November 2002 to present financial institutions with an overview of the opportunities and challenges related to clean energy investments in Brazil. At that time, the potential co-financing identified were Desenbahia, Banco do Nordeste and Banco do Brasil.

During year 2003, E+Co established its own office in Salvador and no longer utilized BRASUS as its in-country representative. Instituto de Desenvolvimento Sustentável e Energias Renováveis (IDER) was chosen as local implementation partner in the state of Ceara and the Instituto Eco-Engenho remained BREED partner in Alagoas.

In 2003, B-REED provided EDS to 16 enterprises and B-REED Investment Committee approved investments in five Brazilian enterprises. The five enterprises are following

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listed. Except the last one, all of them were not in the enterprise pipeline by the end of 2002 and one of them is not located in the Northeast Region.

Village Ambiental, Mato Grosso – B-REED provided a US$55,000 working capital loan to Village to deliver photovoltaic (PV) powered water pumping irrigation systems on credit to rural producers. The PV powered pumps would irrigate one hectare each of corn and cassava. The pump would allow multiple annually harvest increasing the small farmers’ income approximately ten times.

Cerâmica Bandeira, Alagoas – B-REED approved R$426,000 loan to establish a sustainable energy self supply system. The loan would be used to purchase equipments to improve the efficiency of the biomass energy conversion they currently use and establish a eucalyptus plantation. The biomass resources replace dirty fuels and decrease energy costs for the brick manufacturing company.

Operárias do Mel, Alagoas – B-REED provided R$78,300 loan to the owners of Operárias do Mel to begin drying bee pollen using solar dryers. For three years, Operárias has been reselling bee pollen produced in other states. By establishing a production facility, the company could produce a higher quality product, promote local bee raise by young people in rural areas and increase its profits.

APAFG – Seaweed Producers, Ceará – B-REED approved R$53,360 loan to the Association of Producers of Algae of Flecheiras and Guajiru (APAFG) to cultivate, process and commercialize dried seaweed. By utilizing solar dryers in the production process and improving extraction techniques, the Association would maintain the precious coral reefs which are currently being destroyed; improve economic opportunities for the Association members through the production of higher quality products which yield a higher price and become a showcase for other seaweed producers in Brazil.

ASCIMA - Organic Agriculture Cooperative, Ceará – B-REED approved a R$145,000 loan to a small and poor organic agriculture cooperative. Utilizing PV powered water pumps, the Cooperative would be able to plant, harvest and distribute organic vegetables and fruits to 200 families in Ceará.

The first policy support activity focused on how to integrate small rural sustainable energy enterprises in the implementing regulation of Law 10438. This law deals with key issues for rural electrification and renewable energy, namely tariffs, subsidies and universal supply of electricity by distribution utilities. To guide the policy activities it was hired a consultant to issue a policy paper named “Alternative energy sources and decentralized entrepreneurship: opportunities and obstacles to their expansion in Brazil”. B-REED’s policy intervention activities included also stakeholder consultations, and policy workshop on support to energy entrepreneurs regarding policy issues.

During year 2004, the B-REED Investment Committee and E+Co’s Officers approved investments in five new Brazilian enterprises. These five enterprises are following listed and two of them are not located in the Northeast Region.

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Ecoluz, Bahia – B-REED approved a US$47,500 loan to this ESCO (Energy Services Company) to finance the costs, via a performance contract, of an energy efficiency project in a 21-floor commercial office building.

Hidrosol, Alagoas – B-REED approved a local currency loan, approximately US$17,400, to the only local company specialized in selling and installing solar water heaters in Algaoas.

Solar Móveis, Alagoas – B-REED approved a local currency loan, approximately US$18,333, to a small wood furniture machine shop to manufacture and commercialize a low-cost, highly efficient solar dryer for fruits, vegetables, grains and meats.

Ouro Branco, Acre – B-REED approved a US$50,000 loan and E+Co approved an additional US$200,000 loan (financed from E+Co and NOVIB) to a small wood industry located in Amazon Region to install a turn-key 580 kW power generation unit that will burn wood residues from its manufacturing operation.

Carbo Charcoal, Parana - B-REED approved a US$160,000 loan to a charcoal producer located in the Brazilian South Region to fabricate and sell high quality biomass (wood derived) charcoal.

Therefore, by the end of 2004, B-REED had 10 enterprises in its portfolio achieving its target (9-12). Nevertheless, two approved investments, APAFG and Ecoluz never disbursed; thus, B-REED searched replacement for those companies and identified Solaris and Ecofogão as suitable enterprises, although the first of these did not subsequently achieve investment approval and the second never disbursed.

In November 2004, B-REED’s management team, in concurrence with UNF, approved a one-year extension of the B-REED program. This extension was to allow the balance of the B-REED Investment Facility to be expended and for the provision of post-investment EDS and monitoring of portfolio investments.

One of B-REED’s objectives was to leverage public and private funds for additional clean energy investing in Brazil. The target is to secure $2-5 million. B-REED’s financing study evaluated the viability of creating a specialized fund. Through the on-going pipeline development activities and EDS, B-REED has identified five niche sectors. The five niche markets are: Biomass Brick Sector Energy Solution Solar Water Heating and Energy Efficiency Performance Contract Renewable Energy Powered Irrigation for Family Organic Agriculture Microfinance

During 2004, B-REED developed the second policy support, aimed at assisting the Brazilian Congress and the Electricity Regulatory Agency (ANEEL) on renewable energy legislation and regulation. The support was developed through the National Network of NGOs for Renewable Energy (RENOVE). A workshop was organized to discuss public policies for renewable energy. Participants recommended work with ANEEL on the dissemination of regulations for PV systems; to extend legal incentives

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for micro-hydro; to allow small companies installing decentralized systems; and to work on regulations for the use of decentralized generation and mini-grids.

During year 2005, B-REED had fully committed the US$850,000 of investment seed capital to viable enterprises, although during the year a number of new investments could still be added due to investment returns and some cancelled disbursements. Five companies have seed financing approved, totalizing a portfolio of fifteen companies. These new five entrepreneurs are following listed and four of them are not located in the Northeast Region:

Biodragão, Minas Gerais: this B-REED R$60,000 loan helped a small company that manufactures industrial burners consuming otherwise useless biomass residues.

Engenho 9, Minas Gerais: this company, which produces a high efficient, clean energy ‘Torrified wood chip’, used the R$250,000 B-REED loan to purchase industrial equipment for its process plant.

Juerana Electric Fences, Bahia: provides solar PV systems for home and electric fences to rural farmers. The R$30,000 loan enabled the company to improve its performance and profits by using modern equipments and tools for project design and dimensioning.

SSH (Small Scale Hydro) Canaa, Minas Gerais: takes advantage of currently existing infrastructure for the production of electricity. The US$127,000 B-REED loan would help to cover the start up costs. In addition, R$298,000 was leveraged from E+Co and NOVIB.

Ecofogão, Minas Gerais: produces a high efficient, clean burning stove which reduces the presence of smoke in rural households. The R$15,000 B-REED loan was approved to improve the manufacturing capacity of the company.

During this year, Village Ambiental loan was past due to insufficient income generated from the harvests. Village’s general manager and E+Co’s Brazil manager agreed to a loan restructuring to address the problems. After re-structuring the loan, a third party investor offered to buy the outstanding loan at 60% of its present value. E+Co accepted the proposal. Both parties finalized the transaction in December of 2005. The repaid funds were returned to the investment facility for re-investment

As described earlier, in 2004 two enterprises (APAFG and Ecoluz) did not disburse, for different reasons. In addition, Cerâmica Bandeira fell behind in loan payments and their second tranche was not disbursed. Ecofogão was not disbursed due to the relocation of the primary sponsor and market conditions, and Ouro Branco was not disbursed because of company re-structuring after investment approval. Following are indicated some of the problems faced.

Entrepreneurs must have more close and intensive training and technical assistance, both before and after disbursement.

Very frequently the business plan needs to be adjusted during its implementation, and very quickly, to avoid market and financial problems conducing to project failure.

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The development and implementation of an adequate business plan for less experienced entrepreneurs should come together with an intensive EDS.

Some entrepreneurs should be closely assisted by B-REED staff or local partner after disbursement.

In the case of agricultural and other renewable energy user projects:o A longer grace period is needed.o Extensive technical assistance and monitoring is needed.o Social issues (motivation, responsibility, etc.) should be integrated.

The Decentralized Biomass Generation Fund Concept manifested its interest on co-financing the B-REED’s and E+Co’s investment in Ouro Branco. During 2005, the B-REED’s staff developed the concept, evaluated initial results from Ouro Branco and began to identify potential core investors.

The third policy support continued to assist the National Congress and Electricity Regulation Agency (ANEEL) on renewable energy legislation and regulation. This support was also developed through the National Network of NGOs for Renewable Energy (RENOVE). A conference and workshop were organized to discuss public policy and regulations for decentralized energy. A forum coordinated by RENOVE elaborated a proposal to encourage the use of solar heaters on federal housing programs. RENOVE presented the proposal to the Energy Commission of the National Congress. The corresponding draft law was prepared and presented to the Congress for analysis.

In spite of the Brazilian currency’s valuation against the dollar in recent years, local entrepreneurs have expressed an aversion to taking U.S. dollar based loans, due to exchange rate risks. Only four dollar loans were approved (Village, Seaweed Farming, Ouro Branco and Carbo - 20% of total loan amount), and only two were disbursed. B-REED also focused on planning the development of a US$20 million Decentralized Biomass Generation Fund to finance 40+ small biomass generation plants throughout Brazil, most with an installed capacity of less than 1 MW and utilizing the energy for internal consumption, but without accomplishment.

A summary of companies’ situation as of November 2006 is shown in the following table.

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Enterprise Name State

B-REED Loan

Amount (US$)

Leverage Interest Rate Currency Status

Village Mato Grosso 55.000 55.000 12% US$

Total repaid $32,239 (P+I); Principal balance ($31,881) was written

off

Operárias do Mel Alagoas 27.000 12% R$Restructured; no

payments to date; to be written-off

Cerâmica Bandeira Alagoas 102.041 14% R$7 payments in arrears;

E+Co expects enterprise to begin repayment

ASCIMA Ceará 55.000 12% R$

While current on repayments;

implementation problems

Hidrosol Alagoas 14.960 15% R$ Current

Solar Móveis Alagoas 20.340 16% R$ 5 payments in arrears; likely to be written-off

Carbo Charcoal Parana 160.000 15,50% US$/R$2 payments in arrears; E+Co expects this to

perform

Biodragão Minas Gerais 60.000 16% R$ 1st payment due Mar 07

Engenho 9 Minas Gerais 250.000 16% R$ 1st payment due Apr 07Juerana Electric

Fences Bahia 30.000 15% R$ 1st payment due Oct 06

To be disbursed

SSH Canaã Minas Gerais 127.000 298.000 11% R$ Closing documents in process

901.341 353.000

Investments Approved/Not disbursed/Cancelled

Seaweed Farming - APAFG Ceara 18.400 12% US$

Despite enterprise development services,

did not develop capacity take on loan

Ceramica Bandeira (Tranche B) Alagoas 44.898 12% R$

This is 2nd tranche of approved loan, not

disbursed as didn't meet milestones for disbursement

Ouro Branco Acre 50.000 200.000 10% US$ Company restructured after approval

Ecoluz Bahia 47.500 22% R$Company board did not

approve terms of BREED loan

Ecofogão Minas Gerais 20.000 16% R$Sponsor moved to the

US; sales low to support loan

180.798 200.000

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3. Scope, objective and methodology

The evaluation path followed in this work aimed to review the results of the B-REED Project implementation following some relevant considerations. One is to identify if the companies that received B-REED support have technically performed as planed and have an expectation to achieve their economic sustainability on a short period of time, including their loan pay back capability. Furthermore, in this path, the impact that each enterprise had on the local population life quality should be considered. Another aspect followed was to understand why some of the investments approved were not disbursed and learn from them why the B-REED project was not considered attractive by entrepreneurs in these cases.

An additional point taken in account was the evolution of the amount of financial support available in Brazil to sustain rural energy enterprises during the last five years in order to conclude if B-REED Project attained some impact in this area. A further issue appraised was to observe if the policy action had some effectiveness regarding Laws or Regulations in this matter.

The methodology applied for the present evaluation included document review (see Annex 2), field visits to ten projects and interview with the project management staff, entrepreneurs, their local partners and project stake holders, when the case (see list of persons met on Annex 4). A questionnaire used during the entrepreneur interviews was elaborated and is accessible in the Annex 5. The rationality behind this questionnaire is to obtain figures that allow the required quantification of each project performance and impact.

For the policy action, beside personal and phone interviews with experts and policy makers, the recent legal and regulatory legislation were inspected to check if the B-REED project rationale was somewhat formally integrated. Special attention was given on the work performed by the two contractors: the policy paper consultant and RENOVE. The first issued a very complete paper presenting technical, regulatory, financial and fiscal opportunities and obstacles to small-scale renewable energy production through decentralized entrepreneurship in Brazil. The second organized workshops and conferences, and supported the Brazilian Congress and the Electricity Regulatory Agency (ANEEL) on renewable energy legislation and regulation. Interviews were scheduled to gain information about how works were performed and what were their impacts.

Once the companies’ answers to the questionnaire were completed and analyzed, and the policy action achievements were taken in account, the performance and impact of B-REED Project was carefully evaluated regarding the broad issues indicated in the TOR. The rate for the whole evaluation of B-REED Project implementation success was achieved following the eleven parameters described in the TOR.

The interviews, together with the figures issued from the questionnaire and the results of evaluation supplied information that sustain the considerations exposed in the

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conclusions, lessons learned and strategic recommendations, both positive and negative, which would contribute to the future direction of other UNEP projects.

Regarding the field visits, the first one occurred in February and was held in Ceará. This visit was used as reference for the questionnaire preparation and to understand its limitations. The second visit took place in March covering both Bahia and Alagoas, where the questionnaire was employed in order to organize the information about the performance of each entrepreneur. The third visit happened in June, to interview three biomass entrepreneurs located in Minas Gerais and to visit their industrial facilities. The full visit schedule is listed in the Annex 3.

4. Project performance and impact following the broad issues requested in the terms of reference

Flexibility of the Project Rationale

As presented in section two of this report, B-REED project initially aimed to develop energy enterprises located in rural and peri-urban areas to supply renewable energy to meet the needs of rural poor and under-served population in the Northeast region of Brazil. Under this principle, B-REED should support energy service companies that deliver renewable energy equipments, products and essentially services for the assigned market.

During the project implementation some flexibility in these principles were adopted in response to market realities and opportunities for productive use/income generation from renewable energy. Among the portfolio of fifteen entrepreneurs, six are located outside Brazilian Northeast region. Also, six cases concern organizations that are renewable energy consumers, not producers: two from them are industrial customers and the other four can be considered in the category of rural poor and under-served customers. Furthermore, among the nine remaining companies dealing with renewable energy, only two produce equipments that can be useful for rural poor and under-served population: one makes domestic wood stoves and the other manufactures fruit solar dryers. Therefore, only these two companies fulfill partially the B-REED project rationale that focused in local renewable energy enterprises offering clean energy services in rural areas.

The above flexibility in some way will affect the project evaluation, mainly on the parameter “Attainment of objectives and planned results”. This B-REED project evaluation goes over this situation, identifying the project performance under all the parameters required and pointing out, when relevant, parameters that do not fit well or do not apply for such company. Therefore, the over all project evaluation can take it in account differently.

How appropriate is the project for meeting the energy needs of rural and under- served communities?

As mentioned before, using the narrowest definition, the B-REED portfolio analyzed did not have companies supplying renewable energy to meet the needs of purely rural

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and under-served populations. Only two enterprises produce equipments that can be useful for rural poor: Solar-Moveis makes wood fruit solar dryer and Ecofogão manufactures domestic wood stoves. Ecofogão eventually did not take the loan, due to the primary entrepreneur relocating to the United States and his deputy evaluation of high market uncertainties, and Solar-Moveis has yet to attain long term sustainability. All other companies dealing with energy (Carbo Charcoal, Biodragão, Engenho 9, SSH Canãa, Hidrosol, Juerana and Ecoluz) serve productive and solvable sectors and are economically in better shape than the previous group. The last one is a strong and successful ESCO, operating mainly in the industrial and tertiary sector. Ultimately, their board did not approve the terms of the BREED loan and this was not disbursed.

On the other hand, we found two industrial renewable energy consumers (Cerâmica and Ouro Branco) that were interested in acquiring cost effective renewable energy supply for their productivity processes. Unfortunately the Ouro Branco investment, although approved, was not disbursed due to a re-organization of the company. Four other rural renewable energy users are in the BREED portfolio (Village, ASCIMA, Operárias and Seaweed), each of which sought to shift from conventional fuels to renewable sources of energy with support from B-REED despite the last one did not disbursed. In the cases where this change was achieved (1st, 2nd and 4th), their renewable energy activity certainly helped to improve the community quality of life and productivity. Regardless of such improvement, none of those initiatives achieves its long term sustainability.

The above evaluation confirms that the original project rationale was adjusted, dealing with renewable energy users instead of exclusively renewable energy suppliers and only six projects are related with under-served rural customers.

How efficient in enhancing the capacity of entrepreneurs to start and develop energy business?

The evaluation found a non-uniform quality for the enterprise development service. Some companies reported a high standard service and others reported they did not have at all this kind of support. In general, those that said they received a good EDS support have a more structured business. Companies that said they did not received adequate EDS have a less structured business, facing difficulties to run their activities and showing fragility to find their economic sustainability. Special attention should be done to permanent availability of a well determined working capital, crucial to avoid fail among the weak entrepreneurs.

The financing supplied for B-REED was crucial for all companies that received the disbursement. The conditions offered for the project is considered better than the one offered regularly for the Brazilian financing agencies, therefore made feasible the improvement of the companies capacity. If this financing were not available, most of the companies in B-REED portfolio would not be able to expand their capability.

How efficient to build up partnership with NGO and financing institutions to support sustainable development of renewable energy enterprises?

B-REED Project had irregular results building up partnership with local implementation NGO aiming to support the development of renewable energy products and services providers or users. It varied from one place to another and along the project lifetime.

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The actions performed had limited efficiency. In some cases there is a close relationship between E+Co, B-REED national representative, the local implementation NGO and the entrepreneurs, and in others this relationship turned to be tutorial, broke up or even did not exist.

Despite some tentative activities to bring Brazilian financing institutions to join the project, none of them effectively gave support or open credit line for renewable energy development at the B-REED project level.

How efficient was the companies to deliver clean energy or energy efficient products, equipments and services to rural and peri-urban consumers?

B-REED company portfolio has only two enterprises manufacturing renewable energy equipments that deal with this kind of public. Those have equipments of acceptable performance but face strong difficulties to access the market and to run their business. Regarding the four rural renewable energy users, three of them are happy with the quality of their energy supply. The other companies supported by B-REED Project, turned to be suppliers of renewable energy products, equipments and services for industrial and urban markets, performing in general quite well, showing that it exists an attractive market for cost effective clean energy.

How efficient was in promote implementation of policies favorable to SME to deliver clean energy or energy efficiency?

Actions in the policy issues were focused on promoting renewable energy power generation technologies, and on integrating stand alone PV systems as a utility technical option for rural electrification, but with lack of harmonization with the B-REED project rationale, because not really regarding actors like small energy service suppliers, with focus on public service. The actions performed helped somewhat on the implementation of legislation toward renewable energy independent power generation, mainly connected to the grid, and energy access through utilities in Brazil. In this matter, important contributions were done to the Ministry of Mines and Energy and to the Regulatory Agency through papers, talks and conferences that helped on the improvement of regulation supporting renewable energy independent power generation and rural electrification through utilities. The workshops organized by Renove mobilized a large attendance but didn’t integrate the spirit of B-REED. In fact, despite this achievements, up to now very little was performed toward the creation of market conditions for the establishment of local enterprises (private sector, NGOs, public-private partnerships) in rural and peri-urban areas that offer energy services to the rural poor using clean and renewable energy technologies.

The excellent and very complete policy paper written by the Consultant covered the main technical, regulatory, financial and fiscal aspects related to renewable power generation, both to grid-connected facilities (up to 30MW), held by independent power producers or self-generators, and micro (up to 100kW) and even the so called pico (up to 10kW) potentials, mostly used for supply small isolated villages or farms. The paper effectively describes all the categories of power generation with renewable energy we can find in practice in the country. At the last chapter, the paper presents some previous public and NGO’s initiatives to deserve collective and individual energy needs of rural poor with stand alone PV systems, out of the public service regime, that didn’t succeed

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to attain the level of sustainability. Once again, the main considering was related to power generation and less to electricity service through a local company.

How effectively the B-REED experience was disseminated

The B-REED experience on creation of sustainable renewable energy supplier in Brazil was poorly disseminated. Despite the work was frequently well done with the companies, the information was spread only locally, and in some cases, the information was hold internally to the companies. This situation occurred due the lack of a strategic plan to broaden the experience nationally. Brazil is a very large country and any information does not broad easily. Strategic people must be brought to know the project results. These results needs to be presented in important national and international events and published in national and international journals showing their figures. This evaluation found that Brazilian people, who are aware of the project results, are the ones direct or indirect involved on project implementation (companies and partners).

5. Rating of project implementation success following the eleven parameters requested in the terms of reference

The success of project implementation was rated hereafter on a five-point scale: 1=excellent, 2=very good, 3=good, 4=satisfactory and 5=unsatisfactory, considering the eleven parameters indicated in the terms of reference.

1. Attainment of objectives and planned results: rated as 4 = satisfactory .

B-Reed helped, substantially, the start up of companies that offer equipments or products related with renewable energy but was not effective enough to lead the companies toward their sustainability. Regarding energy services, the major barrier concerns the difficulty of the Brazilian electricity institutions to understand the interest of aggregating local companies in the chain of electricity delivery for final dispersed consumers in rural areas. The B-Reed project had a much larger success with actions toward the industrial sector than with actions toward the poor and underserved population, what was the project primary target. Actually, B-Reed played an important rule demonstrating the concept feasibility but the information about this experience barely arrived to the policy makers and financing agents.

Related to the introduction of new technologies or procedure in Brazil, the B-Reed projects contain few innovations, out of the EDS consolidated concept. The technologies applied were mainly developed in the country (see Biodragão and Engenho 9 achievements) or, at the date, of common use. The evaluation did not find any Brazilian research and development institution working as a partner in any project, conducing to a weak impact in the scientific community.

The strategies adopted for identifying, promote and support enterprises development provide some good results for companies targeting the industrial sector but did not have the same result concerning the few companies aiming the rural underserved population. In these cases the support should be reinforced, integrating the educational level and other relevant parameters regarding people working in those rural projects.

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Based on the described above, the rate for this parameter is 4 (satisfactory).

2. Achievement of outputs and activities: rated as 3 = good.

Most of the projects in B-REED portfolio did not attained its original objective that was to provide energy service but all of them applied renewable energy technology in small and medium enterprises processes. It is a really impressive achievement because this procedure is not common for small companies in Brazil. This achievement shows that the methodologies and tools applied were relevant toward the demonstration of the effectiveness of renewable technologies for the energy market. Despite the projects scopes are not aligned with the B-REED objectives, the project output demonstrated the usefulness of the renewable energy to add value to the local production.

On the other hand, most of projects did not promote the development of technologies, just applying the commercial ones without any planned action to improve or adapt it. But there has exceptions, as Biodragão and Engenho 9. As related before, the evaluation did not find any relevant research institution involved with those projects, therefore, they did not have impact on Brazilian scientific community.

Due mainly to the fact that those projects demonstrated the usefulness of renewable energy for small companies, the topic received grade 3 (good)

3. Implementation approach: rated as 3 = good.

The implementation mechanisms followed the project direction and proof to be very flexible, to adapt to the large spectrum of companies profile. The B-REED portfolio has very competitive companies such as Engenho 9 and companies that on the time of evaluation were not able to manage their financial resources by themselves. It shows that the project core team had to bring about a lot creative to keep their projects running.

The UNEP supervision was well done. None of these projects would take off without the UNEP financial support. On the other hand, in some cases, the decision to support project took more than a year. This delay brought doubts about the B-REED project effectiveness and can explain the fact that few companies almost gave up during the process.

The lessons learned from the beginning of the project showed that the B-REED representative, responsible to discuss with the companies administration about the economics related with the UNEP financial support, must have good experience, knowledge of the country institutional and economy constraints, and communicate easily with the entrepreneurs, to avoid misunderstanding and failures. The loan should be preferentially given in local money due to exchange rate risks. A more strong scientific leadership would certainly bring to the initiatives a higher level of innovations.

Related to the partners division of responsibility, E+CO as the project leader, had the responsibly for the company identification, qualification, EDS training and follow up. IEE and IDER, the local partner at Alagoas and Ceará States played an important role, helping to identify the companies and guide them through all intermediate steps up to

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the disbursement. In one case, the disbursement was made to IDER, instead to the company, and the Institute paid the project expenses.

On the policy side, the partnership was built with Renove, a national well known and recognized NGO to convey its efforts to make possible in Brazil that utility companies to attend off-grid villages with renewable. Despite large success in this area, very little was made to support energy SME development.

The observations realized during the visits could allow the knowledge that the financing resources were well applied in all companies. It is a strong indication that selection and supervision done by UNEP and E+CO was well done. All companies tried to follow their business plan, but due to the market fluctuation, few have problem to meet their obligation with loan repayment. The fact is that, so far, all the companies in the portfolio were not able to achieve their financial sustainability, and most of them, neither be able to attract additional financing from other sources.

A relevant work done was the EDS training coordinated by E+CO. This activity was very effective and turned to be the most important achievement during the implementation of B-Reed project. The EDS activity was much appreciated for all B-REED companies. Partner and entrepreneurs considered it essential. The evaluation also found that the EDS activity was fundamental, but not uniformly performed. Some companies had pre and post-investment EDS, others had only pre-investment EDS, and a few none. All the companies would like to have a more intensive EDS activity, mainly after the disbursement, to help them to take decisions about market changes that affect their original business plan.

Based on the described above, the evaluation granted a 3 (good) for this item.

4. Stakeholder participation: rated as 4 = satisfactory.

The mechanisms put in place by the project for identification and engagement of stakeholders was not so effective in the country as a whole. In the Northeast, the relationship with IDER and IEE was very useful for all parties, permitting to involve other local NGOs. In some cases, these NGO supported the execution of components of the projects. E+CO related alone to the companies in the other region. Renove also made an amazing work promoting renewable energy among Brazilian regulatory agency and policy makers. Despite a correct participation in the meetings organized by the project, the evaluation did not confirm a strong commitment of the political, financial or scientific communities with the project rationality.

The evaluation found a lack of efficacy on B-Reed action toward the creation of an appropriate environment to start up and develop of energy SME. The action to the financial sector did not have a significant result toward the creation of financing lines that would make easier the feasibility of those companies. Also B-Reed project was not able to promote modification on the legislation that would promote energy SME.

Based on the described above, the rate for this parameter is 4 (satisfactory).

5. Financial planning: rated as 2 = very good.

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The amount of resources planed to be invested in the project was well applied and succeed to launch the renewable energy business of the companies involved in the project. The analysis and the recommendations for support were very well done and the amount correctly approved. However, the empowerment of local NGOs demands a more extensive financial support.

The rate for this parameter is 2 (very good)

6. Cost-effectiveness: rated as 3 = good.

B-REED project promoted a huge improvement in all companies in its portfolio, but none of them achieveed their financial sustainability. This fact, by itself, is a major step to demonstrate that renewable energy can improve economically and worth the resources invested. Mainly for the small companies, the period of project implementation was very short and they need a longer period with a stronger EDS post-investment supervision to achieve their stability. If it does not happen, certainly these companies will come into bankruptcy and all resources invested will be lost.

Frequently the companies participate with cash and in-kind co-financing. Nevertheless, the project did not succeed to leverage sufficient additional resources from other financial agencies. Looking the table with the companies' situation summary, only three companies obtained co-financing and two of them are middle size companies. It reflects the reality of Brazilian economy where small companies have difficulty to obtain financing. In order to reverse this situation, a well planned and organized action must be implemented in national level, what was not well performed in B-REED project, to demonstrate to the government and financial agents that renewable energy SME are worthwhile of financing, and this has real data to present, which is the result already obtained with the B-REED project.

The evaluation for this topic is 3 (good).

7. Country ownership: rated as 3 = good.

Almost all technologies applied during B-Reed are of common use in Brazil or developed in this country. The great contribution from B-Reed project was to promote its application for commercial purposes. Unfortunately, all the information about this rich experience was not brought about to the large public and consequently had very little impact on environmental agendas in any level. The B-Reed project has a precious set of information about advantages and problems, together with a tested procedure to introduce energy SME, in different sectors of the Brazilian society. The project results are so positive that this information should be spread to government, financing and scientific agents in order to motivate them to promote the creation of a favorable environment to energy SME. The dissemination of such information was not effectively made during the implementation of the project.

The evaluation attributed to this parameter is rated as 3 (good).

8. Replicability: rated as 3 = good.

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Definitively, the B-Reed project had a much better impact on the industrial sector than to attend underserved population. B-Reed helped to introduce pre-commercial technologies in the market therefore, a set of innovative companies came up to the Brazilian industrial sector. Due to the size of Brazil, this action is very tinny, consequently it is not possible to say that these companies are a trend setters or that they are leading the development of the clean energy sector in Brazil. Furthermore, all the success obtained with the B-Reed portfolio of companies was not informed to the entrepreneurs and population far than the regional level.

All the companies have potential for replicability of their business in other sun-regions, but very shy step were taken in this direction. The reason for it is that all visited companies did not achieve their economic sustainability therefore it is not worthwhile to promote the replication of those experiences in other places or even expand the projects.

The evaluation attributed the rate 3 (good).

9. Monitoring and Evaluation: 3 = good.

The B-REED reports are very effective and valuable information can be obtained from there. On the other hand, the methodology for monitoring and evaluating the company performances are not as effective. It starts with a questionnaire that was sent to the company administration, to be answered and returned to E+Co. This procedures generate information with a time delay between the B-REED team be aware of the problem and the start of the problem in the company. The no-anticipation that Ceramica Bandeira would not repay a tranche of its loan is an example about how the present methodology for monitoring is not satisfactory. A close relationship between the B-REED project and the company administration, maybe on monthly basis, together with a post-financing EDS activity, would increase the monitoring effectiveness, reducing the time for action, therefore, the risk.

The evaluation attributed the grade 3 (good) for this item.

10. Impact: rated as 2 = very-good.

The B-Reed project had a very positive impact on the companies’ neighborhood. It created not only new jobs but also ones that require personal qualification, what means better wages. The project added value to the companies’ products and made the companies environment friendly.

On the scientific side, B-Reed had no impact. During the project implementation, no effort was taken to involve research institutions in the project. Therefore, the Brazilian scientific community is not aware of the project achievement in the technological and managing areas. Not even the procedure adopted for the EDS activity, what indeed are very interesting.

The policy impact is relevant on the promotion of renewable energy use in Brazil. B-Reed, through Renove, was able to help the creation of a directive from the regulatory agency to the electricity utilities about application of photovoltaic system at off-grid villages. It is worthwhile to say that despite the relevancy of B-Reed policy actions, it had a small or no impact to promote the creation of energy SME or facilitate their

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establishment and sustainability, because all the action was orientated to utilities companies, what is not the primary target to B-Reed.

The evaluation attributed here the rate 2 (very good).

11. Sustainability: rated as 2 = very good.

The evaluation split the B-Reed companies in two groups. The first group is the companies that are very unlike to achieve their economic sustainability. These companies are the one that use renewable energy in their process and also are the ones classified as rural poor projects (Ascima, Seaweed and Operárias do Mel). The improvement caused by B-Reed is not enough to promote a fast increasing on the population quality of life and many years will be need before these projects eventually achieve their economic sustainability. A larger effort need to be done, mainly on the population formal education, in order to the companies be able to take care of their business.

The second group, which also did not achieve their sustainability, is the one that sell energy products and services to the industrial, cattle raising and urban sectors (Biodragão, Engenho 9, Jurema and Hidrosol). The profit of these companies increased significantly after B-Reed contribution, but due the innovation of their products and services, they are struggling to introduce their outcomes in the market. The evaluation found that this second group, with small financial support and some flexibility on the legislation, is able to offer a significant contribution to the development of the energy sector.

The evaluation rates this item with a 2 (very good).

6. Conclusions

Taking a close look at the history of each company in B-REED portfolio, all of them show an improvement as consequence of the project action. This improvement was enough to higher the business quality but was not enough in all cases to guarantee their economic long term sustainability. Among the weak points we can find the complexity to implement the EDS and the dissemination of the experience to the academic, financing and government communities. Once they are aware of the success achieved for the actual B-REED portfolio, they will, in the long run, adopt the project rationality.

Another important achievement is that the B-REED project had a higher effectiveness targeting micro companies supplying renewable energy to the productive sector than to the poor and unattended population. The replicability in these cases is easier and the projects are able to rapidly attract the attention for new partners.

7. Lessons learned

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Two major lessons were learned in this evaluation. The first is about how effective the E+CO approach of energy enterprise development offering energy entrepreneurs a combination of enterprise development service and start-up financing. Second is about how difficult is to implement that approach because it depends on the quality of the human resources available.

When the company had people qualified enough to receive and process the information given during EDS activities, the process ran smoothly and the company turned to be strong enough to pursuit their long term sustainability. The low side here was the time required for the B-REED project to go from selection to financing. It took two years in some cases. This long period of time brought to the entrepreneurs doubts about the possibility to end up the process in good terms.

When the company did not have people qualified, the evaluation found weak enterprises, in some cases needing a local NGO working as its tutor, to increase the chances to achieve their long term sustainability. There is a third situation when the company has people qualified to receive EDS training, but the training was not given. These companies could be administrative stronger once received that service.

The positive point was the fact that renewable energy technology performed well in all companies. The problems faced for the companies did not include the security of the energy delivered for the renewable technology. The technology delivered a cost-effective clean energy.

A common point for all companies was about the importance of the start-up financing. This kind of financing, term and condition, is not currently available in Brazil. Therefore without the help of B-REED project, they could not expand or even start their business. The evaluation was able to notice the good that the financing brought to the companies. In the other hand, it is necessary to solve the question of the hedge related to exchange rate risk, which can not be in charge of small renewable energy enterprises. Furthermore, the EDS provider should give all the support necessary to the negotiations between the entrepreneurs and Banks and other strong financial institution.

Despite the initial target for the B-REED project was to attend the under-served population in the Brazilian Northeast region, the enlargement of the initial objective to others region and target population, showed that B-REED approach fits well to spread the concept of renewable energy company attending multiple markets. This approach is suitable for companies using renewable in their process or supplying energy from renewable to other companies or houses.

Unfortunately, the richness of information produced during the B-REED project was not able to arrive to the financing and government sector. Despite some effort to motivate the Brazilian financing sector to support this kind of company, no positive result was found at the end. Small amount of results toward to promote renewable energy companies to the government was obtained. Most of the policy action was performed to build a legislation to introduce renewable electricity to the grid and to off-grid system. The rationality behind the B-REED approached was not disseminated adequately such that the policy makers are not aware of the B-REED rationality.

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The reason for this fail should be charged to the size and complexity of Brazil. Its society was build with multi-layers, interconnected, making localized action with small or no results. In order to bring awareness and mobilization for both sections, a national action must be planned involving since actors in the county level, up to the federal level, and bring to action private and public companies as well as academic institutions.

Finally, the most impressive lesson learned during this evaluation, is the number of opportunities that the B-REED has in Brazil, not only in the Northeast, but in all regions of Brazil. Brazil has room for energy companies to use sawmills residues to generate power. Major cities seek for energy companies to make energy end-user more efficient and preferable using renewable energy. Energy companies are needed to produce charcoal more efficient and less hazardous to the environment. There is plenty of room to prove the B-REED concept in a broad band of applications.

8. Recommendations

Most of Brazilian energy under-served populations are located in the Northeast and North regions. B-REED focused initially the Northeast, but the North region, mainly supplied from fossil fuels and with physical difficulties to increase the grid imposed by the rain forest, is an excellent option of future working area to B-REED. Electricity supply in Amazon is a no-solved problem, mainly to location far from the grid and to inadequate grid solution. Despite this problem, there are plenty of natural resources that can be used to generate power and this electricity can be used to add value to the traditional production and to achieve social needs. It turns Amazon region as an opportunity field for developing renewable energy enterprises.

There is a strong interest to have confident and reliable local implementation partner, to avoid interruption in the EDS and technical assistance to entrepreneurs. EDS training is critical for the company success. It is so important that must occur before and after the loan disbursement. The relationship between the company and the EDS training partner must be continuous allowing adjustments on the business plan due unexpected events. This relationship will bring strength to the company structure, confidence to the entrepreneur and increase the chances of company success. The lack of EDS activities in the company brings a so high risk for failing that should be avoid for the project.

A suggestion for future work would be to support micro companies to delivers renewable energy to the productive sector in rural areas, and on the success of this action, drag the action of the new partners to similar companies now attending the poor and unattended population. Partnership with distribution utilities, that can bring the public service regime to the rural renewable energy entrepreneurship, must be pursuit due their benefits in terms of carrying cross-subsidies for investments and operation of the energy installations and services. Furthermore it will avoid the risk of market screaming therefore leaving unattended the poorest population.

Brazil is a large country with a large administration complexity either on government and financing sector. Any action involving these sectors need to be anticipated with a planning in order to keep the focus and effectiveness during the execution. All participant in this action must have in mind, clearly, what are its goals, otherwise a

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diffusion of ideas will cause the action fail. These are the causes for the weak performance of the financial and policy action. Those are very important to create a friendly environment to the multiplication of rural energy enterprises. A better and effective planning must be done at this level in advance of new action. In this case, a bottom up approach, as was adopted, very useful for grassroots project rationale diffusion is not sufficient. It should be accompanied of high level country decision makers and UN representatives’ involvement, strongly supported by UN institutions, to give credibility to the project rationale.

9. Annexes

Here after the following annexes:

Annex 1 – Terms of referenceAnnex 2 – List of documents reviewedAnnex 3 – Field visit scheduleAnnex 4 – List of persons metAnnex 5 – Summary of questionnaires

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Annex 1 – Terms of reference

TERMS OF REFERENCE

Terminal Independent Evaluation of UNEP Project“Brazilian Rural Energy Enterprise Development (BREED) Project”

MT/4040-01-08

1. BACKGROUND

Project Rationale

The Northeast region of Brazil occupies 18 percent of the country’s area but is home to 30 percent of its population. The Northeast is Brazil’s poorest region; one-third of its 43 million people live below the poverty line, almost twice the national poverty rate. Five million households (22 million people) do not have access to electricity. If energy can be provided using renewable energy technologies, economic development can be achieved without the usual costs of degraded air quality, degraded land and emission of greenhouse gases. If they are provided at an affordable price, modern, clean energy services allow for quality of life improvements, income generation and environmental protection.

In 2001 the United Nations Environment Programme (UNEP) initiated the Brazil Rural Energy Enterprise Development (BREED) project. The aim of the project is to develop new sustainable energy enterprises that use clean, efficient, and renewable energy technologies to meet the energy needs of under-served populations in the Northeast region of Brazil, thereby increasing their quality of life and productivity.

The BREED project utilizes the E+Co approach of energy enterprise development, offering energy entrepreneurs a combination of enterprise development services and start-up financing. This integrated financial and technical support allows entrepreneurs to plan and structure their companies in a manner that prepares them for growth and makes eventual investments by mainstream financial partners less risky. The project also assists the federal and state governments and legislators to enable a favourable environment for the development of small clean energy enterprises. BREED is working through partner organisations in the states of Alagoas (Instituto Eco-Engenho) and Ceara (IDER), E+Co Brasil (with office in Bahia), and Renove, a nationwide network of non-governmental organizations dealing with renewable energy. The E+Co is the manager of the B-REED Investment Facility.

The project has four inter-linked objectives: To establish enterprises (private sector, NGOs, public-private partnerships) in

rural and peri-urban areas that offer energy services to the rural poor using clean and renewable energy technologies;

To empower local NGOs and development organizations to offer enterprise development services (identifying and supporting small and mid-size energy enterprises through their critical start-up phase);

To engage regional financial institutions to understand and increase willingness to invest in the renewable energy sector; and

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To increase local, regional, and national government support for business-like, private sector oriented solutions to the delivery of sustainable, rural energy services.

The overall expected results of the project would include:(a) Renewable energy enterprises developed;(b) Acceptance by development and finance communities;(c) Improved capacity of government officials and agencies to formulate and

implement policies that support sustainable energy; and (d) International support agencies and donors are better informed, motivated and

able to apply sustainable energy enterprise experiences in energy and climate change programmes elsewhere.

More specifically, the BREED results would be achieved at four levels:

At the Local Level: Rural energy enterprises would have received: integrated enterprise development support to foster the creation of bankable

enterprises and access to early stage environment financing.

At the Regional Level: The Project would broaden the depth of organizations and people who could nurture potential energy entrepreneurs so that

business-oriented NGOs would begin to operate as local enterprise developers; regionally-based financial institutions would better understand the small-scale

renewable energy sector, and begin to open windows in their portfolios for such investments; and

new financial mechanisms are designed, including local or regional specialized funds, that facilitate the growth of those enterprises reaching maturity and poised for commercial capital.

At the National Level: The project would have assisted Government by: providing advisory support on improved policy frameworks that promote clean

energy; demonstrating realistic and practical business models, both private and public-

private, for integrating environmentally sound energy technologies into rural energy mix;

having the private sector take a more active role in ensuring the rural poor have access to modern energy services, to date considering a state burden;

demonstrating the political benefits of stabilizing the rural environment, reducing urban migration as local communities grow and prosper; and

mobilizing additional resources for renewable energy and rural electrification.

At the International Level: The project would have assist UNEP, other UN agencies, the Global Environment Facility (GEF), and bilateral donor programmes by:

mainstreaming the sustainable energy enterprise development approach in other donor-assistance climate change/sustainable energy programmes at the international level;

increasing the opportunity for others to work more directly with the private sector on rural energy issues;

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demonstrating “win-win” solutions to sustainable development and global climate change; and

closing the loop between high level climate change policy work and ground level implementation activities (e.g. gaining experience on the types of market driven projects that could qualify for Clean Development Mechanism.

Legislative authorityThe legislative authority for the BREED project stems from Agenda 21, Chapter 38 (Creating Capacity for Sustainable Development); UNEP GC 16/33 (promoting ways and means to facilitate access to ESTs); UNEP GC 16/41 (assisting developing countries in identifying climate friendly technologies and technology needs); UNEP GC 17/32 (requesting UNEP’s Executive Director to implement Agenda 21); UNEP GC 20/29 (policy and advisory services in the key area of economics, trade, and financial services) and UNEP GC 20/40 (functioning of UNEP’s specialized offices).

Relevance to UNEP ProgrammesThe BREED would contribute to the implementation of energy sub-programme 1: promoting renewable energy and efficiency technologies and policies and UNEP’s efforts to promote regional and international cooperation regarding global climate change, particularly mitigation measures. The project would seek to increase the capacity of the Brazilian private sector to offer energy services using clean and renewable energy technologies. These energy systems would either have lower environmental impacts than those currently used or prevent new investment in unsustainable, fossil fuel-based energy systems. More specifically, it would (i) allow UN agencies to develop and internalize a new methodology for promoting private sector driven, clean energy technology adoption; (ii) build the capacity of Brazilian NGOs to identify and support small and mid-sized enterprises through their critical-start-up phase; (iii) help regional financial institutions better understand and ultimately invest in this sector; and (iv) help local, regional and national governments to support business-like, private sector oriented solutions to the delivery of sustainable, rural energy services.

Executing ArrangementsThe BREED project is implemented by the UNEP Risoe Centre (previously called the UNEP Collaborating Centre on Energy and Environment) in close cooperation with the Energy Branch of the UNEP’s Division of Technology, Energy and Economics (DTIE) and the US-based NGO E+CO.

Important partners in the implementation effort were Instituto Eco-Engenho and IDER, and in the first year BRASUS. E+Co worked with each of these organisations in providing enterprise development support to local entrepreneurs, and is the manager of the BREED Investment Facility. In the policy area UNEP and E+Co have been working with the non-profit organization Renove.

BREED ActivitiesThe initial project duration was 42 months, from August 2001-January 2005. It was further extended up to December 2005.

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The BREED activities are clustered in three phases:

Phase I (0-6 months): Project preparation assessment of relevant activities in the Northeast region selection of three target states market opening workshops to identify potential partners and financing

institutions, and early enterprise development opportunities Selection of NGO partners Identification of matching funds for the project Full project proposal with detailed implementation plan for UN Foundation

Phase II (7-53 months): Capacity building Training of partner NGOs on the provision of enterprise development services Enterprise development services for selected entrepreneurs Training of local/regional financial institutions on enterprise co-investment

opportunities Policy support to federal/state governments Integration in and dissemination of energy enterprise development through other

training programmes

Phase III (12-53 months): Enterprise development Start-up financing for selected enterprises Leveraging of additional funding from other sources Continued capacity building Continued policy support to federal/state governments

BudgetThe original budget for the project was US$4.9 million of which UNF was to provide US$1.9 million through a trust fund (US$1.7 million) and matching grant contribution on an equivalent co-financing basis being provided by a third party (US$400,000). Of the total amount US$1,847,000 was to be allocated to the supported organisation UCCEE; US$153,000 was to be used directly by UNEP DTIE and US$100,000 was reserved for project support costs. UNEP was to contribute US$100,000 as expert staff services and part of the organisational costs of this project. E+CO was to co-finance US$100,000 in environmental venture funds. W. Alton Jones Foundation had indicated its intent to co-finance US$50,000 in environmental venture funds, US$50,000 of policy support, US$50,000 of enterprise support activities and US$50,000 for the design of sustainable financial mechanisms, pending its approval at their July 2001 Board meeting. In addition, US$2.0 million was to be obtained as other co-financing leveraged by BREED and its seeded enterprises and US$600,000 from multi/bilateral institutions.

2. OBJECTIVE AND SCOPE OF THE EVALUATION

The objective of this terminal evaluation is to assess the extent to which the goals and expected objectives of BREED have been achieved in an effective and efficient manner and provide recommendations and lessons from project implementation in order to assist in determining whether to continue, replicate or modify project direction and associated outputs and activities after completion of current phase (ending in December 2005). The evaluation will cover the entire period August 2001 - December 2005.

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Field studies will include visits to project supported enterprises and face-to-face interviews with key in-country stakeholders. The evaluation will cover six broad issues:

1. How appropriate is the BREED model for meeting the energy needs of rural Brazilian poor? If so, what improvements/modifications are required? If not, are there other alternative proven models that can be used more effectively and efficiently?

2. To what extent the project has been successful in enhancing capacity of entrepreneurs to start and develop sustainable energy businesses? How useful training, business services support and seeding capital for generating interest and establishment of viable/bankable energy enterprises have been in each project country?

3. How successful the project has been in developing strong partnerships with NGOs and financial institutions in sustainable and renewable energy enterprise development? And, to what extent such partnerships have resulted in developing functional, sustainable and replicable models for renewable energy development and energy efficiency products and services in participating countries?

4. How effective and efficient the SMEs have been in delivering cost-effective clean energy and energy efficient products and services to rural and peri-urban consumers, particularly poor ones?

5. To what extent has the project been successful in assisting Brazil to formulate and implement policies supportive of SMEs delivering clean energy and energy efficiency services and products? If yes, in what way? If not, what were the barriers?

6. To what extent experience and lessons learned through BREED have been disseminated to a wider audience, both within the UN system and to national policy makers, private sector entrepreneurs, academic institutions, NGOs and the news media?

Terms:In particular but not restricted to, the evaluator shall conduct analysis on the following parameters defined:

1. Attainment of objectives and planned results: Evaluate how, and to what extent, the stated project objectives have been

met, taking into account the “achievement indicators”. In particular, evaluate whether and to what extent the results of this project have informed national or sub-regional processes in formulating energy efficiency products and services through SMEs.

Ascertain the contributions of project outcomes to date in building capacity for sustainable energy enterprise development.

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Assess the extent to which project outcomes to date resulted in sharing knowledge across national boundaries.

Determine the extent to which external scientific and technical information and knowledge have been incorporated and have influenced the execution of the project activities.

What is the strategy developed in the different partner organisations for identifying, promoting and supporting enterprise development? Is the strategy appropriate, successful and sustainable for all aspects of energy enterprise development after end of project?

12. Achievement of outputs and activities: Asses the scope, quality and usefulness of the project outputs in relation to

its expected results. Assess the soundness and effectiveness of the various assumptions,

methodologies and tools developed as well as their relevance for developing technologies for sustainable and renewable energy development and production of energy efficiency products and services?

Assess the extent to which project outputs produced have the weight of scientific authority necessary to influence policy makers at the national and sub-regional levels.

13. Implementation approach: Ascertain to what extent the project implementation mechanisms outlined in

the project documents have been closely followed. Evaluate how appropriately implementation mechanisms have been adapted

to the changing needs of the project. Evaluate the effectiveness of project execution arrangements at all levels

including (i) policy decisions; project steering committee; (ii) day to day project management; and (iii) the core team and scientific leadership.

Assess the effectiveness of supervision and administrative and financial support provided by UNEP.

Identify administrative, policy, operational and/or technical problems and constraints that influenced the effective implementation of the project.

Characterise the division of responsibility in the project, according to plan and in reality (between UNEP DTIE, URC, E+Co, BREED Partners Forum and partner organisations). Focus particularly on the building of sustainable capacity in the partner organisations. Has the division of responsibility been clear to all parties?

To what extent the linkage of the BREED activities have supported policy development energy SMEs in the countries.

Assess whether the funds have been efficiently used by the organisations (international and partner organisations) on enterprise development activities. Conduct a review of the expenses of the partner organisations.

How effectively are the companies performing against i) business plan ii) loan repayment obligations iii) financial sustainability and iv) ability, when needed, to attract additional financing from other sources?

29

How useful has the non-financial Enterprise Development Services been for the development of the enterprises? Evaluate both the enterprise development support provided pre-investment and that provided post-investment, as the companies began to implement their business plans. Evaluate to what extent the BREED training tools have been used in the development of the existing enterprises and what the partner organizations as well as the entrepreneurs think about them. Are additional training tools needed? If so, what kind of tools?

What role was intended among the partners for post investment enterprise development services, monitoring and evaluation and asset management? How are responsibilities actually being handled?

Have the terms and conditions of energy enterprise financing been appropriate for the type of enterprises supported?

14. Stakeholder participation: Assess the mechanisms put in place by the project for identification and

engagement of stakeholders and establish, in consultation with the stakeholders, whether this mechanism was successful, its strengths and weaknesses. Particular attention should be paid to the level of participation by scientists, and national government institutions/ NGOs and civil societies.

Assess the degree and effectiveness of collaboration and coordination between the various project partners and institutions during the course of implementation of the project.

15. Cost-effectiveness: Assess the cost-effectiveness of the project activities. Assess the contribution of cash and in-kind co-financing to project

implementation and to what extend the project leveraged additional resources.

Identify factors which contributed in leveraging additional resources.

16. Country ownership: Assess the level of country ownership. Specifically, the evaluator should

assess whether the project was relevant for national development and environmental agendas and to regional and international agreements.

17. Replicability: Assess whether the project has potential to be replicated, either in terms of

expansion, extension or replication in other sun-regions and/or regions and whether any steps have been taken by the project to do so and the relevance and feasibility of these steps.

How innovative is the BREED portfolio of companies? Are they trend setters that are leading the development of the clean energy sector in Brazil? Is BREED an effective industrial development project?

30

18. Monitoring and Evaluation: Determine the effectiveness of the reporting, monitoring and evaluation

mechanisms employed throughout the project’s lifetime; and how effective the project responded to the challenges identified through these mechanisms. The evaluator shall include an assessment of the quality and application of project monitoring and evaluation plans and tools, including an assessment of risk management based on the assumptions and risks identified in the project document.

19. Impact: Evaluate any visible and/or identifiable immediate impact of the project on

scientific research and on policy development and decision making in the participating countries and other possible impacts. Also, evaluate the impacts of the BREED project in socio economic terms, e.g. regarding gender, environmental impacts, job creation, etc.

20. Sustainability:

Ascertain to what extent the project outcomes will be sustained and enhanced over time. The sustainability assessment should include the enabling environment, institutional and financial sustainability. How useful has the BREED financial support been for the development of the enterprises? Would these companies have succeeded without the support of the BREED project? Reasonableness of expectations of the role financial institutions would play; what is the willingness from financial institutions to invest in BREED type of enterprises (expressed, for example, in terms of completed or on-going negotiations for co-financing of specific enterprises)?

The evaluator shall make strategic recommendations which would contribute to the future direction of the similar UNEP project(s) based on lessons learned during project implementation. These recommendations should be clearly tagged to responsibility (who does what) and time line (by when) and should be made for each country and the overall project management team.

The evaluator will rate the overall implementation success of the project and provide individual ratings of implementation aspects as described in Section 3 of this TOR. The ratings will be presented in the format of a table with adequate justifications based on the findings of the main analysis.

Furthermore, the evaluation should highlight lessons learned, both the positive as well as the negative, from the standpoint of the design and implementation of the project.

The evaluation should also include a breakdown of actual costs and co-financing for the project prepared in consultation with the relevant UNON Fund Management Officer of the project.

3. METHODOLOGY

31

This terminal evaluation will be conducted as an in-depth evaluation using a participatory approach whereby the UNEP Project Officer and other relevant key stakeholders are kept informed and regularly consulted throughout the evaluation. The evaluator will consult with the UNEP/EOU and UNEP Project Officer on any logistic and/or methodological issues to properly conduct the review in an independent way.

The findings of the evaluation will be based on the following:1. A desk review of project documents including, but not limited to:

(a) The project documents, outputs, monitoring reports (such as progress and financial reports to UNEP Headquarters, annual Project Implementation Review reports, self-evaluation reports and relevant correspondence.

(b) Review of specific products including technical and financial models, technical information, research results, methodological guidelines, strategies and recommendations related to wider application of the generic tools and methodological approach developed by the project.

(c) Notes from the Steering Committee and Technical Advisory Committee meetings.

(d) Other material provided by the project team in both hard and soft forms, including the 1993 mid-term review of the project.

2. Telephone and/or in-person interviews with project management staff at DTIE, UCCEE and partner institutions as well as representative rural energy enterprise operators/ managers supported by the project in partner countries. In-person interviews will be conducted in Brazil.

The success of project implementation will be rated on a five-point scale: 1=excellent, 2=very good, 3=good, 4=satisfactory and 5=unsatisfactory.

The following parameters should be considered for rating purposes:- Attainment of objectives and planned results- Achievement of outputs and activities- Implementation approach- Stakeholders participation- Financial planning- Cost-effectiveness - Country ownership- Replicability- Monitoring and Evaluation

- Results and Impact- Sustainability

5. EVALUATION REPORT FORMAT AND PROCEDURES

The evaluation report shall be a detailed report, written in English, of no more than 30 pages (excluding annexes) and include:

i) An executive summary (no more than 3 pages)ii) Introduction and backgroundiii) Scope, objective and methodologyiv) Project Performance and Impact as per above listed 11 parametersv) Conclusions and rating of project implementation success

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vi) Lessons learnedvii) Recommendationsviii) Annexes

The final report shall be submitted in electronic form in MS Word format and should be sent to the following persons:

Segbedzi Norgbey Chief, Evaluation and Oversight Unit UNEP, P.O. Box 30552Nairobi, KenyaTel.: (254-20) 623387Fax: (254-20) 623158Email: segbedzi.norgbey@unep.org

With a copy to:Eric UsherHead, Renewable Energy and Finance Unit, DTIE

39-43 quai Andre Citroen, Paris, 75739FranceTel: 33 (0)144377614 Fax: 33 (0)144371474E-mail: eric.usher@unep.fr

The evaluation report will be printed in hard copy and published on the Evaluation and Oversight Unit’s web-site www.unep.org/eou.

6. RESOURCES AND SCHEDULE OF THE EVALUATION

The contract for this evaluation will begin on or about 22nd January 2006 and end on 31st March 2006, one month spread over nine weeks). The consultant will submit a draft report to EOU on or before 7th March 2006, with a copy to the UNEP Programme Officer for initial comments. Comments to the final draft report will be sent to the consultant by 21st March 2006 the latest after which the consultant will submit the final report no later than 31st March 2006. The Consultant will be required to receive a briefing by teleconference and will travel within the country to collect primary data, interview key stakeholders and visit enterprises supported by the project. The actual sites of project supported enterprises will be advised to the consultant prior to the commencement of the evaluation work. The evaluator will hold interviews with local project partners, supported entrepreneurs, government/congress representatives, financial institutions and other relevant stakeholders. URC will facilitate the evaluator’s field programme.

In accordance with UNEP policy, all projects are evaluated by an independent evaluator contracted by the EOU. The evaluator should not have been associated with the design and implementation of the project. The evaluator will work under the overall supervision of the Chief, Evaluation and Oversight Unit, UNEP. The evaluator should have the following minimum qualifications: (i) experience with rural energy enterprises; (ii) scientific expertise in the subject matter (rural energy, financing SMEs); (iii) project

33

evaluation; and (iv) fluency in Portuguese/Spanish and English . Knowledge of UNEP programmes and activities is highly desirable.

7. SCHEDULE OF PAYMENT

The evaluator will receive a lump sum contract payable in three parts. Upon signing the contract he will receive 30% and upon submission of draft report he will get 30%. Final payment (40%) will be made upon satisfactory completion of work. The fee is inclusive of all expenses such as Travel, DSA, and Misc. telephone costs, etc.

In case, the evaluator cannot provide the products in accordance with the TORs, the timeframe agreed, or his products are substandard, the payment to the evaluator could be withheld, until such a time the products are modified to meet UNEP's standard. In case the evaluator fails to submit a satisfactory final product to UNEP, the product prepared by the evaluator may not constitute the evaluation report.

34

Annex 2 – List of documents reviewed

1. ProDoc – Project Document and Implementation Plan – January 20022. ASCIMA Recommendation for Support – 03/11/243. Biodragão Recommendation for Support – 05/07/284. Canaã Recommendation for Support – 05/12/075. Carbo Charcoal Recommendation for Support – 04/12/086. Cêramica Bandeira Recommendation for Support – 03/07/297. Ecofogão Recommendation for Support – 05/03/318. ECOLUZ Barra Recommendation for Support – 04/06/239. Engenho 9 Recommendation for Support – 05/09/0110. Hidrosol Recommendation for Support – 04/08/1711. Jurena Recommendation for Support – 05/12/0712. Operarias do Mel Recommendation for Support – 03/10/2713. Ouro Branco Recommendation for Support – 04/08/3114. Seaweed Aquaculture Recommendation for Support – 03/11/2415. Solar Móveis Recommendation for Support – 04/08/2316. Village Energia Recommendation for Support – 03/06/0817. Evaluation Report Outline: Operárias do Mel18. Evaluation Report Outline:Cerâmica Bandeira19. Progress Report: Carbo Charcoal20. Progress Report: Ascima21. Progress Report: Solar Móveis22. Progress Report: Hidrosol23. Progress Report: Operárias do Mel24. Portfolio Summary and Status July 200625. Portfolio Summary and Status November 200626. Post-Investment EDS Examples November 200627. Half Yearly Progress Report – January/June 2004 – 121509028. Half Yearly Progress Report – January/June 200529. State Profile – Alagoas30. State Profile – Bahia31. State Profile – Ceará32. Brazil Financing Study – January 200433. Annual Report – 200234. Annual Report – 200335. Annual Report – 200436. Annual Report – 200537. Accounting Report – 05/12/3138. Lograme39. Management and Planning meeting Salvador, Bahia 9-10 June 200340. Management and Planning meeting Fortaleza, Ceara July 25-2841. Phase 1 – Final Report – 02/06/3042. Policy Paper – Afonso Henriques Moreira Santos – November 200343. Policy Support–Term of Reference for the Statement of Work for the First Government44. Policy Support–Term of Reference for the Statement of Work for the Second Government45. Policy Support – Statement of Work for the First Policy Workshop46. Policy Support – Statement of Work for the First Government - August 200247. Policy Support - Conference on National Public Policy and Regulations on Distributed Energy

Brasília-DF / Brazil, November 200548. Policy Support - Workshop on National Public Policy and Regulations on Distributed Energy

Brasília-DF / Brazil, November 2005

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49. Policy Support – Consultancy Contract Renove-UNEP RISOE Centre on Energy Climate and Sustainable Development – Final Report

50. Policy Support – Draft Law 3566, OF 2004 By Dep. JOÃO CALDAS 51. Policy Support – Draft Law of Conversion 2004 – Biodiesel: Deputy Betinho Rosado52. Policy Support – ANEEL Resolution 83 - 01/09/20 Procedures and conditions for electricity

supply by Individual Electricity Generation Systems with Intermittent Sources53. Policy Support - Policy Workshop Progress Report - Period: Aug 10th to Sep 20th 2004

36

Annex 3 – Field visit schedule

State Organization Investment Disbursed

Visit Period

Ceará IDER ----- 15-17/02/2006

APAFG NO 15-17/02/2006

ASCIMA YES 15-17/02/2006

Bahia E+Co ----- 21-23/03/2006

Ecoluz NO 21-23/03/2006

Juerana YES 21-23/03/2006

Alagoas Eco-Engenho ----- 23-25/03/2006

Cerâmica Bandeira

YES/NO 23-25/03/2006

Hidrosol YES 23-25/03/2006

Operárias do Mel YES 23-25/03/2006

Solar Móveis YES 23-25/03/2006

Minas Gerais Biodragão YES 12-13/06/2006

Ecofogão NO 12-13/06/2006)

Engenho 9 YES 12-13/06/2006

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Annex 4 – List of persons interviewed

ASCIMA – Organic Agriculture Salet Silva

APAFAG - Seaweed Aquaculture Raimundo Nonato Nunes, Edvan and Marta Viana

Biodragão José Laércio Zica, Chester Brasileiro

Cerâmica Bandeira Frederico Gondim Albuquerque

E+CoChristine Eibs Singer, Gerardo Aguilar, Gina Rodolico, Lucio Felix, Oliver Sieg, Tom Broyles

Eco-Engenho David Cerquira, Lúcia Figueiredo

Ecofogão Ronaldo Carneiro Miranda

EcoLuz Sergio Catão Aguiar

Engenho 9 Artur Tôrres Filho

Hidrosol José Gonçalves de Oliveira

IDER Jörgdieter Anhalt

Juerana Jorge e Keila Silvany

Operarias do Mel Rubia Soares Barbalho

Renove Fabio Rosa

Solar Moveis Flávio Fernando

UNEP Eric Usher, Juan Zak

UNIFEI Afonso Henriques Moreira Santos

38

Annex 5 – Summary of questionnaires

Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão

1. Technical matter Flavio Fernando Salet Silva José Laércio e Geraldo Chester Frederico Albuquerque Ronaldo Miranda

Does the Company offer renewable energy products

or services, or use renewable energy?

Equipments User Equipments User Equipments

What kind of renewable energy technology is being

employed?Solar Photovoltaic Biomass Biomass Biomass

Who did bring the technology?

Instituto Eco-Engenho, replicating a model from

Appalachian State University - USA

IDER had previously installed PV system for water pumping

Own development, evolving from biomass drying and

burning equipmentsOwn development Own development

How many people in the company do know how to

deal with such technology?One Nobody Two Two Two

Is the company able to improve such technology? No No Yes Yes Yes

What was the initial objective of the company?

Manufacture of wood furniture

Agriculture production Manufacture of wood burners Brick production Manufacture of wood stoves

What is the company goal now?

Manufacture of solar driers, together with its previous

activities

Cultivate and sell organic agriculture

products

Manufacture and install of over ten equipments per month

To become energy independent on brick drying and firing

Manufacture of more than twenty stoves per month

Does the Company receive any kind of technical

support?Yes Yes No No Yes

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Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão

Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão

1. Technical matter Flavio Fernando Salet Silva José Laércio e Geraldo Chester Frederico Albuquerque Ronaldo Miranda

Who is giving? Eco-Engenho IDER and NEPA Nobody Nobody Iowa State University, USA.

What frequency?Frequently, during the

technology transfer period (one year)

Frequently xxx xxx Twice

How many people in the company are involved? Five Five Design – two; manufacture and

install – six Several Five

What kind of formal education does have the

company staff?

High school - one; elementary school - four

High school - one; elementary school -

four

College – two; high school – one; elementary school - five

College – two; the other, from elementary to applied technical

school

College – two; elementary school - three

What kind of training did the company employee

receive?

Technical, from raw material suppliers

Technical and commercial - IDER

and NEPA

Weld and machine shop equipments, in a continuous

way, disseminating the knowledge through all the

employees

None None

How many people were trained? Two Not available All xxx xxx

40

  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture

1. Technical matter Artur Torres Filho José Gonçalves de Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

Does the Company offer renewable energy

products or services, or use renewable energy?

Solid biofuel Equipments Equipments User User

What kind of renewable energy technology is

being employed?Biomass Solar Photovoltaic Solar Solar

Who did bring the technology?

Own development, evolving from previous French

experience

Equipment suppliers (Tecnosol, Colsol, Wurth)

Equipment suppliers (Wurth, Speedrite)

Equipment supplier (Solartec)

IDER had previously installed a solar drier followed of a PV

system for water pumping

How many people in the company do know how

to deal with such technology?

Two One Two Two Nobody

Is the company able to improve such technology?

YesYes (planning to

manufacture solar water heaters)

Yes (installations) No No

What was the initial objective of the

company?

Equipment manufacturing, engineering, and services for

environment protection

Electric and hydraulic installations

Trading and installation of equipments and materials for agriculture and cattle

breeding

Sell pollen from beekeeping Algae production

What is the company goal now?

Keep the previous business and expand its activity

toward the production and selling of solid biofuel

Sell and install (and planning to manufacture)

solar water heaters

Keep the previous business, selling and

installing PV systems for electrical fences, water pumping and household for farmers, and making

GPS plants

Drying pollen bought from local rural

beekeeping, improving its quality

Growing, drying, processing, transforming and selling

seaweed products

41

  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture

1. Technical matter Artur Torres Filho José Gonçalves de Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

Does the Company receive any kind of technical support?

No Yes Yes Yes Yes

Who is giving? NobodyEco-Engenho, Green Solar, Universidade

Federal de PernambucoEquipment suppliers Eco-Engenho, academic

research centers IDER and Terramar

What frequency? xxx Frequently Two times per year Not available Frequently

How many people in the company does hand the

equipments?Ten Five

Design and sell – two; installation (external) –

nineFour Twelve

What kind of formal education does have the

company staff?

College – two; the other, from elementary to applied

technical school

High school and applied technical school (SENAI) High school College and high school Elementary school

What kind of training did the company

employee receive?

Labor risk and accidents - in the company; welding,

machine shop, assembly and maintenance - external the

company (SENAI)

Technical and commercial - equipment suppliers, SEBRAE and SENAC

Technical and commercial - equipment suppliers

Scientific and technical workshops, Sebrae

Technical and commercial - IDER and Terramar

How many people were trained? All All All (internal) All (internal) Not available

42

Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão

2. Financial matter Flavio Fernando Salet Silva José Laércio e Geraldo Chester Frederico Albuquerque Ronaldo Miranda

Are there other financing agencies willing to invest in the company? Who?

No No Coopcredi (county cooperative financial institution) No No

What is the gross income during last 3 years? Not available Not available 2005 - R$ 600,000; 2004 - R$

300,000; 2003 - R$ 200,000 Over R$ 2 million 2005 - R$ 70,000; 2004 - R$ 50,000

What is the expected gross income next years? Not available Not available 2006 - R$ 500,000; 2007 - R$

700,000Over R$ 2 million and

increasing2006 - R$ 70,000; 2007 - R$

100,000

How much was spent in equipments, training and

expenditures?R$ 55,000 Not available 2006 - R$ 120,000 Over R$ 200,000 Not available

What is the expectation for the pay back? Not available Not available Four months Not available Not available

How much is the company turn-over? Not available Not available R$ 30,000 Not available Not available

Does the company have financial reserve to be

reinvested?No No Only the profit Only the profit Only the profit

Does the company have annual balance? The result

is positive or negative?

Only accountability, and the result is negative No Yes, positive, increasing yearly Yes, positive Yes, positive.

What is the profit? None None Over 30% of the gross income Not available Low

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  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture

2. Financial matter Artur Torres Filho José Gonçalves de Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

Are there other financing agencies willing to invest in

the company? Who?

CEF/PROGER/BNDES – R$200,000 – 6 years – to purchase 2 trucks and

20 Biodragão burners

No

Banco do Brasil for turn-over – R$ 5,000 and

facilities from equipment suppliers

No No

What is the gross income during last 3 years?

Solid biofuel 2005: R$ 50,000; the whole company: R$ 2.5

million, increasing ~ 10% per year)

2005 - R$ 450,000; 2004 - R$ 250,000; 2003 - R$

120,000R$ 80,000 to R$ 100,000 Not available Not available

What is the expected gross income next years?

Solid biofuel 2006: R$ 500,000; 2007: R$ 1,5

million2006 - R$ 1 million R$ 200,000 to R$ 300,000 R$ 12,000 per month Not available

How much was spent in equipments, training and

expenditures?

Solid biofuel facility investment: R$ 2.5 million;

the whole company: R$ 100,000 per month

Not available, but informed that it was high, due to some

sophisticated test and demonstration infrastructure

installed

Not available R$ 27,000 Not available

What is the expectation for the pay back? Five years Not available Not available Not available Not available

How much is the company turn-over?

R$ 250,000 for the whole company R$ 15,000 R$ 10,000 Not available Not available

Does the company have financial reserve to be

reinvested?Only the profit Only the profit Only the profit No No

Does the company have annual balance? The result

is positive or negative?

Yes, positive and increasing yearly Yes, positive. Yes, positive, increasing

yearly

Only monthly accountability, and the

result is negativeNo

What is the profit?2005–R$370,000; 2006 – R$ 500,000; 2007 – R$ 600,000 for the whole

company

10%, due to high expenses 20% to 40% of the net income None None

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Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão3. Institut. & administ. matter Flavio Fernando Salet Silva José Laércio e Geraldo

Chester Frederico Albuquerque Ronaldo Miranda

Who are the partners to implement this project? Nobody IDER and NEPA

Engenho 9 (biofuel); HCE/Inbec (biofuel); Comad

(dairy producer); Flick (clothing)

Nobody Iowa State University, USA.

What is the responsibility of each partner? xxx

To assist the Cooperative in energy

and agriculture matters

Support for market or equipment development xxx Technical support for

improving the stove design

How long do they support the company? xxx From the beginning Last year; this year; from 3

years; from 6 years xxx Since 2005

Did any partner give up or intend to give up the

project? Why?xxx No No xxx No

There is any kind of government support? No No No No No

What kind of support? xxx xxx xxx xxx xxx

During how long? xxx xxx xxx xxx xxx

Does the Company receive any kind of enterprise development service?

Yes Yes (but the loan was disbursed to IDER) Not really Yes Yes

Before loan disbursement Eco-Engenho, on behalf of E+Co

IDER, on behalf of E+Co

E+Co: the business plan was commented

Eco-Engenho, on behalf of E+Co

E+Co, but the loan was not disbursed

45

Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão3. Institut. & administ. matter Flavio Fernando Salet Silva José Laércio e Geraldo

Chester Frederico Albuquerque Ronaldo Miranda

After loan disbursement No IDER, on behalf of E+Co No No No

Has this project been replicated? Where? No No No No No, but it comes from other

Latin America experiences

Someone has the intention to set up a similar company?

Who?No No No No No

What was the major difficulty to implement the

company?

Entrepreneurship, management, access to the

market

To create a cooperative,

entrepreneurship, access and liquidity of the local market

and absence of grants

Lack of financing and technical support plus high resistance

from potential buyers to accept innovative biofuel burners

Technical control of the process, equipment

performance, dialog with the financial partner

Lack of reasonable financing and a better technical support.

Furthermore, difficulties to have the innovative stoves accepted by the customers.

How did the company deal with those problems?

Working daily but so far discouraging

Working daily but so far discouraging Persistence

Guessing ways to solve processes and equipments

problems and working on the negotiation with the financial

partner

Working daily but so far discouraging

Was that problem unexpected? Yes

No, but very little was done to

overcome these difficulties

Yes, especially the resistance. Even in the case of very

favorable pay-back for the equipment and fuel switch

Yes, especially the dialog with the financial partner

Yes, especially customer resistance

46

  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture3. Institut. & administ. matter Artur Torres Filho José Gonçalves de

Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

Who are the partners to implement this project? Biodragão Nobody

Agricultural project designers, soil analysis

laboratories, water pumping and irrigation

firms

Association of young apiculture producers IDER and Terramar

What is the responsibility of each partner?

Support for market development xxx Their specialty To grow bees for the

pollen productionTo assist the Cooperative in

energy and aquaculture matters

How long do they support the company? Since last year xxx Permanent partnership

The partnership was conceived inside the

projectFrom the beginning

Did any partner give up or intend to give up the

project? Why?No xxx No Yes, because it’s not

running satisfactorily No

There is any kind of government support?

Only PROGER and SEBRAE TEC (R$ 30,000

for a gasifier)Yes No No No

What kind of support? LoansTax reduction for trading

on renewable energy equipments

xxx xxx xxx

During how long? Not available Not available xxx xxx xxx

Does the Company receive any kind of enterprise development service?

Yes Yes Yes Yes Yes

  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture

47

3. Institut. & administ. matter Artur Torres Filho José Gonçalves de

Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

Before loan disbursement

E+Co: business plan improvement during four visits, each of up to three

days

Eco-Engenho, on behalf of E+Co E+Co Eco-Engenho, on behalf of

E+Co IDER, on behalf of E+Co

After loan disbursement E+Co: business plan revision during two visits Eco-Engenho E+Co No IDER

Has this project been replicated? Where? No. No No No No

Someone has the intention to set up a similar company?

Who?

E+Co talked about support the establishment of similar companies in Thailand and

in the South of Brazil

No No No No

What was the major difficulty to implement the

company?

Customer resistance to accept the innovative solid

biofuel

Training, entrepreneurship,

management, customer resistance to accept

innovative equipments, low environment

conscience, previous solar water heating system fails

Entrepreneurship

Performance of the solar drier, financial resources, working capital, trading

and bee’s mortality

To establish and run an association, entrepreneurship

and absence of grant

How did the company deal with those problems?

Implementing pilot and demonstration projects and

offering training to architects, engineers and technicians in its test and

demonstration facility

Pilot and demonstration projects. Offering training to architects, engineers and

technicians

Capacity building Working daily but so far discouraging Persistence

Was that problem unexpected?

Yes, especially the customer resistance, either in the case of very favorable pay-back

for the fuel switch

No No Yes No, but very little was done to overcome these difficulties

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Solar Moveis ASCIMA Biodragão Cerâmica Bandeira Ecofogão4. Social and Environ. matter Flavio Fernando Salet Silva José Laércio e Geraldo

Chester Frederico Albuquerque Ronaldo Miranda

What is the number of employees during last 3

years?

From ten to five (for the whole activities) Not available Three to five Over sixty Three to five

How much did raise the salaries during last years? Not available Not available

Company provides insurance and complementary grocery

supplyNot available Not available

What kind of clients is related with the company?

Individual and associated rural producers

Local final consumers of organic agriculture

products

Industrial (72 equipments operating now)

Sellers of building materials and building companies

Households, including low income families supported by

NGOs

What kind of environmental impacts is

caused by the activity?xxx xxx xxx xxx xxx

What kind of environmental benefits is originated by the activity?

Electricity and fossil fuel savings

Electricity and fossil fuel savings

Fossil fuel replacement, friendly use of biomass

residues, recycle of combustion residues in agriculture

Fossil fuel replacement, reforestation and more efficient

use of biomass residues

Fossil fuel replacement, friendly use of biomass

residues

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  Engenho 9 Hidrosol Juerana Operarias do Mel Seaweed Aquaculture4. Social and Environ. matter Artur Torres Filho José Gonçalves de

Oliveira Jorge e Keila Silvany Rubia Soares Barbalho Raimundo, Edvan, Marta

What is the number of employees during last 3

years?

Zero to twenty (solid biofuel) Eight

Two internal and nine external people working on

installationFour Not available

How much did raise the salaries during last years?

The amount agreed with the employee Union Not available Not available Not available Not available

What kind of clients is related with the company?

Small industries (fertilizers, iron melting, bakeries and dairies), laundries, fitness

and swimming pool centers

Households, buildings, hospitals, hotels, fitness

and swimming pool centers

Farmers Natural and common food stores, pharmacies, etc

Cosmetics, pharmaceutical and food industries

What kind of environmental impacts is

caused by the activity?

Presently the company disposals its pyrolysis gas to the atmosphere, but it plans

to recycle this gas in its industrial process

xxx xxx xxx xxx

What kind of environmental benefits is originated by the activity?

Reduction of methane emission due the degradation

of urban tree residues disposed in municipal waste

area and energy forest residues; fossil fuel

replacement and friendly use of biomass residues

Electricity and fossil fuel savings

Electricity and fossil fuel savings

Electricity and fossil fuel savings

Preservation of coral reefs together with electricity and

fossil fuel savings

50