The rural communities in Peru faced multiple barriers to increasing the use of electricity for production. The constraints on promoting demand for electricity from productive units included (i) limited technical and management skills of rural producers, (ii) inadequate access to capital and financing, and (iii) poor quality perception of grid supplied electricity, which reduced interest in electrical equipment.
From the perspective of the supplier, the constraints to meeting the additional demand included (i) a lack of marketing or tracking of productive-use customers by distribution companies, (ii) limited access to information and insights on rural markets, (iii) rural electrical system designs and network layouts optimized for least-cost household connections, rather than maximum development benefits, and (iv) inconsistent service quality in many of the poorer communities, with interruptions and voltage drops.
The project implemented an approach based on business development services (BDS) techniques. The non-governmental organization (NGO) implementing the productive uses activities used BDS methods to assist small and home-based enterprises in gathering information, finding credit and addressing technology constraints through marketing and assistance campaigns. The BDS approach has been applied in rural programs targeting income generating activities in other sectors by working, often in collaboration with other institutions, to assist enterprises improve and start small businesses by addressing technical skills, markets, finance, technology and other constraints. For its application to promote productive uses of electricity, the NGOs followed a strategy that included the following elements:
- market assessment;
- preparation of business plans;
- marketing to the community and potential entrepreneurs;
- coordination with complementary institutions; and
- links with the electricity distribution company.