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USAID Impact Evaluation


Saving Energy in Guatemala


1996, Number 8

(PN-ABS-550)




A USAID project in Guatemala and four other Central American countries benefited 2,000

industrial firms by training managers and technicians in ways to use energy more efficiently.

However, economic policies and conditions prevailing at the time of project 

implementation did not foster widespread adoption of energy conservation practices.


The Agency's $6 million 1982-89 Regional Industrial Energy Efficiency project


--   Trained a cadre of independent energy conservation experts. These professionals form

     the core of an energy audit industry. 

     

--   Supported publication of technical manuals and training guides that became universally

     regarded as high quality, relevant, and well presented.  

     

--   Helped participating companies save an estimated $7 million a year. 

     

--   Increased demand for energy conservation among companies with an awareness of its

     financial rewards.

     

--   By increasing energy efficiency at participating companies, set the stage for easing

     pressure on energy supplies and improving the quality of the environment.

     

But the project failed to accomplish some of its objectives. Among them:

     

--   Spreading demand for energy conservation much beyond industries that took part in the

     project.

     

--   Encouraging lending policies by commercial banks for investments in energy

     conservation.




SUMMARY


For decades, Guatemala and its neighbors relied on cheap-energy policies to fuel economic

growth. That worked well enough so long as international petroleum prices were relatively

low. Energy lost through inefficient use could be compensated for, not through conservation

but by producing yet more energy. 


Then came the oil shocks of the late 1970s and early 1980s. The Guatemalan government

found it increasingly difficult to sustain its cheap-energy policy, and many energy-wasting

industries began to experience rising costs and declining profits.


With help from USAID, in 1982 Guatemala, Costa Rica, El Salvador, Honduras, and

Nicaragua launched the Regional Industrial Energy Efficiency project (PEEIR). Targeting

manufacturers--large energy users--the $6 million effort conducted training in energy

management and energy audits. The project provided advisers and trainers, held seminars and

demonstrations, and produced technical manuals and training guides for energy conservation

measures. 


The project emphasized simple, inexpensive conservation measures such as repairing leaks and

installing insulation. It focused on efficiency in energy use, not power production. Moreover,

only  modest attention was given to energy price policy issues that influence conservation

priorities. It has had some notable successes. By project termination in 1989, an estimated

2,000 companies had benefited from PEEIR. Estimates put energy savings for participating

companies at more than $7 million a year throughout the region, clearly a positive economic

payback. 


It has had potentially beneficial environmental effects as well. Less oil burned means cleaner

air, and more efficient use of hydropower (now a dominant energy source) translates into

reduced pressure to build new dams. That helps relieve stress on forest habitat.


PEEIR also created a critical mass of energy conservation professionals and a fledgling energy

audit industry. The longest term impact of the project may be the 30 to 40 local staff who were

on the project team and have moved on to become independent energy conservation

consultants and energy managers for industrial firms.


But demand for their services in Guatemala remains limited, owing,