New model for environmental remediation and economic growth

The initiative of our project arises from the concern of ABC and its allies for the lack of coordinated actions given the opportunities for improvement that the natural conditions of the country offer to solve the socio-environmental problem and the accumulated effects of the lack of equitable economic growth and the degradation of the environment and depletion of its resources, 

Guatemala is one of the poorest, most unequal and most rural countries in the world; with 52.8% of inhabitants living in poverty and extreme poverty. Of this population, 35.3% live in rural areas and 11.2% in urban centers. This means that close to 9 million guatemalans live in poverty, out of 17 million inhabitants. The third part of the population does not manage to consume the Q10 thousand 218 quetzales per person per year.  Lack of education, health care and basic services deepens the conditions of poverty. In contrast, is a country with a strategic geographical position, naturally and culturally diverse, and with high productive agricultural, commercial, industrial, and power generation potentials, among others.

The underlying cause that we identified is the adoption of consumerist, extractive and wasteful patterns; of a vicious cycle that, in its course, impacts the most vulnerable groups, worsening their conditions, but since, originally, they are unsustainable and will end up reaching and affecting everyone. 

This negative pattern cycle arises, on the one hand, due to poorly focused engineering that degrades the environment and does not take advantage of technological developments, and on the other, the turn that took place in the country towards centralized generation, which turned the potential generators into simple consumers. The foregoing, aggravated by a financial system that does not understand the productive and inclusive potential of electricity generation and does not enable adequate financial figures, since it is charged on the subjects and not on productivity, disabling them as subjects of credit.

Having, or not having, 'conventional electricity service '; is a complex problem, in the combination of all areas of problem within the MIT Solve Challenge, but our solution approaches them as financial inclusion. Is well studied that vulnerable groups and MSME's a

lways pay more for basic services, not only in the incurred cost of solving the lack and more, but also due to the unconsidered cost of the loss of opportunities by not having them. Electricity is defined, not just a basic, but a critical service, due to its incidence in other critical needs as education and heath, as well as for productivity 

Inclusion is a lost opportunity, in 'central generated electricity', due to the principles that govern both the public and private sectors whether commercial or public policy (and partisan politics, even), as they are driven to 'maximize the benefit-cost ratio', an therefore, contrary to inclusive principles for those living in segregated and remote rural areas, in a context where Guatemala has close to the most expensive electricity in the world  https://forbescentroamerica.co... 

The cost of the loss of this opportunities, is the highest for everyone.

ABC Alliance formulated a new Model that is comprehensive and participative, that, orienting actions to the structure of the problem, and focusing on its underlying causes, introduce la energetic transformation from  renewable sources, based on the legal technical figures that the legal system enables specially Renewable Distributed Generation -RDG- and other Solutions based on Nature -SbN-, as productive components of the model, that to not only will allow to economically and financially support the remedial components (the DNA) of the model but will alleviate the finances of households and MSME's where sunk costs are higher and of greater incidence so that. Starting from the unballasting of the budgets from the base of the socioeconomic structure, and being that in the present are who pays higher prices for electricity, paradoxically, it will be the action that confers viability and robustness to the economical and financial structure of the model and therefore will constitute the catalizer of a change towards productive patterns of progressive growth that creates a new value chain throughout the entire socioeconomic structure. The previous will allow to absorb the cost of environmental remediation and conservation and replacement of its natural resources and put their areas it in value, generating new attractions that can be capitalized for economic growth by adding to the new value chain, from which a designated portion of about a third, that will generate new jobs in addition to alleviating domestic and MSME's household budgets and providing a new productive source that can convert them into subjects of credit and incorporate them into the development process.

For this we have turned to the international development financial system, while the national system reacts and adapts to provide new financial mechanisms appropriate to the new green economy; presenting the proposal for the development of the pilot project that is in process to MIT Solve and submitted a request for financing to the US International Development Fiance Corporation -USDFC- so that, based on the evidence of the pilot project, we can finance the development of the Basin Rescue Matrix Project and bodies of water under the new comprehensive and participatory model of ABC alliance

While the national financial system identifies and processes the internals of the solar business applied to social development, ABC Alliance is requesting for technical assistance and economical support to MIT Solve to complete the Pilot Project and provide evidence for funds from USDFC for the parental Project (since in Guatemala there is no Development banking) to leverage initial investments in energy generators and proposing to create a financial bridge, that ideally may be through the municipalities more directly incorporate their inhabitants in the form of distributed renewable generators with the creation of municipal companies of broad popular base.

In the particular conditions of Guatemala, and at the residential and MSME's level, a 50 m2 of suitable roof, may produce near to US $1,000 of savings and sales, new income; at the community level, the roofs of buildings and community facilities; at the municipal level, likewise, the roofs of municipal buildings

Due to the inclusive and participatory nature of the Project and given that the ideal is the maximum possible participation to achieve shared objectives, our solution can be considered an inclusive coverage service with a broad popular base. It start from the base where costs and its impacts are higher deepening vulnerability and poverty 

The productive components of the project allow:

• release part of the sunk cost of electric bills from the budgets of the participants from the population base 
• generate income from the sale of energy (in the case of household uses, a part for own benefit)
• A part of the benefits will be committed to the O&M and support of the remedial components of the environment and its resources that the legal order makes mandatory for the conservation and recovery of the environment and its resources (or mitigation of environmental impacts) 
• For the participating MSME's productive activities, it is contemplated that 30% of the new value chain be allocated as a condition for new jobs and ventures.

ABC and the group of professionals, in the development of the Project:

Jorge Perroni (Business Admin. UNAM, MSc in Marketing, PHD Political Sociology from the Sorbonne) Promoter of the Project and financial support; Eduardo Cofiño (Chemical Engineer, Doctor in Administration and HR) Coordinator; Claudio Cabrera (engineer, specialist in soil recovery); Iván Azurdia (engineer, doctor, specialist in comprehensive water treatment); Susana Asensio (MSc urban planner architect, strategic environmental assessment); Marco Cerezo (ecologist, FUNDAECO) Gustavo Perdomo (ADEP, photovoltaic engineering project specialist) and other specific collaborators.

ABC alliance

The ABC association, in alliance with the group of professionals who developed the model , the Panchoy Valley Development Foundation -FUNPANCHOY-, the University of the Valley of Guatemala -UVG- and the Ecodevelopment and Conservation Foundation -FUNDAECO- , in the administration of existing conservation areas and those to be declared; and the Academy of Photovoltaic Engineering Projects -ADEP-. The government agency: National Agency for the Development of Economic Infrastructure -ANADIE-.

The general Project was presented to the National Agency for the Development of Economic Infrastructure -ANADIE-, which began the profiling of the Alliance, but is pending budget allocation; and expression of interest in the alliance of: The Foundation for the Development of the Panchoy Valley -FUNPANCHOY- in coordination with local support entities and with the academy; The University del Valle of Guatemala -UVG- and its Center for Environmental and Biodiversity Studies -CEAB- and the Institute for Research in Natural Sciences and Technology -IARNA- of the Rafael Landívar University -URL-, in the development of the studies and the training of participating organizations; The Association for the Sustainable Development of Valle Panchoy -ADEPANCHOY-, in the coordination with the local private sector; the Foundation for the Conservation of Guatemala, the Agua Limpia Association in support of the components of conservation of the environment and its natural resources and specific sanitation and water conservation; and,

The Pilot Project in progress serves to villages of near 175 households each for an aprox. of 1,575 inhabitants. Te parental Project covers a population of near to 271,486 inhabitants in an extension of 1,350 km2 (according to data of the University del Valle of Guatemala -UVG-

The Project allows to create a prototype of how to solve the barriers of Financial including some of a technical nature and, from here on, the development of new criteria and mechanisms. We consider the technical and financial support of MIT to have a strong impact potential, since perhaps language barriers and access to information and research seem to have isolated the country and its financial system, as a product generated internally, has barriers of a technical nature, mainly in the instruments and criteria for supporting debts for credits, especially since solar generation and other renewable sources have a production of known, stable and low-risk standards

Is a new application of existing technologies 

The core aspect of the innovation is that, with the application of the legal framework of the General Electricity Law and its technical legal instruments, the use of energy generated from renewable resources, not only as a source of supply for own consumption and of unballasting budgets, but as a financial instrument; and, for the purpose of the Project, the figure of Renewable Distributed Generation -GDR- allows the incorporation of potential small minor generators, from domestic and MSMS, up to 5 MW; either by selling to distribution companies, which in my country are private, or to the wholesale market to sustain the remedial components of the environment and its resources and the enhancement, over time. 

As result It is expected to: Leave the Pilot Project in operation and gather evidence of the results obtained to activate the financing requested from the International Development Finance Corporation of the United States -USDFC-, and scale the ABC model for the development of the general Project that covers the Guacalate basin and its rivers; which, in turn, will provide remaining funds for the replication of the project to cover the Achiguate River Basin and, later, other prioritized basins, their rivers and other bodies of water in the rest of the country.

Not only did we find an important barrier to the inclusive energy transition, but with the MIT funds we are going to develop the first financial prototype to create the enabling conditions that allow to unlock private investment, in the energy sector, with a broad popular base.

The Project addresses different components based on the multidimensionality and comprehensiveness of watershed management, which covers water, soil and waste treatment, as well as the management of historical and cultural assets and community, municipal, departmental and national participation, both in the private sphere and in the public sector, and achieve financial self-sustainability, and proceed to replicate it, in an already self-sustaining way, for the rescue of other watersheds and their rivers, and to erase the ECOLOGICAL FOOTPRINT of the malpractice of modern human beings, for posterity. This Project is innovative and unique, participatory, inclusive, preventive, job creator, community economic growth and of public-private participation.

The energy transition for leave behind dependence on fossil fuels and move towards the diversification of the economy towards a green and fair industry must become a fundamental part of a NATION PROJECT, and, as in the model developed by ABC and its allies, its productivity can be applied as an economic and financial instrument to promote the reversal of environmental deterioration and the recovery of our natural resources and archaeological sites, as an indispensable requirement to achieve SUSTAINABLE DEVELOPMENT.

General objective:

Being able to complete the Pilot Project with the technical and financial support of MIT it will also allow ABC alliance to: Create a prototype of the financial mechanism, to avoid the barriers of the national financial system that unnecessarily hinder equal access to energy transformation, since they rigidly do not give in to basing credit recovery on the productivity of the energy generation systems themselves, and their potential for the debt service coverage; but they insist on basing it on the income from the main line of businesses or the salaries and income of individual applicants, with their respective financial statements; this is the identified barrier. With MIT technical and financial assistance for this financial prototype will base the recovery of the investment capital on the potential of the productivity of photovoltaic generation. With these Funds, as seed capital, leverage the initial investments for the development of the DRG's in the points already identified with the communities of the Pilot Project and the covers of the first home and MSME's systems in the community, estimated at close to US $200,000, and its associated functional costs, for a total of US $275,000;  

Specific objectives:

· From the social development perspective: MIT Technical and financial assistance will allow to create prototype and finance: The implementation of the first community systems for generating energy from renewable sources, both self-consumption (in the case of the Chicazanga village water pumping plant, currently with hydrocarbons); as well as DRG's on the roofs of communal buildings prioritized by the community and the municipality and, with the products, replenish the seed capital and remain operating with its own funds, and thereby create the first mixed municipal company of renewable energy.

· From the commercial-financial perspective: Crear a tax credit system from the municipality of San Andrés Itzapa, for those households that want to opt to transition from conventional energy to renewable energy by installing a DRG on their roofs, with MIT technical and financial support to leverage initial investments in power generation renewable energy, mainly photovoltaic, first to cover the service of the fiscal debt and then as a sale of energy to the municipal company and in exchange for shares of the renewable energy mixed company; to then, expand the coverage of the model to the maximum possible households and MSME's of the pilot communities. With the savings from the energy produced for self-consumption and the income from energy production from Distributed Renewable Generation that will be sold, a new value chain will be created, of which 30% of MSME new value chain will be used to create new jobs and businesses and with the rest, will proceed to finance the recovery and enhancement works and activities in the basin and its bodies of water (according to legal framework) in an already self-sustained way. Surpluses will be reinvested to replicate the model and expand the coverage of the program and maximize the benefits of economic growth for the population.

Because it is a comprehensive and participatory development Model, it has positive incidence in all the objectives of sustainable development.

Some of the indicators are:

• new connections to electricity as a critical basic service
• savings and/or new household and MSME income from photovoltaic systems
• increase in agricultural production due to the use of agrivoltaic nurseries 
• better collection of reserve rainwater for irrigation
• additional income from photovoltaic systems on crops
• better control of weather irregularities on crops and health
• more hours of light with solar energy in support of education
• the systems themselves illustrate to the new generations how to contribute to climate control
• Equitable access to facilities regardless of gender and other conditions of vulnerability
• rainwater collection 
• Sanitation of bodies of water and soil
• clean and green energy
• more accessible energy
• economic growth through savings and new income and increased productivity

At the initiative of the group of professionals of the Project and knowing the problem of the advance of the deterioration of the environment and the tendency to depletion of its natural resources, as well as the opportunities for improvement, a model was developed for the rescue and enhancement of basins, their rivers and other bodies of water. 

The identified problem and its opportunities for improvement, in the work area, could be confirmed, with its particularities, with the organizations of elected representatives (COCODES) of the communities of the pilot project at the source of the Guacalate/Achiguate River. They have accompanied the process identifying sites for the different work and activities.

The rescue model is based on productive components, mainly the generation of renewable energy to economically and financially support the remedial components of water and soil for its implementation and subsequent operation, maintenance and enhancement,

ABC submitted a financing request to the United States International Finance Corporation in January 2021 within the framework of the XX Memorandum of Understanding, and they begin to await the results of the pilot pilot  

The community organization accompanied the members of the ABC Association to identify the community and private facilities where generation can be started as a productive component that triggers the rescue and the sites for the development of works and remedial actions. 

ABC has requested the analysis of return on investment and quotes for the required photovoltaic equipment and possible sources of financing, and this is where a barrier is found, since the country does not have a development bank, commercial financial systems, does not enable inclusive schemes, not even in the case of energy, which is an unnecessary barrier since with figures oriented to the potential of the debt coverage ratios, energy generation (with its known and stable variables) has the capacity to become, in addition to a source of supply as a basic service , also in a financial instrument and become accessible to the base of the population.

In order to maximize the cost-benefit ratio of the model and achieve the expansion of its coverage to the work area, steps have been taken to create the first municipal renewable energy generation company that incorporates households and MSMEs as 'renewable distributed generators' . 

The rigidity of the local financial system will take a long time to make it react and adapt to create the required enabling conditions, which is why development banks in the United States have been used to manage resources for the completion of the pilot project that ABC has started. with own resources   

ABC presents this proposal to MIT Solve to opt for the funds and invest them in the inclusive financial mechanism conceived, based on the legal system of electricity in the country, and the technical-legal instruments that derive from it, to promote the pilot project and Provide evidence of the results to activate the financial management of the parent project.

Photovoltaic, Bio-digestion, Waste to Energy -WTE- and Solutions based on Nature

The Common Good Association -ABC- and the group of professional promoters and developers of the Project, in a strategic alliance with entities of sustainable development, ecological conservation and academia; and promoting public-private alliances between neighbors, municipalities, government entities and the National Agency for the Development of Economic Infrastructure 

The project model is inclusive and participatory in nature and is aimed at incorporating all households, micro, small and medium-sized enterprises -MIPYMES- in the coverage area. The model is formulated to be able to be replicated in all the basins of the country. 

The core mechanisms are:

1. In order to achieve shared objectives, wide-ranging participation is essential

2. Electricity is a basic service, considered critical for development; but also, the generation of electricity is considered one of the most profitable and stable businesses in the market; Therefore, it has a double potential to achieve a broad popular base incorporation into the development process. 

3. Renewable Distributed Generation -GDR- is a figure that also enables broad-based participation, since it is aimed at promoting the participation of small generators, allowing the transfer of tax incentives conceived in the General Electricity Law of the country to all participants. In addition, and given that photovoltaic generation does not require specialized administration, it enables equitable access to 'a business' to different population groups, regardless of their gender or vulnerability conditions; and, since ABC and its allies will accompany the process, efforts will be made to expand the coverage of the project and maximize the benefits, prioritizing actions to incorporate the most vulnerable.

4. The creation of mixed municipal renewable energy companies allows the incorporation as shareholder partners of all households, micro, small and medium-sized companies -MIPYMES- as 'Renewable Distributed Generators'

5. Renewable Distributed Generation contributes to the country's energy matrix with clean energy and a more efficient production, avoiding the losses involved in transporting energy over long distances of the National Interconnected System -SNI-, which is centralized and exclusive in nature ; however, when used as a basis for interconnection, the GDR's confer the SNI the character of an integrating network with an inclusive interconnection