[This on-line version does not contain any figures, charts, graphs, or tables. To receive a published copy of this impact evaluation, order number PN-ABS-550, contact DISC, 1611 North Kent Street, Suite 200, Rosslyn, VA 22209. Phone 703-351-4006; fax 703-351-4039; internet docorder@disc.mhs.compuserve.com] 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,