Powering Up Communities
Salvadoran Americans are investing in clean energy and community development back home, with support from USAID
Omar Ortez never expected to run a solar power plant in El Salvador. Although he was born and grew up there, he moved away for graduate school and had lived in the United States for decades. “My wife and I started our lives together in Boston, but we always came back to the question of what we could do to contribute back to El Salvador and the Central American region,” Omar says.
Omar and his wife, Carmen Henriquez, began researching sectors where investment from the Salvadoran diaspora could have an impact, leading them to renewable energy. From the outset, their interest was not only in generating renewable energy and reducing carbon emissions, but also catalyzing local and inclusive economic growth.
Why renewable energy?
In El Salvador, energy access is nearly universal, even in relatively rural areas. However, fossil fuels still make up around half of the energy supply, and affordability remains a challenge. The Salvadoran government would like to see the country diversify into more renewable energy sources such as solar, wind, and biogas.
Omar and Carmen pooled investments from half a dozen contacts, most of them Salvadorans living abroad, to found Nauak Power in 2016.
“We wanted to show that it’s possible to mobilize diaspora investments into productive projects that can generate employment, in a strategic sector of the economy,” says Omar.
Nauak Power found suitable land near Santa Ana, in western El Salvador, to build the Natividad solar plant, and they agreed to sell the energy through a local utility company. They also secured a $6 million bank loan. But soon, the COVID-19 pandemic hit and delayed construction. Since the plant was not yet operational, the interest they owed kept accumulating and increased the size of the loan by almost a million dollars.
Acceleration with USAID
That’s when the stars aligned, and in late 2021 Nauak Power received USAID support through the Investment, Enterprise, and Sustainability (INES) program, which aims to generate at least $30 million in investment to support economic growth and generate meaningful social or environmental impacts in El Salvador.
Nauak Power received acceleration and capital mobilization support from Deetken Impact, which runs INES and is a Canadian asset manager focused on climate action and gender equality.
“This is not your typical solar project,” says Deetken’s Fernando Alvarado. “What motivated the design and implementation of the project from the start was achieving social and environmental impacts and empowering the community.”
Deetken Impact and Nauak Power worked together to renegotiate and restructure the company’s existing loans, attract new investors, and increase community engagement, with particular attention to gender and youth.
Social and environmental impact
In the community around Nauak’s Natividad plant, 90% of households are led by women, and about half have family members who have migrated elsewhere in search of economic opportunities. For these reasons, Deetken advised Nauak Power to implement training and projects focused on empowering women and youth. Now the company provides training on topics such as agroforestry, business skills, entrepreneurship, and women’s rights.
Nauak Power was intentional about generating local employment, with an initial goal to hire at least 40% of the labor force locally. Ultimately, 61% of the 252 jobs Nauak Power created were held by community residents, with a fifth held by youth and another fifth by women. Of the plant’s current maintenance crew, four of the six employees are women.
Nauak Power’s solar plant is also helping El Salvador move towards a greener future — the plant has five megawatts of installed capacity, enough to power around 8,400 homes, and it is displacing the equivalent of 1,600 cars’ worth of emissions each year with renewable energy. The team is also growing animal feed on the land under the solar panels and reforesting areas near a waterway on the property with moringa trees.
“Our values are threefold: solid, sustainable, and solidarity,” Omar explains. “Solid, in making investments that make sense in the long term and in a strategic sector of the economy. Sustainable, in choosing sectors that contribute to the environment. And solidarity, in contributing to local development as much as we can.”
For Omar, everything is reflected in the name of the company. “Nauak” is a word in Nahuatl, an indigenous language of Central America, which means “gathering together,” side by side — the opposite of “diaspora,” which refers to scattering or separating.
Today, thanks to USAID’s support, Nauak Power is operational and sustainable. It is planning expansions into agro-photovoltaics, small-hydroelectric generation, and a biogas project. Now that it has demonstrated the social and gender impacts of the project, the company is well positioned to secure additional funding from impact investors, diaspora members, and other financial institutions so it can continue to grow.
About the Author
Natalie Alm is a communications advisor for the USAID INVEST initiative.
