Peru has a population of 25.6 million of which 70% reside in urban areas. A significant component of Peru's recent economic reform has been restructuring and privatization of the energy sector. In 1992, the government enacted the Electric Power Licensing Law, which sought to: (i) achieve vertical separation of generation, transmission and distribution activities; (ii) introduce private sector participation in these activities; and (iii) set electricity tariffs according to marginal costs and free market principles. Since passage of the law, Peru has privatized a significant and growing percentage of its electric power generation and distribution companies. Peru has an installed generation capacity of 5,192 MW, of which diesel and fuel oil plants provide 52% and hydroelectric facilities supply 48%. General demand for power has been growing at approximately 5% annually and is projected to reach 4,415 MW by 2010.

Peru gained its most significant experience with energy efficiency in 1994, when the country faced an electricity shortfall. To avoid this problem, the Ministry of Energy and Mines (MEM) created a national Energy Savings Program (PAE) to administer a series of energy efficiency initiatives aimed at reducing peak hour demand by 100 MW. PAE implemented these programs in conjunction with CENERGIA, a local NGO dedicated to energy conservation. The PAE-CENERGIA campaign successfully avoided the crisis, but mainly served middle and high-income citizens in the capital city of Lima. The PAE program has been continued since 1994 in a scaled-down form because of its cost saving benefits. ELI will complement and coordinate with this ongoing effort, specifically targeting the previously underserved constituencies of low-income families and those living outside of Lima.

Peru's residential lighting market is still dominated by incandescent sources. Although the PAE-CENERGIA campaign raised CFL sales from 40,000 in 1994 to 415,000 in 1995, sales subsequently dropped when intensive CFL promotion ceased. In 1998, lighting sales included 23.3 million incandescents and 250,000 CFLs. As for the commercial lighting market, most of the linear fluorescent tubes installed in Peru are the less efficient T-12 type. Although most companies could save money by replacing T-12 tubes with the higher efficiency T-8s, many are unaware of this opportunity. In addition, some companies have the mistaken impression that T-8 tubes provide less light because they are thinner in diameter. Encouragingly, an increasing number of companies have been willing to switch from T-12 to T-8 linear fluorescent tubes over the past two years.

The ELI budget for Peru was $2,100,000. ELI was implemented in Peru by Edelnor S.A.