FAQs from the first cycle.
FAQs updated on 7th February 2017
- What is the IRENA/ADFD Project Facility?
- What is the objective of the IRENA/ADFD Project Facility?
- What type of finance does the IRENA/ADFD Project Facility provide?
- Why does ADFD require a government guarantee letter and can alternative guarantees be accepted?
- What are the loan terms and conditions?
- How and when to apply?
- Who can apply?
- How long does the selection process take?
- Is there any renewable energy technology constraint?
- How does the selection process work and what are the selection criteria?
- How can applicants improve their applications?
- Can IRENA ensure confidentiality of the project details, for instance in the case of patented technology?
- How is IRENA planning to continue to improve the facility?
1. What is the IRENA/ADFD Project Facility?
The IRENA/ADFD Project Facility is a partnership between IRENA and the Abu Dhabi Fund for Development (ADFD) to provide and facilitate finance for renewable energy projects in developing countries.
As part of the bid to host the IRENA headquarters, the UAE offered the sum of USD 350 million in concessional loans, through ADFD, to projects endorsed by IRENA. Approximately USD 50 million in concessional loans is provided in each of seven funding cycles.
Projects funded through this facility will support adopting the sustainable use of all forms of energy from renewable sources in developing countries.
2. What is the objective of the IRENA/ADFD Project Facility?
The overall aim of the IRENA/ADFD Project Facility is to support the energy transition and development goals in developing countries through the provision of attractive loan rates to government-driven renewable energy projects.
IRENA is recommending replicable and potentially transformative projects to the ADFD for funding that have the potential to be models for scale-up, and will improve energy access and address energy security.
3. What type of finance does the IRENA/ADFD Project Facility provide?
ADFD provides sovereign concessional loans. Concessional loans offer more favourable terms than conventional loans, with a lower loan rate, a grace period before any payment needs to be made and longer tenure than commercial loans.
ADFD provides concessional loans of USD 5 million to USD 15 million to renewable energy projects in developing countries.
The loan by ADFD covers up to half of each project's total costs. The remainder will come from other sources such as national contributions, banks, development partners or financial institutions.
Moreover, the loans obtained through the Project Facility must be used for activities or assets directly related to the proposed project. Contractors must directly invoice the ADFD with specific activities directly related to the project for disbursements to be made. Loans cannot be used to fund any pre-development activities, such as feasibility, environmental impact or socio-economic studies.
A government guarantee letter is required by ADFD. The letters needs to be from the international borrowing entity of the respective project country for example a Ministry of Finance. Templates to use for these letters are provided in the Funding page.
4. Why does ADFD require a government guarantee letter and can alternative guarantees be accepted?
The Abu Dhabi Fund for Development’s mandate is to work with developing country governments to contribute towards their strategic national economic development priorities. As the ADFD offers concessional sovereign loans, they require a government guarantee as part of the mandatory requirements in order to be considered for funding. The government guarantee letter can be provided at either the Executive Project Summary stage or the Full Project Proposal stage (if your project is shortlisted).
Alternative guarantees from agencies, state utilities, international organisations, PPAs etc. cannot be accepted in place of a government guarantee.
5. What are the loan terms and conditions?
Loan rates vary between 1 per cent and 2 per cent per annum with a duration of 20 years, including a grace period of 5 years. Once a loan agreement is signed, the loan rate is fixed for the duration of the agreement.
The currency of the loan is fixed in USD. However, if there will be any withdrawal applications in other currencies, ADFD will provide the exchange rate of that currency opposite USD at that time.
ADFD loan terms and conditions apply only for the part that ADFD will finance from the total cost of the project. Therefore, ADFD does not interfere or get affected by other commercial banks financing the project.
The final terms and conditions of the loan will be set by ADFD. The project implementation shall be in accordance with the tendering and procurement procedures of ADFD. The tendering and procurement procedures will be provided after the project is selected by ADFD.
6. How and when to apply?
Each funding cycle opens to receive Executive Project Summary applications in November and applicants have until mid-February of the following year to submit the online form.
Applicants must register and login to the online system to start the Executive Project Summary form. The “How to Apply” page of the website is updated each year to reflect any changes.
7. Who can apply?
All IRENA Members/ Signatories/ States in Accession who are developing countries on the OECD DAC list of ODA recipients can apply. Preference is given to projects submitted by IRENA Members. However, there are several months involved in the selection process, by which time Signatories/ States in Accession have time to become an IRENA Member. Within these requirements above, all stakeholders are eligible to apply (i.e. government bodies, energy utilities, private sector and civil society organisations etc.) but they need a government guarantee as per ADFD requirements.
8. How long does the selection process take?
The process takes one year from application to selection.
The final announcement of selected projects is made at the IRENA General Assembly in January of each year.
9. Is there any renewable energy technology constraint?
There are no specific renewable energy technology type constraints with the term "renewable energy" meaning all forms of energy produced from renewable sources in a sustainable manner, which include, inter alia:
- bioenergy (including waste to energy/biogas/biomass)
- geothermal energy
- ocean energy (including inter alia tidal, wave and ocean)
- solar energy
- wind energy
Off-grid solar home systems, for instance, are eligible under solar energy. Backup storage systems for renewable energy are eligible activities. Projects using hybrid systems such as wind and solar are also eligible to apply for funding.
10. How does the selection process work and what are the selection criteria?
IRENA selects and recommends projects for funding to ADFD as per the Guidelines for Applicants. ADFD makes the final selection from the recommended list put forward through IRENA.
When applying to the Project Facility, applicants are first asked for an Executive Project Summary which must be submitted in February of each cycle year.
The applications are evaluated by an international Panel of Experts who review the projects based on technical feasibility, economic/commercial viability and socio-economic and environmental benefits.
The shortlisted projects are then asked to submit Full Project Proposals in May of each cycle year.
The evaluation process includes a strategic overview by the Advisory Committee who assess the projects to ensure alignment with national development priorities, geographic spread and diversity of technologies. The Advisory Committee then recommends projects to ADFD for final selection.
11. How can applicants improve their applications?
In each cycle, the requirements in the Executive Project Summary and Full Project Proposal application forms are further clarified to assist applicants to improve their applications. Webinars are also carried out to assist applicants. Please check the How it works and How to apply sections of the website for details on how best to focus and prepare an application.
12. Can IRENA ensure confidentiality of the project details, for instance in the case of patented technology?
The Panel of Experts and the Advisory Committee
are asked not to disclose details of applications in the public domain unless necessary to evaluate projects or communicate results of the respective cycles. IRENA does not guarantee full confidentiality with regard to intellectual property rights or inventions. For example, during the selection of projects, certain members or experts may seek advice from expert consultants or knowledge organizations on certain aspects of applications.
13. How is IRENA planning to continue to improve the facility?
The Advisory Committee
continues to work to improve the facility further. Recommendations are then made to the full IRENA membership for approval for implementation in subsequent cycles. All relevant stakeholders can provide any comments and feedback on the IRENA/ADFD Project Facility to firstname.lastname@example.org .