The International Renewable Energy Agency (IRENA) and the Abu Dhabi Fund for Development (ADFD) announced on Saturday the winners of the fourth round of a joint facility that funds transformative renewable projects in developing nations. All bioenergy, geothermal energy, hydropower, ocean energy, solar energy, and wind energy technologies are eligible for funding.
In this round though, solar PV and micro-grid technologies were the clear winners showcasing the dynamism of the sector.
Specifically, US$44.5 million in the following four projects:
• Marshall Islands: A 4.6 MW hybrid micro-grid project, using solar PV and advanced lithium-ion batteries, that will provide renewable energy access to over 16,000 people.
• Niger: A project focused on rural electrification for over 150,000 people, using 2.1 MW solar PV micro-grids and solar home kits. The project will electrify 100 schools and improve the drinking water supply.
• Seychelles: A government supported solar PV utility scale project will integrate a 5 MW solar PV plant into an existing wind farm, demonstrating an innovative space-saving solution for this small island nation.
• Solomon Islands: A government-backed 20 MW reservoir dam and hydropower facility will diversify the country’s energy mix, eliminating 44,000 tonnes of CO2 emissions per year.
Based on the Irena and the ADFD collaboration pattern, Irena recommends and selects the renewable energy projetcs and the ADFD offers soft (concessional) loans to these projects worth $350 million over seven annual cycles.
Since 2013, through the joint facility, Irena and the ADFD have allocated $189 million to 19 projects, while moreover have also attracted over USD 387 million in co-financing for a total of $576 million in new investment inflow, said Irena.
Applications for the fifth round of the IRENA/ADFD project facility funding will be accepted until 15 February 2017.
ADFD loans range typically from $5 million to $15 million per project and finance is offered at 1 to 2 per cent lending rates with a 20-year loan period, including a 5-year grace period.
Financing is crucial
The Irena/ADFD facility is crucial because it alleviates the problem of financing renewable energy development in emerging and developing markets. For off-grid projects specifically, financing tends to be even harder due to the lack of a credible project off-taker.
For on-grid projects, the problem tends to be less so, since utilities often offer power purchase agreements (PPAs) that can guarantee a revenue stream to the projects investors. However, PPAs are only worthy when the off-taker is credible, and often utilities in developing nations are in a bad financial state.
The winners of the fourth round of the Irena/ADFD facility were announced in the beginning of Abu Dhabi’s sustainability week that takes place between 12 to 21 January. Part of this week’s events include the World Future Energy Summit, which pv magazine will attend and report.