Advancing renewables in developing countries

seychelles | IRENA newsroom

The Abu Dhabi Fund for Development (ADFD) in 2013 undertook to support renewable energy
projects through a joint initiative with the International Renewable Energy Agency (IRENA). Through that facility, the fund has dispensed AED 1.285 billion (USD 350 million) over the course of seven cycles. In the first six cycles, ADFD has dedicated AED 900 million (USD 245 million) to fund 24 projects, benefitting 23 countries spanning different continents worldwide.

Six annual selection cycles of the IRENA/ADFD Project Facility were completed by January 2019, resulting in the allocation of USD 245 million by the Abu Dhabi Fund for Development (ADFD) to 24 selected projects. ADFD at the outset committed USD 350 million in the form of concessional loans for the implementation of renewable energy projects in developing countries. ADFD allocates funding to the projects based on an agreed evaluation and selection process, and the resulting recommendations issued by the International Renewable Energy Agency.

After announcing the selected projects in each cycle, IRENA connects the project proponents
and host government representatives with ADFD to jointly work through five main stages of implementation. IRENA additionally facilitates engagements between ADFD and the various
project teams to support communication and monitors the progress of projects and related
development impacts. Figure 1 shows the geographical distribution of ongoing projects.

Figure 1 Projects progressing from the first six selection cycles

The main post-selection stages are as follows:

  1. Preliminary loan offer, acceptance and onsite project appraisal.
  2. Agreement signing, ratification and loan declaration. This entails processing loan agreement and loan guarantee agreement, where applicable.
  3. Procurement of consulting engineers. Their role is to support the Project Implementation Unit (PIU) in final design and project oversight.
  4. Selection of Engineering Procurement and Construction (EPC) contractor(s).
  5. Construction and commissioning. This stage includes a sequence of disbursements to the project, as per milestones set by the PIU in consultation with ADFD.

Portfolio progress highlights
Overall portfolio implementation progress has improved compared to the previous year, with
more projects reaching the procurement and construction/installation phases.

Five projects are working through the procurement stages (Stages 3 and 4); another four are at various stages of loan agreement processing (Stage 2) and the remaining project is still at the preliminary loan offer stage (Stage 1) (see Figure 2).

Figure 2 Portfolio progress

Subsequent sections of this report provide updates on the progress of the projects at various critical milestones and list the challenges faced by each project to date.

Status of loan agreements
Thirteen of the 18 progressing projects now have signed loan agreements; 12 of those loan
agreements have been ratified and declared effective, paving the way for disbursements. The
loan agreements for a further four projects have been drafted and are expected to be signed in early 2020 The last project in the sixth cycle remains at the preliminary loan offer stage and has yet to reach loan agreement processing.

Figure 3 Status of loan agreement processing
Table 1 Status of projects currently (or soon to begin) generating electricity

Implementation and process improvements, 2014–2019
The IRENA/ADFD Project Facility has achieved notable successes in the six cycles by applying
the lessons learned along the way to improve the evaluation and selection process and facilitate project implementation. IRENA and ADFD continue to actively engage with project development teams to support the implementation process and bring the benefits of renewable energy to the developing world. Project advancement has also been facilitated by joint appraisal missions, together with periodic conference calls with project teams and follow-up missions to monitor and document progress.

Conclusions
Progress was made in 2019 in terms of increasing the proportion of projects completing implementation, with 44% of the portfolio reaching the construction stage, compared to 33% in 2018. Several projects began generating electricity, thereby providing renewable energy benefits to target communities. Loan agreement processing also advanced, with three additional projects signed in 2019 and five others under negotiation. Ongoing follow-up activities include an online progress tracking platform, which is being updated and re-deployed to provide project teams with the ability to issue regular reports on progress,
challenges and mitigation measures.

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