UAE and IRENA to fund renewable energy projects
The latest round is part of a $350m commitment from the ADFD that provides concessional loans to projects that Irena supports over seven funding cycles, with loan values between $5m and $15m.
The International Renewable Energy Agency (Irena) and the Abu Dhabi Fund for Development (ADFD) are seeking applications for projects to tap the fourth round of funding amounting to about US$50 million.
“This new funding cycle provides another opportunity for developing countries to access low-cost capital for renew- able energy projects to drive an energy transition and achieve sustainable development,” said Adnan Amin, Irena’s director general.
The latest round is part of a $350m commitment from the ADFD that provides concessional loans to projects that Irena supports over seven funding cycles, with loan values between $5m and $15m, reported The National.
These concessional loans have lower interest rates than traditional market loans, with Irena receiving more than 100 applications for each tranche.
For low-income countries, the interest rate runs at 1 per cent, while middle-income countries are granted loans with an interest rate of 2 per cent.
The loan recipients have 20 years to repay the loan, including a five-year grace period. Although applications must be submitted by February 15, projects are required to have a government guarantee.
So far the first two cycles of the Irena and ADFD partnership have resulted in $98m worth of projects expected to produce renewable energy capacity exceeding 56 megawatts.
That could meet the energy needs of 600,000 people and businesses a year. The third round of funding has yet to be awarded.
Just under 30 per cent of the $98m in funding has gone to the African continent. This programme also provides a business opportunity that enables UAE companies to venture into the renewable energy sector in developing countries. For instance, a $9m loan for Sierra Leone’s solar photovoltaic park is funding an engineering, procurement and construction contract awarded to a unit of Sharjah’s Mulk Holdings.
Oasis Gulf Investment will build the $18m solar park in Freetown using solar panels made by Masdar, the Abu Dhabi government’s clean energy company.
Countries across South America and the Caribbean as well as some island nations have already benefited from the programme.
“The scale of current energy demand globally requires close collaboration among governments and international agencies to ensure access to clean and cost-effective energy across the developing world,” said Mohammed Saif Al Suwaidi, ADFD’s director general.
And countries in the Middle East and North Africa (Mena) could be next on the list.
An estimated 28 million people in the Mena region lack access to electricity, according to World Bank statistics. Iran is the only country in the region that has received funding from the Irena and ADFD programme, but new prospects could emerge.
Laith Basha of the Jordan Solar Industry Association said there were many energy projects in the pipeline (ranging from 1 megawatt to 20MW) in need of financing.
“Talking about [interest rates of] 1 to 2 per cent is really convincing,” he said, adding that many renewable projects in Jordan need low-cost financing.
Mr Amin said: “The continued partnership between ADFD and Irena brings funding to the places where it can have the most impact and where financing is one of the greatest challenges.”