RESULTS BASED FINANCING (RBF) GRANTS FOR RENEWABLE ENERGY INVESTMENTS IN GREEN MINI AND MICRO GRIDS

SECOND CALL FOR APPLICATIONS 2019

1. INTRODUCTION

The Rural Energy Agency (REA) is responding to the Tanzanian Government’s aim to reach the UN initiative for Sustainable Energy for All (SE4ALL) Agenda of universal (100%) access by 2030 by opening a financing window for co-funding private sector renewable energy investments. Cooperation between the Government and the private sector through different types of public private partnerships are considered key elements in the effort to rapidly expand sustainable energy access. Sweden and the United Kingdom have contributed for supporting investments in Green Mini and Micro Grids.

The private sector financing window will be used strategically to incentivize scale-oriented investors to enter the rural electrification area and/or to expand ongoing electrification activities into less-served, more remote off-grid areas of the country for economic and social development purposes.

A Results Based Financing (RBF) approach will be used where capital grant incentives will be offered to Green Mini and Micro Grid (GMMG) service providers with realistic business plans, based on the verified number of electricity connections resulting from the financing support.

The Rural Energy Agency (REA) invites renewable mini- and micro grid Project Developers to submit applications for result based grants to support accelerated access to sustainable energy services in un-served rural areas of mainland Tanzania.

The Rural Energy Agency (REA) invites renewable mini- and micro grid Project Developers to submit applications for result based grants to support accelerated access to sustainable energy services in un-served rural areas of mainland Tanzania.

2. OBJECTIVES OF RESULTS BASED FINANCING

The overall objectives of the Programme are:

i. Electricity access for at least 735,000 people (147,000 households), of which 430,000 (86,000 households) through green mini and micro grids;

ii. Accelerated access to high quality solar PV-systems to over 900,000 people (188,000 households) in more remote areas of Tanzania; and

iii. Increase of private sector investments in renewable off-grid and mini-grids by use of various financial instruments.

3. FINANCING MODALITY

REA will apply the multi-tiered indicator approach of the SE4ALL initiative as a basis for the different RBF incentives.  SE4ALL’s tier framework measures electricity access along a continuum of improvement over five levels.

This second call for RBF support will only consider applications that cater for Tiers 4 and 5, as detailed in Table 1 below.

Table 1: Investments corresponding to SE4ALL tiers and service levels

4. ELIGIBILITY REQUIREMENTS

4.1 Eligible Developers and Investment Entities

The following categories of developers and investors are eligible for RBF within the Private Sector Renewable Energy Investment Window:

a) Any private enterprise, NGO, community, or co-operative operating in Tanzania, registered as a legal entity, and having the capacity to enter into a binding agreement under the laws of the United Republic of Tanzania is eligible, subject to REA assessment of technical, financial, management and procurement capacity to implement the proposed project according to the Operating Guidelines.

b) Project developer shall provide evidence that they have satisfied EWURA’s regulatory requirements.

c) For micro-grids: REA shall accredit participating companies for commercial and domestic micro-grid operation and service provision.

d) Project developers seeking to secure debt financing from banks or other financiers must provide evidence of such bank’s or financier’s commitment to provide the debt financing for the project.

e) The Project Developer shall not have been “blacklisted” by the Government of the United Republic of Tanzania or any other regional or international authority for any reason whatsoever; and

f) The Project Developer shall not have been declared bankrupt and should not have a bad history of mediation, arbitration or litigation relating to fraudulent business transactions.

g) A project developer who has received a grant under this initiative shall not be eligible for another grant until he has completed all the obligations of the previous grant.

h) Project developers may only apply for grant support for one project. The project may, however, be comprised of sub-projects in different locations, if all the necessary information (including financial, technical, managerial, etc.) is provided for each sub-project in the project proposal.

4.2 Eligible Projects

The following eligibility criteria apply for RBF grant support under this second call:

a) Projects must be supplied by a renewable energy power generator not exceeding 10MW.

b) Projects must aim to connect domestic (household), commercial and institutional customers. Projects with a high number of connections will receive preference.

c) Existing GMMGs aiming to connect additional customers without investment in additional generation capacity: Must have connected at least 60% of their target under RBF first call (if applicable), and ensure that the SE4ALL Tier service level of the existing distribution network is not reduced as a result of the extension.

d) New GMMGs not having reached financial close: Must provide evidence that proves a high probability of reaching financial closure.

e) Selection of sites to be electrified in Tanzania’s islands specifically to Lake Victoria, Lake Tanganyika and along the Indian Ocean coast have high priority. The priority list of island can be accessed here.

5. GENERAL PROCESS AND PROCEDURES

The application procedure will follow a two stage process:

i. Stage 1: This second call is open for 4 weeks. Interested project developers and investors may submit Concept Notes, on-line, showing key project features, stage of development and financing structure. These Concept Notes will be screened by REA in collaboration with the Programme Consultant, and the applicants will be notified of the result of the screening within three (3) weeks after submission deadline. The Concept Note template can be downloaded from REA’s website.

ii. Stage 2: PProjects that successfully pass the Stage 1 screening will be invited to submit a Feasibility Study and a Business Plan with required enclosures where applicable, including a bank guarantee or other payment securities covering the advance grant payment amount. Projects which pass Stage 2 appraisals will be presented to the Rural Energy Board (REB) for approval or notification (as applicable). A Letter of Notification will be provided within one (1) week of the REB decision. Once all financing and regulatory requirements are fulfilled, an RBF Grant Agreement will be signed between REA and the Project Developer. The maximum implementation period after agreement signing is four (4) years for Hydropower Projects and three (3) years for biomass, solar, wind or hybrid projects. Applicants that do not pass Stage 2 will be notified within one (1) week of the REA Appraisal Team decision. Applicants whose proposals were disqualified at Stages 1 or 2 may re-apply for financing consideration in subsequent calls provided that such previous proposals have been revised to meet eligibility criteria stated therein.

6. MAXIMUM AWARD SIZE

The amount of the grant to be provided is variable, it is calculated based on the number and type of connections proposed as shown in the table below.

The minimum amount per RBF Grant Agreement is USD 1,500 per project. The maximum amount is 75% of total investment cost for isolated grids and 75% of total investment in the distribution network for grid connected mini-grids per each project.

7. HOW TO APPLY

Applicants are encouraged to apply online at http://rea.go.tz/Resources/ApplicationForms/RBFOnlineGrantApplicationForm/tabid/295/Default.aspx. To use our online proposal form, you must register and have a valid account and profile with www.rea.go.tz. Registration is free. Apply Now!

Please contact the RBF Programme Team by phone at +255 26 2323504, +255 26 2323506, +255 788 416284 or +255 788 590669 or via e-mail at team.rbfonline@rea.go.tz for more information and support.

Please note that all applications must be submitted before 11:00 East African Time (8:00 GMT) on Friday, February 7th, 2020. Online applications are only considered completed when they have been officially submitted (i.e., you must specifically select the option “Yes (Please SUBMIT Application Now)” on line #91 before clicking the “Submit Form Now” button).

Applications will only be accepted in English. If successfully submitted, the RBF2019C2 Online Application System will acknowledge receipt of your application for your records. Any proposals in draft form will not be considered for evaluation.

Director General
Rural Energy Agency (REA)
LAPF Building, 7th Floor
Makole Road
P. O. Box 2153
Dodoma, Tanzania

E-Mail: team.rbfonline@rea.go.tz
Tel: +255 26 2323504, +255 26 2323506
Mob: +255 788 416284 or +255 788 590669
Fax: +255 26 2323507