Renewable Energy Projects in Developing World Offered Attractive Funding Options
Source: SIDS DOCK
Abu Dhabi: A UAE decision to ease its loan terms for renewable energy projects in developing countries will help many rural communities across the globe get easier access to energy solutions and take up anti-deforestation projects.
Six clean energy projects funded by the UAE are already helping more than 300,000 people in six developing nations. Some communities will get access to electricity for the first time, which in turn will give them access to clean drinking water from desalination plants powered by renewable energy. The UAE has announced that the Abu Dhabi Fund for Development (ADFD) will be offering more attractive terms for loans provided through the International Renewable Energy Agency (Irena)/ADFD projects that support renewable energy initiatives in developing countries, an official spokesperson of Irena told Gulf News.
ADFD has reduced the interest rates on such loans from 1-2 per cent, as against 2-6 per cent for alternative funding options, he said. The ADFD will now offer loans at one per cent interest rate to the least developed countries and low-income countries. An interest rate of two per cent will be offered to lower- and upper-middle income countries. In both cases, a 20-year loan period including a 5-year grace period will apply, the spokesperson said.
The easier loan terms will help the Irena/ADFD projects support a wider range of countries and renewable energy projects. This will allow countries facing international borrowing constraints to access financing for their clean energy projects. The new terms will also help expedite the process of finalising the loan agreement and project implementation. “Since the announcement, Irena is already seeing a significant increase in interest by developing countries to apply for this fund as the new terms are far more attractive,” the spokesperson said.
Mohammad Saif Al Suwaidi, Director General of ADFD said: “ADFD sees the provision of renewable energy as an important and effective form of development aid. It is important that the recipients of the aid are able to fully realise the economic and social benefits of the clean energy projects delivered. We believe these new terms will significantly increase the facility’s impact, and encourage developing countries to utilise this opportunity.”
ADFD in coordination with Irena, announced the beneficiaries of the first cycle of loans in January 2014. Six projects, with a total capacity of 35 megawatts, were provided $41 million (Dh150.59 million) in the first cycle of a concessional loans programme of $350 million to be disbursed in seven cycles over seven years.
The first cycle of loans went to a geographically diverse set of countries — Ecuador, Sierra Leone, the Maldives, Mauritania, Samoa and Mali.
Courtesy of Binsal Abdul Kader, Staff Reporter