Results-based Financing (RBF) Sub-Saharan Africa Grid Densification Challenge Fund. Call for Proposals

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1 Results-based Financing (RBF) Sub-Saharan Africa Grid Densification Challenge Fund Call for Proposals 1 st tranche of the grid densification challenge fund (Mozambique and Uganda) Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is pleased to announce the call for proposals for the 1 st tranche of the Sub-Saharan Africa Grid Densification Challenge Fund, financed through the Energising Development (EnDev) programme. What is RBF? Results-Based financing (RBF) means that a financial incentive is paid out once pre-agreed, well-defined results have been achieved and verified by an independent party. In this regard, RBF is different from traditional grants which are usually paid in advance, as RBF fund applicants will have to fully pre-finance activities until the achieved results are verified. Who is eligible? For this first call, the national grid-densification partners of the EnDev country programmes in Mozambique (Electricidade de Moçambique) and Uganda (Rural Electrification Agency) are invited to submit proposals. In future, the competition will be opened to interested utilities or national energy authorities in all sub- Saharan African (SSA) EnDev countries. Local EnDev teams will support and advise the utilities/reas in the preparation of the proposals. The applying entity must have the financial capacity to pre-finance the connections that are to be established under this RBF scheme. What is the scale of support? The first tranche will allocate a maximum total of EUR million in the form of results-based payments for increasing energy access for poor households in either or both of the selected countries through grid densification. A second tranche, open for additional countries, with a similar volume will be added after one year. Further calls may follow. Funded by: Coordinated by:

2 What activties are supported? Traditional electrification programmes often focus on grid extension to rural areas, leaving out opportunities for increasing access in already electrified communities. This is especially detriment to poor households as those are the ones more likely to be locked out by high connection costs. However, the potential to connect poor households at relatively low cost is extremely high, as low voltage lines are already available. The Grid Densification Challenge therefore aims exclusively at closing the electricity access gap in already electrified areas targeting poor households not yet connected to the grid. To make connection costs for poor households more affordable, the Grid Densification Challenge furthermore aims to encourage the wider use of the following two technologies: ready boards to address quality and financial challenges related to internal house wiring due to the low payment capacities of poor households, and energy efficient LED lighting to provide additional benefits to poor households by making monthly electricity bills more affordable. For the purpose of this call eligible connections are defined as connections where: i) low voltage lines are already available, ii) iii) only the electricity meter and a few meters of wire have to be added, and safe and quality internal house wiring is provided, either through What are the requirements? Proposals submitted to the Grid Densification Challenge fund need to fulfil the following basic criteria to be admitted for consideration: Basic criteria a. certified internal wirings installation services 1, where at least one room in a household is properly connected by wire, or b. the installation of a ready board. The maximum incentive proposed per household connection is lower or equal to EUR 100; Target areas need to be connected to the national grid for at least one year at the time of submission of application and selected households have to be living in the area for at least one year; The recipients are free in determining the geographic areas to be targeted, as long as no other grant funding is applied for the same connections; The share of renewable energies in the national electricity mix is above 60%. In addition, proposals addressing one or more of the following bonus criteria intensifying the pro-poor efforts of the approach will be weighted during the evaluation of the proposals. 1 According to nationally defined standards and to be checked by the provider when providing the connection. EnDev RBF Grid Challenge Fund - Call 2

3 Bonus criteria Connections of households in rural areas 2 Connections of households including the installation of a ready boards (RB) Connections of households including the installation of energy efficient (EE) LED lighting (2 LED lights per household). Proposals Proposals submitted to the fund need to provide information on the following elements: Ongoing government or donor financed national grid densification activities and an explanation how the proposed project will be additional to ongoing efforts, increasing the number of beneficiaries Total number of household connections and people to be reached Specify areas and communities and respective approximate number of urban and rural households to be targeted Number of households where energy efficient lighting and/or ready boards are included in the connection Connection fee to be charged to the household by the implementing entity Timeframe to install grid connections (maximum 18 months after signature of grant agreement) Standard service agreement template to be agreed upon between implementing entity and household Projections on the financial impact of the new connections on the utilities cost and income Evaluation The proposals will be evaluated in two steps: i) fulfillment of all basic criteria to be admitted for further consideration, ii) based on the proposed incentive per household connection and differently weighted bonuses applied for ready-board connections, energy efficient LED lighting, and rurally located households. In addition, the evaluation will take into account (a) the implementing entities track record of previous grid connection or densification programmes, and (b) their proposed business plan including a realistic implementation plan, sustainable tariff and connection cost structures, addressing potential implementation risks and mitigation strategies and a financial forecast during and beyond RBF. If there are considerable doubts regarding the ability of the utility to reliably and effectively deliver the results promised or regarding the effective targeting of poor customers, it is up to the evaluation committee, in consultation with external experts if deemed necessary, to determine the best-fit winner. 2 Nationally defined classifications of rural and urban localities will serve as criteria. If no such a definition exist, applicants will have to provide according to which criteria rural and urban households are distinguished. EnDev RBF Grid Challenge Fund - Call 3

4 Criteria are weighted as indicated below and the following evaluation grid applied 3 : Evaluation Criteria Score Weight Ex. 1 Ex. 2 Ex. 3 Ex. 4 A No. of HH connections No. proposed B No. of connections including No. proposed ready-boards C No. of connections including EE No. proposed lighting D No. of rural HH connections No. proposed E Success rate of previous programmes F Business plan soundness G Overall incentive per connection (in EUR) Incentive proposed Total Score = {[A+B+(C 0.25)+(D 0.5)] G} E F The funds of each tranche will be allocated based on total score achieved, starting with the highest scoring proposal, until the full amount of EUR million is reached. This will result in 1-2 projects distributed across the two countries in this call. The most expensive project receiving funds might as a consequence be reduced in volume. In case more than one proposal achieves exactly the same score, the total available amount will be equally distributed between the same scoring applicants. Depending upon the number and volumes of proposals received, RBF funds may be awarded to more than one entity in a country. In addition, proposals may be accepted at a reduced scale, both of which will be at the discretion of the GIZ EnDev HQ evaluating committee. Verification & disbursement process The contracted utilities carry out the connections in the agreed target areas and can subsequently hand in claims to EnDev on a quarterly basis. Claims have to contain minimum information about each connected household: customer name, address, phone number (if available), GPS, service contract number, and record if a ready board and /or EE lighting has been installed. The respective EnDev country teams will monitor the progress. EnDev will contract an independent verification agent to provide reliable and efficient audits of grid densification installations. As soon as the connections are claimed with EnDev, the audit firm will make a physical independent verification of service contract agreements and a sample of the households connected, including an inspection of the quality of connections. Subject to results of the independent verification, GIZ/ EnDev will disburse incentive payments or parts thereof in case verification fails or shows that claimed results have only partially been achieved. 3 Please note that the evaluation method has changed from the one indicated in the Q&A document shared with potential applicants in May Scores will be allocated on a continuous scale between 0 and 1 at the discretion of the GIZ HQ evaluation team based on the information provided. EnDev RBF Grid Challenge Fund - Call 4

5 Application process Proposals shall contain all required information as detailed out above using the application form which can be downloaded from the EnDev website ( under the country information for Mozambique and Uganda. Proposals are to be submitted in soft copy and written in English language. Timeline This call for proposal will close on December 12, 2016 (end of day). Please submit to: Energising Development Elina Weber RBF Coordinator Further tentative timelines are: Proposal evaluation finalised until 31 December 2016 Signing of Grant Agreements expected in January/February 2017 Start of implementation February 2017 Finalisation of implementation 31 July 2018 (latest 18 months after signature) EnDev RBF Grid Challenge Fund - Call 5