*** CALL FOR PROJECT PROPOSALS No.2 in Energy Efficiency and use of Renewable Energy Sources (private sector) *** Chisinau, April 2013
Call for Project Proposals in Energy Efficiency and use of Renewable Energy Sources According to the Law on Renewable Energy No.160-XVI of July 12, 2007 (published in Monitorul Oficial of the Republic of Moldova, 2007 No.127-130) and the Law on Energy Efficiency No.142-XVI of July 2, 2010 (published in Monitorul Oficial of the Republic of Moldova, 2010 No.155-158), the Government of the Republic of Moldova approved the Decision on the Energy Efficiency Fund No.401 of June 12, 2012 (published in Monitorul Oficial of the Republic of Moldova, 2012 No.126-129). Energy Efficiency Fund (the Fund) supports projects in the Republic of Moldova focused on promotion of energy efficiency (EE) and on use of Renewable Energy Sources (RES) that have a positive impact on reduction of greenhouse gas emissions. In this context, the Fund has allocated 20 million lei within this call, which is the total maximum amount available for financing eligible EE and RES projects. This call is guided by the procedures and requirements established by the Decision on the Energy Efficiency Fund No.401 of June 12, 2012 (hereinafter referred to as the Fund s Regulations). The form of financial support for proposed projects shall be established by a three-party Financing Agreement (FA) signed by (1) the Participating Financial Institution (PFI) (see Annex 1), (2) the Fund and (3) the beneficiary, or by a bilateral FA between the Fund and the beneficiary (according to clause E/8 below) that has successfully passed two-stage evaluation and selection procedures: (a) initial project proposal evaluation, (b) detailed project evaluation. The final decision on project financing shall be made by the Fund s Administrative Board (AB). A) Project proposals shall be submitted by applicants authorized representatives of private legal entities in any field of national economy complying with the following requirements: 1) 100% privately owned; 2) functional entities not undergoing insolvency, bankruptcy or liquidation processes; 3) do not have any tax liabilities; 4) not involved in litigation or party to any court trials; 5) have not benefited within the last 5 years from support of similar programs or projects (e.g. programs and projects aimed at financing EE and RES projects, as well as environmental projects with implementation of EE and RES measures); 6) have not benefited from support within investment programs run by international financial institutions for the same purpose they request financing now (e.g. EBRD MOSEEF or MOREEF credit lines and so on) or within technical assistance projects of foreign donors (e.g. EU, GIZ etc.) (Note: support offered for conducting studies, energy audit reports and other technical assistance activities are not qualified as support within investment programs and therefore shall not represent the grounds for exclusion). B) The Fund s support for projects approved within this call shall be offered in the form of a grant or financial guarantee based on the conditions described in Annex 1 to this call. C) Each applicant can present a single project proposal containing a number of technical solutions (EE, RES or a combination of those) within the limit of the maximum amount available for financing from the Fund. If the same project proposal has been already presented to another institution or support program, the applicant must inform the Fund about it and present relevant information. D) The deadline for submission of project documents is May 24, 2013, 17:00 to the Fund s office. E) Submission and evaluation of project proposals shall take place according to the procedure described in the Fund s Regulations by following the steps below: 1. The Fund will register the date of submission of each Initial Project Proposal (IPP) by assigning it a unique identification number;
2. IPPs shall be evaluated (initial evaluation) in the order they are received by the Fund. Note: if FA stipulates participation of a PFI, the initial project evaluation process shall start only after a preliminary approval (due diligence) by the PFI; 3. IPP evaluation shall be based on: Administrative conformity, i.e. presentation of a complete set of documents properly signed and stamped; Applicant and IPP eligibility as detailed and clarified in Annex 2 to this call. IPP evaluation shall take place based on the evaluation criteria presented in Annex 3 to this call. 4. The Fund shall immediately inform the applicant when the IPP initial evaluation process is finalized. 5. Only those applicants whose proposals have successfully passed the initial evaluation stage shall be recommended to submit a detailed project proposal to the Fund for examination and detailed evaluation; 6. Applicants who have obtained the initial approval of their IPPs shall submit a Detailed Project Description (DPD) within up to 20 working days from the date of notification on the part of the Fund about the IPP s initial approval. In exceptional cases, the Executive Director of the Fund can approve extension of the deadline for DPD submission for up to 10 working days based on a written request from the applicant providing due justification. The approval of requested deadline extension shall be made in the written form. DPDs presented after the date of approved deadline extension shall not be accepted by the Fund; 7. All DPDs received by the Fund by the established deadline shall be evaluated according to Art.76-78 of the Fund s Regulations as specified and clarified in Annex 2 to this call. Only projects that have successfully passed the stage of technical, financing and environmental feasibility assessment (detailed evaluation) shall obtain the Fund s support. Further DPDs shall be evaluated based on the selection criteria presented in Annex 4 to this call. Each project proposal shall obtain the Total Evaluation Score (TES) to rate projects proposed for support from the Fund. If the total amount of support requested from the Fund by the projects that have successfully passed the detailed evaluation stage exceeds the maximum amount allocated by the Fund within this call, project proposals to have obtained a higher TES shall have financing priority over the project proposals with a lower TES. 8. The Financing Agreement can be arranged in the form of a: a) Three-party credit/financial leasing agreement between the PFI, the Fund and the beneficiary; b) Bilateral financial guarantee agreement between the Fund and the beneficiary; c) Bilateral grant agreement between the Fund and the beneficiary; F) Eligible costs of proposed projects refer to expenses necessary for project running and supported by accounting documents. Within this call, costs (invoices) incurred (issued) before the date of project proposal presentation to the Fund shall be considered non-eligible, except for the expenses incurred by applicants to conduct energy audits and feasibility studies necessary to develop the projects proposed for financing. Expenses incurred before the date of the project s final approval by the Fund s Administrative Board and, respectively, signing of the Financing Agreement with the Fund shall not be reimbursed. Such expenses shall be incurred within the applicants own responsibility and at their own risk. Value added tax is not a cost eligible for financing by the Fund and thus shall not be taken into consideration when evaluating investment project efficiency. Additional information on eligible costs is presented in Annex 6 to this call. G) Project proposals shall be presented in full conformity with the Fund s requirements. The applicant must submit a Letter of Application to the Fund s address requesting project financing signed by the authorized representative of the applicant. The following documents shall be enclosed to the Letter of Application: Signed Statement confirming eligibility / meeting of conditions set out in Chapter A (cl. 1-6) above;
Initial Project Proposal, Annex 1 to the Regulations on Organization and Functioning of the Energy Efficiency Fund, Government s Decision on the Energy Efficiency Fund No.401 of June 12, 2012, Monitorul Oficial 126-129/448, 22.06.2012; Environmental Impact Assessment Questionnaire; Annex 2 to the Regulations on Organization and Functioning of the Energy Efficiency Fund, Government s Decision on the Energy Efficiency Fund No.401 of June 12, 2012, Monitorul Oficial 126-129/448, 22.06.2012; Environmental due diligence and / or environmental permit for the project; Feasibility study/ for RES projects/ energy audit report/ for projects involving energy efficiency measures/ or RES projects for existing installations. The Feasibility Study or Energy Audit Report shall not be older than 12 months as of the date of initial project proposal submission. The seal and signature of the head of the legal entity or the signature of the individual representing the applicant must be applied to the copies of the feasibility study or energy audit report and the Terms of Reference. Documents shall be dropped at the office of the Energy Efficiency Fund at the following address: 180 Stefan cel Mare Ave, 6 th floor, of.607, MD-2004, Chisinau Municipality. For more details dial: 022 000 807 or 060 809 709.
ANNEX 1: Financing Conditions The Fund will offer financial support in the form of a grant for the approved projects presented to the Fund by private legal entities or will ensure execution of beneficiaries payment obligations before participating financial institutions by issue of a financial guarantee. The financial support shall be offered with engagement of participating financial institutions included in the list published on the Fund s webpage. The projects approved by the Fund shall be financed by participating financial institutions in the form of a credit or financial leasing, whereof the Fund s contribution shall make up 30% of the financed amount (capital) or 15% of total project costs if the investment project is fully financed by beneficiaries, based on the following conditions: Financing terms: from 24 to 60 months; Annual interest rate: to be negotiated individually (direct negotiations) by the participating financing institution and the project beneficiary; Payment schedule: to be negotiated individually (direct negotiations) by the participating financing institution and the project beneficiary; Grace period (for capital): shall be negotiated individually (direct negotiations) by the participating financing institution and the project beneficiary; Beneficiary s contribution: at least 30% of the amount financed by the participating financial institution; Administration fee: 0.2% of the financing amount offered by the Fund; Fund s financial support: provision of a grant making up 30% of the amount financed by participating financial institutions (capital) in proportional rates for each payment date according to the repayment schedule provided successful implementation of the investment project, as well as on the condition the beneficiary making all the due payments in strict conformity with credit / leasing rates repayment schedule; provision of a grant in the amount of 15% of the total project cost provided its successful implementation if the beneficiary covers all the costs of the investment project. The Fund shall offer financial guarantees for projects presented to the Fund and approved for financing based on the following conditions: Type of guarantee: partial financial guarantee; Amount of guarantee: from 20% to 50% of the financing amount offered by participating financial institutions but up to 1.5 mil lei; Guarantee period: for the entire period of validity of the Financing Agreement but up to 60 months; Guarantee fee: 2% of the guarantee amount annually. If the financial guarantee is executed within the period of validity of the Financing Agreement, the amount of guarantee shall be recovered from real guarantees made by the beneficiary.
ANNEX 2: Eligible Projects and Eligibility Criteria 1. Eligible Projects Eligible projects are described in Art.50 of the Regulations on Organization and Functioning of the Energy Efficiency Fund (Government s Decision No.401 of 12.06.2012, Monitorul Oficial 126-129/448, 22.06.2012). 2. Non-eligible Projects or Non-eligible Project Components Within this call, the Fund shall not offer financial support to projects or their component parts that are described in Art.51 of the Fund s Regulations, or for: Green-field EE projects referring to: development of the basic energy infrastructure if non-existing at the moment, like installation of new equipment to cover energy needs (heating, lighting, ventilation, air conditioning etc.) in a new or already existing building where such equipment is not in place. Green-field projects are eligible only if they are RES projects; Modernization / rehabilitation measures, maintenance works in the energy field or within other systems not associated with implementation of parallel measures to improve energy efficiency or to install RES technology within the same system. E.g. replacement of an old cable system with a new one in a building with no other parallel energy efficiency interventions in the lighting system and/or other use of the same system not leading to measurable energy saving; Installation of reserve electric power generators or other auxiliary equipment except for cases when such equipment is an integral part of an EE or RES project; RES projects involving production of electric power on RES and biofuel basis for the fees fixed by the Government s Decision No.321 of January 22, 2009 on approval of methodology for determination, approval and application of tariffs for electric power produced from renewable energy sources and biofuel; Procurement of land and/or buildings. The Fund offers financial support aimed specifically at application of technologies available on the market and corresponding to the commercial performance criteria, as well as in compliance with good practices and in conformity with international standards. Application of experimental innovative methods or technologies is not eligible. Neither production (including research and development, design, testing) of tools and equipment consuming less energy or used to save energy is eligible within this call. 3. Eligibility Criteria Project proposals in conformity with the requirements listed in the Fund s Regulations and corresponding to the eligibility criteria presented in this call shall benefit from the Fund s financial support. Within this call, the following eligibility criteria have been set: a) The projects implement EE and/or RES technologies and are eligible according to the requirements set in Chapter 1 and 2 of this annex; b) Efficient energy measures deal with energy efficiency issues, are based on good international practices and lead to well-defined, quantified and supported energy savings; c) Projects that propose to use RES are based on advanced and commercially available technologies by application of good international practices and advanced technical solutions, capitalization of the existing renewable energy potential leading to well-defined, quantified and justified production of energy and/or substitution of conventional fuels; d) Technical, financial and environmental documentation included in the project is complete and acceptable from quality point of view; delimitation of facilities and systems referring to EE and RES measures well-determined;
information complete, consistent and adequately documented; measures, technologies and application methods clearly described, relevant quantities presented with adequate details; estimations based on professional calculation methods applying clearly defined and transparent data, hypotheses justified and reasonable; e) The amount requested from the Fund for financing projects is within the limits of 300,000 3,000,000 lei; f) The contribution of project beneficiaries from their own sources has to make up at least 30% of the project s total cost. Additional information on personal contribution and relevant methodological principles are presented in Annex 5 to this call; g) Investment recovery period (simple method) of EE projects shall not exceed 7 years and that of RES projects shall not exceed 15 years. If measures within the same project provide for mixed measures, the recovery period shall be calculated separately for each project component correspondingly; h) In order to promote projects directly involved in energy saving within this call, according to the relevant policies and international commitments of the Republic of Moldova, at least 35% of EE project benefits shall account for measurable or calculable energy savings. Other project benefits can result from other economic, technical etc. indicators; i) The part of investment project cost to be financed by participating leasing companies shall refer exclusively to procurement and delivery of portable/mobile equipment ready for sale, such as: High-efficiency biomass and gas boilers with thermal capacity of up to 1.5 MW; High-efficiency engines with or without inverters; Transformers; Thermal energy generation systems; Electric and thermal energy consumption optimization systems; Cooling systems; Compressed air production systems; Pellet and brick production systems; Conditioning and ventilation systems; Control and automation systems; Interior and exterior lighting systems; Others. Costs of equipment installation, mounting and connection to cable systems, pipelines etc. shall be covered by project beneficiaries in the form of personal contribution to investment project implementation. IPP has to contain an explicit description of the list of equipment proposed for financing by leasing, as well as its basic technical characteristics (technology, capacity, efficiency, etc. as required). The Fund shall establish whether the list of proposed equipment meets the eligibility criteria for financing by a leasing agreement.
ANNEX 3: Initial Evaluation Grid for IPP Administrative Conformity and Eligibility
ANNEX 4: Selection Criteria In cases (e.g. due to limitation of available sources), when there is a need to select from a number of eligible projects at the stage of detailed project proposal evaluation, the following selection criteria shall apply: C1: Technical Quality Factor (TQF) of the project proposal with the share of 0.3; C2: Investment Recovery Factor (IRF) with the share of 0.4; C2: Personal Contribution Factor (PCF) with the share of 0.3. Total Evaluation Score (TES) = TQF x 0.3 + IRF x 0.4 + PCF x 0.3 The project proposals that shall obtain a higher STE shall have priority in getting financial support from the Fund. Definition of Selection Criteria C1: Technical Quality Factor Evaluation Sub-criteria YES (max. 30) PARTIALLY NO (acceptable minimum) Facilities and systems targeted by proposed EE and RES measures clearly defined and problems addressed by the project clearly described Solutions and technical specifications adequately described, proposed technical solutions in conformity with good international practices including application of an integrated approach to the addressed problems Hypotheses and technical data used in calculations are reasonable, comprehensive, documented and adequately confirmed. There are no arbitrary hypotheses or data Methods used in technical calculations clearly described and conform to adequate engineering methods. The Evaluator can make re-calculations based on the descriptions given in the proposal Cost estimates included in the project presented with adequate details, unit costs indicated and justified Total project cost estimates are reasonable 3 1 or 2 (quite high for certain elements) 0 (unreasonably high) Calculation of financial benefits based on well-defined and comprehensive hypotheses, data adequately documented and supported correspondingly. There are no arbitrary hypotheses or data Methods used in financial calculations clearly described and in conformity with adequate professional methods. The Evaluator can make re-calculations based on the descriptions given in the proposal The Project Proposal is of a good quality, well-structured, with reasonable outcomes and does not contain discrepancies or arithmetic errors 6 2 (very week), 3 (acceptable), 4 (generally good with minor deficiencies) 0 Total TQF Score = Sum of Sub-criteria Scores x 100/30
C2: Investment Recovery Factor IRF can vary from 0 to 100. The minimal score FRI=0 shall be given to projects with the maximum recovery period (7 years for EE projects and 15 years for RES projects). The IRF score is calculated based on the following formula: IF IC2 7, then IRF = 0 If IC2 < 7, then where: IC2 = 7 Iser + Iee 15 NAI IRF = 100 100 IC2 7 IC2 = indicator similar to the investment recovery period adjusted to different types of investment I RES = investment cost of RES project I EE = investment cost of EE project NAI = net annual income (total annual benefits obtained as a result of project implementation) Note: If a project proposal combines EE and RES interventions, calculations shall be made separately for each component (EE or RES). General and administrative costs shall be also divided between the EE and RES components proportionally to the costs of EE and RES interventions. C3: Personal Contribution Factor PCF can vary between 0 and 100. The minimal score PCF=0 shall be given to project proposals with the minimum level of personal contribution (30%). Project proposals with a rate of personal contribution of over 70% shall get the maximum score of 100%. The PCF score is calculated in conformity with the following formula: If IC3 0.7, then PCF = 100 If IC3 0.3, then PCF = 0 Otherwise: IC3 = Personal Contribution Total Investment Cost PCF = (IC3 0.3) 200 where: IC3 = indicator of the share of personal contribution in the total investment cost
ANNEX 5: Personal Contribution and Methodological Principles 1. Personal Contribution In-kind contribution of applicants can be accepted as personal contribution on the condition it is supported by accounting data, is relevant for the proposed project, and is presented as a distinct component part in the structure of total project costs. 2. Methodological Principles In order to calculate energy savings, the current conditions of operation shall be taken into consideration (existing operational system, the current level of activity and conditions for the standard comfort level in conformity with current regulations, before and after the investment). If there is a discrepancy between the de-facto energy consumption registered based on energy bills and energy consumption calculated based on the current conditions of operation before the investment, this must be explained and justified. All the parameters (temperature indicators, energy prices etc.) used in calculations shall be clearly described and their choice justified. Cost estimates shall be reasonable and based on unit costs within the limits of prices on the local market. In cases of doubt, the Fund may request the applicant to justify their cost estimates and to present additional evidence supporting the accuracy of calculations. The Fund may conduct their own studies, as well as comparative analysis of unit costs presented by other project proposals. The Fund has the right to reject project proposals containing exaggerated investment cost estimates. The benefits resulting from EE projects shall be presented from analytical point of view through the prism of energy savings (of electric energy quantities and fuel savings) and cost reduction. Benefits expressed in cost reduction can include reduction of operation and maintenance costs related to the corresponding energy systems. Analysis of these costs shall be presented with due support. Expenditure/income reduction from RES projects can include income from RES sales and/or cost savings due to substitution of conventional fuel used at the moment. In case of green-field projects, the feasibility study has to be based on comparing RES technology with technologies based on conventional fuel use for the same method largely applied in the Republic of Moldova. If a part of project benefits come from sources other than EE or RES, these benefits shall be described, quantified and supported accordingly. They shall be directly supported by entries in the accounting books of the applicant; the project proposal shall describe clearly the way, in which these benefits are supported by accounting data. E.g. these benefits can be expressed in reduction of raw materials costs (supported by the technical specifications of the equipment as a component part of the production process with higher level of energy efficiency), reduction of manual labour as a result of transferring the production process from the night shift to the day shift (supported by increased production capacity of the directly productive equipment), reduction of waste transportation expenses by using waste as fuel for personal needs instead of transporting it to land-fills, etc. Indirect benefits (such as additional income from increased sales due to improved reputation of the applicant, or increased productivity of the employees following improvement of working conditions, etc.) shall not be accepted. If uncertain, the Fund shall not take into account such benefits. When calculating the investment recovery period, the grant component offered by the Fund shall not be excluded from the total cost of the project.
ANNEX 6: Eligibility Conditions for Project Costs The total project cost is formed from the following cost categories: A. Basic costs of EE and RES projects: These include costs of equipment procurement and execution works directly related to EE and RES and leading to energy savings or energy production from RES: the main and auxiliary equipment necessary for the main equipment to operate, such as ventilation pipes, biomass packing systems, control devices, fire and security equipment etc. B. Costs of renovation measures: These investments can include minimal necessary measures not leading to direct energy savings or contributing to more efficient production of energy from RES aimed at improving safety and operational functioning of energy systems, for which EE or RES capitalization measures are to be implemented; these can also include works to reduce water leakage, change of old electric cables and switch boards to improve safety, etc. C. Costs of implementation and improvement of the energy management system: This category includes costs related to design and implementation of energy record systems, including procurement of specialized software and hardware, staff training and awareness raising activities, etc. The costs of installing meters and other systems to record and control energy consumption do not come under this category but under category A or B, as relevant. D. Costs of technical assistance: This category includes costs incurred when contracting energy audit services, feasibility study, engineering / design works, special studies if necessary for development of technical documentation or for organization of a tender, as well as expenditure for supervision and acceptance of works. Within this call, the total eligible project cost shall be structured in conformity with the following thresholds: Expenditure Items % of Total Project Cost A. General EE and RES Project Costs > 65% B. Renovation Costs < 30% C. Costs of Energy Management System Implementation and Improvement < 5% D. Technical Assistance Costs < 8%