Support for Enterprise Development in Developing Countries 2023 – Norad
General information about the grant scheme
The grant scheme aims to contribute to sustainable economic growth in the renewable energy sector, which is key for many developing countries. Consideration will also be given to projects in other sectors where there is an element of renewable energy.
Grants are intended to reduce risk prior to investment decisions. Grants can support feasibility studies, training of local staff, guarantee and risk premium subsidies in the long-term financing of renewable energy projects, or limited pilot funding.
The grant scheme is application based. Applications are processed and approved or rejected on the basis of the guidelines and criteria set out in this call for proposals.
The grant scheme is competition based. Applications are subject to a comparative assessment in relation to other applications. No applicants are automatically entitled to a grant under this scheme, even if they meet all the formal and practical criteria.
Applicants will first be asked to submit a short concept note, as well as audited financial accounts from the past year, and confirm that they meet the grant scheme’s minimum criteria to qualify for support (see “Types of project eligible for funding”). This will be referred to as “Stage 1” of the application process. Applications will be assessed based on the eligibility criteria below.
Successful applicants will subsequently be invited to submit full applications as well as any other required documentation. This will be referred to as “Stage 2” of the application process.
Unsuccessful applicants at both stages will be notified as soon as possible.
The grant will cover up to 50% of the incurred project development costs and the applicant shall finance the remaining 50%. The minimum grant amount will be NOK 500,000. Applications for amounts under NOK 500,000 will be rejected. Applicants applying for support to more than one project that together amount to more than NOK 500,000 will be considered.
All application documentation must be submitted through Norad’s Grants Portal.
Requirements relating to the grant application
For the first stage of the application process, applicants will be asked to submit a short concept note (four pages, PDF format, uploaded to Norad’s grants portal), describing the project in as much detail as possible, and presenting the business case. The purpose of the call is to contribute to private sector development in service of job creation and renewable energy production. The concept note should reflect a viable business case. The concept note must include the following information in this order:
- A short description of the proposal’s main activities that will be supported by the grant. The project’s geographic location and relevance for the target group should be described (maximum 1 page).
- A brief description of how the activities relate to the business case of the main project, including financial capacity and competence to implement the main project (maximum 1½ page), based on a positive feasibility study where applicable.
- Yearly budget and the applicant’s ability to co-finance minimum 50% of the supported activity (maximum ½ page)
- Expected results on the supported activity and scalability (maximum ½ page)
- Possible partners to the project, both public and private and their contribution when relevant (maximum ½ page)
- For renewable energy projects applying under the guarantee and risk premium scheme, see dedicated section on which information should be included.
Applicants that successfully pass stage 1 will be invited to submit a full and formal application through the Grants Portal. Applicants will be asked to supply full documentation for all claims made in Stage 1, as well as additional information for a full assessment of the project. See below for a list of the questions that will be filled out in the full application.
Objectives of the grant scheme
The objectives of the relevant parts of the grant scheme are to contribute to:
- Increased access to affordable, reliable, sustainable and clean energy in ODA countries,
- Reduced emissions from the energy sector,
- Adaptation to effects of climate change,
- Increased job-creation in ODA countries.
This call for proposals is targeted towards projects in the clean energy sector. Applications for other sectors may qualify for support if linked to energy access or productive use of energy, for example for agriculture and food security.
The following indicators will measure results from successful project applications:
- The number of investment decisions taken as a result of supported project preparation
- The estimated consolidated investment amount released as a result of the grant
- Estimated number of new jobs created or number of personnel trained in the private sector in the developing country as a result of the support, disaggregated by gender and youth
- Estimated increase in supported projects’ production capacity of renewable energy
- Estimated number of people that have gained access clean energy solutions that the project has contributed to
The main target group for this scheme is the population in developing countries, in particular population groups without access to renewable energy.
This call is open for projects implemented in all countries eligible for Norwegian development assistance (ODA countries), with a preference for projects in Sub-Saharan Africa. The national budget also identifies a list of partner countries for long-term development cooperation (see Prop. 1 S 2022/2023, p 76), which will be weighted as appropriate.
Who can apply for grant funds?
Potential grant recipients are companies registered in Norway or abroad. Applicants must document that the following criteria are met:
- The applicant must be an independent legal person. Accurate and complete information about the nature of the organisation must be provided. Please note that neither holding, investment, consulting companies, nor equipment suppliers, are eligible for support.
- The applicant must have had a turnover in the last accounting year of at least NOK 6 million from the commercial activities. The applicant must present audited accounts for the last year. The criteria do not apply for off-grid renewable energy projects, provided that the applicant’s issuing of shares, having taken place within the last 12 months prior to the date of application, had a market capitalization of minimum NOK 6 million.
- The applicant must have the necessary expertise and administrative capacity to be able to implement the project(s).
- The applicant must demonstrate good insight into the issues concerned and must have set clear, achievable objectives for the project(s).
- The applicant must confirm that there are ethical guidelines for the company. The ethical guidelines must satisfy the minimum requirements set out in the guidance for the preparation of ethical guidelines for Norad’s grant recipients.
- The applicant must confirm that it is aware of and conforms to the UN’s guiding principles on business and human rights and the OECD’s guidelines for multinational enterprises.
- The applicant must confirm that sufficient security assessments will be carried out for its own employees for stays abroad, and the necessary measures are taken for, for example, training, own guidelines, insurances and equipment.
- The applicant must have established close ties with potential partners. Information about partners must be provided.
Types of projects eligible for funding
Grants may be awarded for the following types of projects:
- Feasibility studies for establishment of renewable energy or clean cooking projects in developing countries
- Vocational training of local staff related to the establishment of business in developing countries
- Basic local, public infrastructure and investments required for the establishment of clean energy projects in developing countries
- Pilot production as part of a feasibility phase for establishment of business in developing countries in connection with clean cooking or off-grid renewable energy projects (note that the grant can cover only 15% of investment-related costs)
- Guarantee and risk premiums for financing of renewable energy projects. See below for more information
No funding may be provided for:
- Sales and marketing activities.
- Projects solely for export to the recipient country.
- Projects that produce or otherwise involve weapons or other military material.
- Projects that produce or otherwise involve drugs, alcoholic drinks, and tobacco.
- The main investment subject of a feasibility study.
All projects must meet the following eligibility criteria:
- The project must be in line with the objectives of the grant scheme and must seek to meet a specifically defined need.
- The project must have clearly defined, realistic and measurable goals, and applications must include a description of the current situation (baseline) and indicators that will make it possible to measure and report results.
- The applicant must substantiate that the project is “catalytic”, i.e. that the funding will support activities that inform investment decisions, or trigger financial return or other forms of investments from private actors.
- The applicant must have considerable ownership and involvement in the implementation of the main project. The applicant must own minimum 25% of the equity in the planned main investment.
- The project must be cost-effective, and this must be reflected in a detailed budget. The grant recipient must not make a profit from the grant.
- The grant can cover maximum 50% of the incurred project costs and the applicant shall finance the remaining 50%.
- The applicant must declare all public funding granted to the project.
- The project must comply with the OECD/DAC criteria for ODA support.
- The applicant must document that the project is anchored within the company’s own management, and within potential partners’ management. Information about cooperating partners and their owners must be provided and be verifiable.
Applications for guarantee and risk premiums for renewable energy projects must in addition fulfil the following eligibility criteria:
- Eligible activities include support to guarantee and risk premiums of debt and equity capital. Both equity and debt guarantees, and the risk margin on debt capital, will qualify.
- Mature projects close to financial close and investment decision will be prioritized as the time period from commitment to disbursement should be less than 12 months, given Norad’s one-year budget horizon.
- A financial commitment letter or term sheet from a lender or guarantor with fixed terms must be submitted with the application, for Norad to calculate the grant amount.
- The applicant must submit information about annual saved emissions that the renewable energy project will contribute to compared to alternative fossil fuel.
- The subsidy is not tied to a particular guarantor and is open to Norwegian and international investors.
In its assessment of the application, Norad will consider a number of factors, including:
- Risks and risk management systems of the applicant
- Due diligence of project and project partners, including background checks
- Relevance to the objectives of the grant scheme described above, including Norad’s geographical priorities
- Degree of additionality of Norad’s support
- Where relevant, the extent to which the main project takes cross-cutting issues into account
- Where relevant, the project’s local ownership, financial sustainability and exit strategy
- The project’s relevance in relation to Norwegian energy priorities and policies
- The project’s relevance to the local country’s own plans and priorities
- Administrative costs associated with the project are not covered
- The grant cannot be used to finance more than 15% of investment-related costs of a pilot project.
The following four cross-cutting issues must be given adequate consideration in all projects:
- Human rights, with a particular focus on participation, accountability and non-discrimination
- Women’s rights and gender equality
- Climate change and environment, in particular climate change adaptation measures
Grant recipients must identify material risk factors that may have a negative impact on the four cross-cutting issues, and must analyse and manage these risks throughout the project cycle.
Applications will be assessed in accordance with the process and criteria described above. If necessary, Norad will collect internal and external advice in the application assessment.
- Reimbursement of salary costs for Norwegian and expatriate employees are based on actual salaries, and limited to a maximum of NOK 800 per hour.
- Local salary levels should be stated in the budget.
- Maximum budgeting and funding rates for consultants are NOK 1,600 per hour, based on a competitive procurement process.
- Travel between home country and project country is approved for economy class only.
- Travel within the country of origin or a third country must be justified.
- Applications will be treated in accordance with the Norwegian Freedom of Information Act.
To learn more and apply, click here.