Direct access fundamentals: Project Preparation Facility

15 March 2021, Category: All insights, News, Tags: direct access, PPF

This series examines each of the Green Climate Fund’s (GCF) special assistance programmes to better understand what services are available to Accredited Entities (AEs) and how they can benefit low-carbon projects. Building on our previous article on the Readiness Programme, this article explores support provided through the Project Preparation Facility (PPF). 

We also recently published our 17th GCF insight report on ‘Stakeholder views on direct access’, which you can read here. 

Achieving ambitious climate goals relies, in part, upon the ability to fund the necessary projects. However, this can be incredibly challenging, especially in countries with capacity constraints. Developing successful funding proposals and gaining access to vital climate finance requires specialist experience and understanding of the processes. To more easily move through the various stages of project proposal, and to increase the involvement and engagement of stakeholders required to build country ownership, the Green Climate Fund (GCF) provides several forms of special assistance to enable Direct Access Entities (DAEs) to bolster their project development capabilities. 

What does the PPF offer? Key areas and funding brackets

The objective of the PPF is to assist entities in preparing successful, full funding proposals using a concept note that fulfils GCF criteria as the foundation. The concept note will then be reviewed by the Climate Investment Committee against four key areas: strategic fit with the Fund’s portfolio goals; evaluation against investment criteria; alignment with country and entity work programmes; and complementarity and coherence.

This form of special assistance enables entities to navigate from the project concept stage to the level of formal submission, with a much higher likelihood of funding success. Projects led by direct access entities falling within the micro (USD <10 million) and small (USD 10-50 million) categories are the specific focus of the facility, although any entity with accreditation can apply for assistance. In the five years since its inception, the PPF has approved 38 requests in 42 countries, with approved funding above USD 24 million. 

What type of work could fall under the PPF? Forms of support

The multi-step process often requires added assistance, so the facility can provide support in one or more of the following areas:

1. Pre-feasibility and feasibility studies, and project design 
2. Environmental, social and gender studies
3. Risk assessments
4. Identification of programme/project-level indicators
5. Pre-contract services, including the revision of tender documents
6. Advisory services and/or other services to financially structure a proposed activity

In the last six months alone, the GCF has funded activities such as: the development of funding proposals in 11 African countries for a project that builds climate resilience in smallholder agriculture; a feasibility study, risk assessment and policy analysis to reduce deforestation and enhance management of forest areas in Cameroon; and local stakeholder engagement surveys and the development of a gender action plan to build adaptive capacity in the agricultural sector in Tanzania.

At E Co., our consultants regularly undertake activities such as the above to enhance project development around the world. Recently, we’ve provided a range of services like these, for example:

• Produced an analysis of gender and access to finance to generate knowledge and provide insights into the impact of different business models on access to affordable solar energy and financial inclusion in Zimbabwe and Malawi.
• Conducted interviews to form a risk assessment report focusing on the local renewable energy market in Kazakhstan.
• Provided technical advisory services, including conducting an economic and financial assessment of the impacts of climate change and a capacity needs assessment for climate information services for resilience, in North Macedonia.
• Developed a full funding proposal, including a gender action plan, stakeholder engagement plan, financing mechanism description and GHG calculations, for a sustainable bioenergy project in Ukraine.

Our significant experience in writing concept notes and funding proposals means our consultants know what it takes to make projects successful as well as the potential pitfalls to watch out for. 

How can the PPF help?

PPF assistance comes in the form of either funding or service. Financial resources available for both forms are capped at USD 1.5 million for each project or programme. 

The difference between both forms lies in the degree to which the AEs are engaged in the process. 

PPF funding can be either standard or simplified. Standard funding requires a much more detailed approach to implementation and budget, whereas simplified funding was a new addition in 2020 to speed up the review and approval process for smaller, less complex projects. AEs who request up to USD 300,000 are eligible for consideration under simplified funding. Under both, entities must take a more active approach – they are responsible for their procurement of additional support (hiring consultants or firms), manage the implementation of eligible activities and must report to the Fund. 

Last year, the GCF also unveiled the new PPF Service modality. This seeks to streamline the delivery of the approved project or programme activities through consultants or firms inheriting many of the roles and responsibilities that would normally land at the feet of the Accredited Entities. The GCF, through a rigorous selection process, chose eight firms with specialist expertise in project development to form a roster from which they can work directly with entities. 

In a recent webinar highlighting the changes to the PPF, the GCF addressed specific questions on the process. They noted that by using project development firms from the roster, AEs can avoid much of the administration that comes with project proposals. That is, they don’t have to navigate the intricacies of legal agreements, disbursement or recruitment of consultants, thereby enhancing the efficiency of the team. Once a PPF application is approved, the accredited entity must submit a full funding proposal within two years. At E Co. we would be very happy to support you through the PPF funding or the PPF service, bearing in mind of course that the final selection of the service company for the PPF service will be made by the GCF based on our proposal to them.

This series is authored by E Co. Senior analyst, Marcus Arcanjo.

Learn more about the PPF in the updated GCF guidelines here

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