Preparing your Project Proposal

 

The main document that needs to be uploaded to the project application is a Project Proposal: a concise and credible plan that is straightforward and easily understood by evaluators and reviewers. It should provide enough detail to give evaluators a clear idea of the project rationale, structure and management, investment ask and returns, risks as well as climate benefits and any developmental, social and gender impacts.

If you do not have a Project Proposal yet, this may seem like a lot of work, but following our guidelines may help you define your project more clearly, and it will help you convince others, including PFAN, that your project is worth working with.

It is not necessary to address every every question or item in the guidelines – elaborate on those relevant to your project and for which you have information available. Any areas requiring further work will be covered during the coaching offered by PFAN to the selected projects.

Please note the following:

  • The Project Proposal document should be maximum 20 pages long, in MS Word or PDF format (.doc or .docx or .pdf). Other formats, such as PowerPoint slide decks, are not accepted.
  • Proposals exceeding the data limit of 20MB or the page limit, or submitted in other file formats than those provided above, may be disqualified.
  • Please ensure the information in the Project Proposal is in line with the information provided in the online application form and other files submitted (such as the Financial Model and Executive Summary).
  • Ensure the Project Proposal is factual and realistic. Document your claims and proposals where possible and provide supporting data, using diagrams, charts and graphics where appropriate.
1. Project description, ownership and management team

Ownership structure (Who)Ownership structure (Who)
Goals (What)Is it a build-operate-transfer project, a privatisation, a green field project, a scale up of existing operations? What is being done, offered, acquired, sold, and distributed? What are the goals?
Purpose (Why)What problem is being solved/addressed by your company/project?
Location (Where)Region/place of operation and distribution/sales. How strategic/positive is the location for the project?
Timeframe (When)Is it an operating company or a new project. What have been the milestones so far, what is the future time table for implementation?
Resources needed (How)Management team, required financing, technology, permits, construction contracts, additional basic infrastructure investments pre-project, supporting regulations, strategic partners (synergies), local authority’s role/support.

2. Market analysis (commercial rationale)

Target marketLocal/domestic? International? Barriers to entry?
Opportunities and threats. Existing physical, logistical and commercial infrastructure in place, status of regulatory environment.
Analysis of existing competition and project competitivenessWho are they (private, public, local, int)? What are your company/project’s competitive advantages over other market players? – especially important for investors.
Estimated demand for your product or servicesIs there a feasibility study, a development plan? Who are the off-takers, is there a PPA agreement (volumes)?

3. Technology, business model and growth strategy

Business model:

Management TeamPlease describe the team that will manage the project development and implementation, their previous background, experience and role in the project. How many men and how many women are among the owners, management, board and staff of the project/business?
Technology and operations overviewDescribe the technology used in the project, its advantages to other similar ones. PFAN project reviewers are experienced financing practitioners in the clean energy space and have practical experience with most common clean technologies. Only completely new technologies or enhancement of existing technologies will require a more detailed technical presentation.
Also mention any milestones already achieved and progress on implementation, or estimated implementation start and target timeframe.
Marketing, distribution and sales to customersHow will the company sell its products/services to customers, how they will be distributed, how payments will be received/processed.
Required supply chainWhat inputs are needed? Materials, raw materials, fuel sources, equipment/technology. Have main suppliers been identified/contracted? What is the relationship with strategic suppliers? What are the risks, logistics involved?
Enabling EnvironmentPlease describe the legal and regulatory environment applicable to the project (concession laws, privatisation, mandated energy mix requirements or targets, structure of energy tariffs/independent power production etc. planning and building permission, commercial & business licences, employment licences, emissions/water rights, import and export permits, etc.)
What is the level of political support for the project at state, regional and/or local level? How is this support demonstrated? Might state guarantees be available? Are other incentives available (grants, subsidies, tax breaks etc.)?
Human resourcesFrom construction to operations, are the required professionals available, is training required?

Growth strategy:

Where is the project now and how will it grow?Development Phase: this covers the time up until financial close and should outline what needs to be done and detail the plans for achieving financial close;

Construction/Implementation Phase: this covers pre-operations and activities / conditions that need to be in place before the project is operational;

Start of Business/Operations Planning: the operational plan should include details on day to day business operations, scheduling, manpower distributions and supply chain planning;

Expansion/Growth Strategy: to the extent that rapid business growth and expansion are anticipated, information on growth strategy and expansion plans should be provided, and financial analysis provided later in this Business Plan should reflect these details; What is the planned project lifetime? What will happen at the end of this lifetime?

Exit Strategy: if and where applicable; this is always of interest to evaluators and potential investors.
Key performance indicators (KPI)So that success can be monitored

4. Financial overview and investment proposal

Financial overview

Existing financial structure (disbursed/invested)EquityShareholder structure (local, int., companies/private individuals).
GrantsSupporting organisations
DebtInvestors already involved (local, int., type of lenders, general terms)
Future financing already committed to the projectEquityExpected additional investment from existing shareholders?
GrantsSupporting organisations , amount
DebtSource of financing (any local banks?), amounts and terms (tenor, borrowing costs, any guarantees or collateral already committed)
Developers “Skin in the game”Mention if developers have also put significant “sweat equity”, non-cash contributions into the project. – most investors would like to understand developer’s commitment and link to the project.
Overview of projected cash flow (in USD)Discuss main assumptions, especially revenue and estimated capital expenditures and operating expenses (scope of work/bill of quantities/technical specification), time frame used.
Expected financial indicatorsInternal rate of return (IRR), return on capital invested/expenditure (ROCE)
Payback period, point of break even
Annual debt service coverage ratio (DSCR) and interest coverage ratio (ICR) using earnings before interest, taxes, depreciation and amortisation (EBITDA)

Investment proposal:

The Investment proposal should be for a commercial investment which provides a return on capital to the investor and/or which pays a rate of interest to a lender on a debt, which is repayable on agreed terms. The proposal may include grant or subsidised components, but the investment opportunity should be structured as a commercial proposition. PFAN will not consider proposals that are structured primarily as grant requests.
Break down of total amount being asked in the different types of investment envisaged (debt, equity, grants) and currency preference.
What is the target debt to equity ratio after proposed investment?
What rights and benefits would be attached to investors’ obligations and commitments?
Detailed plan for the use of proceeds (source and application of funds statement/summary), including CAPEX, OPEX, financing costs, soft costs
Indicate target type of investors, such as philanthropic investors, impact investors, development funds, institutional investors, private equity, venture capital, strategic investors, industrial investors, carbon investors, development finance institutions and banks, and so on.
For equity investors, what would be potential exit strategies, including multiple exit points if possible (such as industry sale, buy back by developer, IPO, etc)
For debt investors, what would be the pay back strategy, long term amortisation based on stable cash flow generation or refinancing.

5. Identification and mitigation of risks

Risk Assessment and Risk MitigatorsIdentify the nature of the risk, the likelihood of it occurring, the potential impact and possible mitigation measures. Also, such as risks related to the underperformance of new technologies. In case of new technologies, has intellectual property been protected? What are the prospects for new technology developments that may harm or benefit the business model of the project? What laws and policies are in place that could threaten the success of the project?
Scenario AnalysisThe estimated financial impact of key risks, as demonstrated in the cash flow projections under different assumptions of growth, sales, successful implementation, milestones.
Under what circumstances would the project become financially unviable? How likely are these circumstances to occur? What are the implications and commercial options if they do occur?

6. Social, environmental and gender impact

SocialIncluding population trends/demographics, employment, land ownership, customer behaviour (related to your product/services), education, pollution abatement, health, economic participation, water quality and availability, poverty reduction etc.

How many people will increase their resilience to the impacts of climate change due to your project? Jobs created, skills transferred, technologies transferred, economic benefits from increased productive use of clean energy solutions, etc.
EnvironmentalPositive and negative impacts (including mitigation measures), include outcome of environmental impact assessment (EIA), if available. If possible, provide annual GHG reduction potential for the project in tonnes of CO2e avoided or annual energy savings in GWh, as well as methodology used and assumptions for your calculation.

What are the energy efficiency gains offered by the new technology/process/project?
GenderHow could access to your product improve the livelihoods of women and girls or change observed gender inequalities? Please provide a GIA (Gender Impact Assessment) if available.

7. Conclusion

Finally, in your conclusion, highlight the main strengths and benefits of the project/business and summarise why an investor should consider investing.