EAFRD Financial Instrument Ex-ante Evaluations
Creators: name: Conference of Peripheral Maritime Regions
name: Universidad Politécnica de Madrid
name: Euro-Mediterranean Irrigators Community
name: Gobierno de Aragón
name: Generalitat Valenciana
name: Consiliul Judetean Calarasi
Publisher: name: Zenodo
Year: 2022

description: Most of the Mediterranean agriculture and food production rely on the output of more than 11 million ha of irrigated land. In order to achieve the required level of production, more than 60 billion of m3 of water are pumped each year from dwells, rivers and reservoirs to the fields. The process has a very significant economic and environmental cost, as more than 24 TWh of energy is consumed, and more than 4 million tons of CO2 are released into the atmosphere. In order to mitigated the related negative impacts, a change in the energy model of irrigation is needed, as part of the overall policy goal of the CAP of fighting climate change.
The decarbonization of irrigation will require large investments in energy efficiency improvements and, in particular, in the introduction of several gigawatts of photovoltaic irrigation (PVI) systems. PVI systems consist in the integration of a photovoltaic generator and an irrigation infrastructure, allowing to supply all or most of the energy consumed by the pumps with renewable and clean solar energy in a reliable manner. The technology has evolved sufficiently as to present a suitable alternative for most irrigators. Nevertheless, PVI also requires high up-front investments and specialized operation and management procedures, often resulting in a cost of energy higher than that of incumbent, fossil-fuel based, alternatives. As a result, the competitiveness of PVI is not guaranteed, especially if the availability of affordable and long-term finance for the projects is limited.
This document presents a preliminary assessment (ex-ante assessment) of a financial instrument (FI) specially designed to increase the competitiveness of PVI and to facilitate the introduction of quality standards in designing, building and operating the systems in the Spanish regions of Aragón, Valencia and La Rioja. The FI has been designed to be funded by the European Agrarian Fund for Rural Development (EAFRD) and be included by the Managing Authority (MAs) of the Rural Development Plan (RDPs) within its Rural Development Plan of the Common Agrarian Policies (CAP). The FI consists in guarantees to be provided by banks in order to improve the terms and conditions of loans used to fund PVI systems with the required level of technical, legal and financial quality. The result will have a direct impact on the cost of the energy produced by PVI, on the quality of the systems and on the participation of local SMEs in the related business opportunities.
The proposed EAFRD FI is part of the results of the project SolAqua. This document contains the key information that must be gathered and presented by the MAs of Aragón, Valencia and La Rioja to the EAFRD authorities in order to obtain support for the FI. It can also be used as a practical guide to support other MAs and other stakeholders interested in supporting the decarbonization of irrigation by using a tailored PVI EAFRD FI.