EAFRD Solar Irrigation Financial Instrument Introduction
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.
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. 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 maintenance 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.
In order to overcome this situation, the Solaqua project has produced 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 a PVI systems. The FI has been designed to be funded by the European Agrarian Fund for Rural Development (EAFRD) and be included by the Managing Authorities (MA) within their Rural Development Plans (RDP) of the Common Agrarian Policies (CAP). The FI consists in guarantees to be provided by banks and funded by the RDP 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 details of the FI have been presented in Solaqua´s D.2.13 "EAFRD Financial Instrument".
On the basis of D.2.13, the MAs of Aragón, Valencia and Romania started the process to include such FI within their RDPs, a task which has a number of complexities on its own. As a result of the process, a number of relevant issues arise which provide useful lessons in order to facilitate a successful completion, including:
Lesson nº 1: Ensure that all the relevant parties, including MAs, irrigators, and potential investors identify the benefits that will be directly obtained by them as a result of the implementation of the EAFRD FI (including quantitative estimations).
Lesson nº 2: Allocate sufficient resources (time, budget, staff..) to the task of introducing the EAFRD FI.
Lesson nº 3: Assign to the MA only tasks that cannot be carried out by any other party, such as reform of internal procedures or official communications with relevant institutions.
Lesson nº 4: Use the process to produce documents and collaborations that could support the introduction of a technical assistance program during the implementation phase.
Lesson nº 5: Keep it simple and take advantage of any initiative or structure that can help to implement and manage the EAFRD FI.
Furthermore, as a final recommendation for policy action, it must be stressed that collaboration between MAs should be encourage not only to share the workload of the introduction of FIs but, specially, in order to standardize the resulting FIs and to take advantage of economies of scale once in operation. This could be complemented with the creation of superregional or even supranational FIs for debt and equity to be used by the MAs to allocate their versions of FIs particularly suited for their needs.