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25 Jan 24

What to know before applying for the Asia Climate Solutions Design Grant

What to know before applying for the Asia Climate Solutions Design Grant

The Asia Climate Solutions Design Grant is currently accepting concept notes until February 12, 2024. To see what Convergence has supported to date, review our Design Funding grantee portfolio.

Convergence’s Asia Climate Solutions (ACS) Design Grant awards grants for the design and launch of innovative blended finance solutions that mobilize private capital to sectors critical for climate transition and resilience in developing markets in Asia. The ACS Design Grant also aims to demonstrate the potential of funding from family offices, foundations, and donor agencies to catalyze blended finance solutions addressing the climate finance gap, at scale.

In its first cycle, the window received over 100 concept notes from the blended finance ecosystem. Submissions came from a diverse set of organizations from around the world, including asset managers, non-governmental organizations (NGOs), advisory firms, project developers, and social enterprises. Applicants came from both developed and developing markets with the majority based in Asia showcasing how regional actors are taking the lead in developing innovative blended finance solutions to address the climate transition challenge. Some organizations were experienced blended finance practitioners, while others were seeking a way to enter the space for the first time. Finally, three grantees were selected and announced at an Innovation Showcase during COP28 last year.

Prospective applicants often ask how they can make their application standout and how we select our grantees in such a competitive field. In addition to targeting climate mitigation or adaptation in an emerging market in Asia, proposed solutions are scored on development impact, scalability, replicability, additionality, likelihood to reach financial close or launch, demonstration effect, institutional track record, and stakeholder support.

Here are three elements of strong applications that other potential applicants should consider:

Solution serves the wider ecosystem

New blended finance solutions typically address climate finance challenges that target specific beneficiaries. It is also important to focus on broader aspects such as the ability to catalyze financing for the wider ecosystem in the long term and potential to be scaled or replicated in other sectors and geographies. We seek to support innovative solutions with unique private capital financing approaches, albeit often delivered via traditional structures, and business models that not only address existing market challenges but can also demonstrate a financial vehicle’s development impact and create valuable learnings for the broader blended finance ecosystem and climate financing field.

Grantee example: Powertrust is designing an innovative blended finance facility that addresses the financial challenges of distributed renewable energy projects while also facilitating the generation of additional revenue through the sale of Renewable Energy Certificates.

The organization and team have relevant experience and credibility

It is important for organizations designing blended finance solutions to clearly describe their track record of successfully launching similar solutions or operating in similar target sectors and geographies. Beyond highlighting their prior experience, we also encourage applicants to specify how this experience could help them in designing new solutions. We have also provided grants to organizations designing blended finance solutions for the first time. In such cases, organizations should focus on providing details on the relevant experience of their team members in the sectors and regions that the solution is targeting. Teams with a strong track record and credibility give us more confidence in their ability to successfully design and launch new blended finance solutions.

Grantee example: Lestari Capital is working on a blended finance vehicle to invest in conservation and restoration projects in Southeast Asia. The vehicle builds on their extensive experience in Southeast Asia and adopts learnings from their past work.

There is existing support for the solution

We aim to support new blended finance solutions that have already demonstrated some level of engagement and buy-in from relevant stakeholders such as local government bodies, strategic implementation partners and prospective investors, particularly private investors. Of course, we assess this differently for solutions at different stages, which is also reflected in the weighting of the evaluation criteria for the window. For proof of concept solutions, we expect them to have made more progress in securing commitments from key stakeholders while engagement with relevant stakeholders might, understandably, still be at an earlier stage for feasibility study solutions. In both cases, we encourage applicants to provide a detailed list of relevant stakeholders engaged with clear information on the level of engagement and next steps. Overall this is important to assess if the solution would have the required support to be successful and whether investors and stakeholders believe the solution is viable.

Grantee example: NBSV Worldwide (sister entity of Fairventures Social Forestry)’s proposed blended finance vehicle supports the development of regenerative agroforestry projects in Indonesia. The team has an existing partnership with local forestry authorities in Indonesia and had already secured initial funding from donors for the first few pipeline projects to be funded by the vehicle.

The current ACS Funding Window is accepting concept notes until February 12, 2024. To see what Convergence has supported to date, review our Design Funding grantee portfolio.

The ACS Design Grant program operates with support from the Monetary Authority of Singapore, Australian Department of Foreign Affairs and Trade, The Olayan Group, and UBS Optimus Foundation.

About the Author
Krishna Malhotra

Krishna Malhotra is a Manager on the Market Acceleration & Design Funding team at Convergence. Krishna has experience in impact investment in emerging markets and has previously worked in the Corporate Development team of Sterlite Technologies, a publicly listed technology company in India. Prior to Convergence, Krishna was a part of TD Securities, where he worked closely with the New York and Toronto fixed income trading desks. He has also worked with Barclays in their Global Capital Markets division. Additionally, Krishna volunteers as a Mentor at the Toronto Business Development Center, advising start-ups participating in their incubation program. Krishna has completed all three levels of the Chartered Financial Analyst program and has a master’s degree in Accounting and Finance from the University of Mumbai.