Sustainable Finance Mechanism – Repayable Grants: Information bulletin
This page will be updated regularly based on questions we receive.
Grant information
What are the goals of the Sustainable Finance Mechanism (SFM) Repayable Grants?
The SFM Repayable Grants aim to:
- support community groups seeking finance for the delivery of community clean energy projects
- provide a sustainable financing mechanism in which funds will be returned over time and can be recommitted to other community clean energy projects.
How does the SFM Repayable Grant work?
The SFM Repayable Grant involves the following steps:
- A repayable grant is provided by Sustainability Victoria (SV) as a loan to a successful applicant for a community clean energy project,
- Funds received are used to complete the community clean energy project,
- The applicant repays the loan back to SV over the period of the loan (maximum of 5 years),
- As the applicant repays the loan the SFM gets replenished over time and is used to make new granted loans and the cycle continues.
What is a revolving fund?
The SFM Repayable Grant is a type of revolving fund.
A revolving fund is an innovative finance mechanism that recycles a pool of funds over time so that it can be reused to fund multiple projects. To enable this, funded projects must have sufficient income generation or cost savings to enable the grant to be repaid over a set time frame. For the SFM Repayable Grant, loans must be re-paid within a maximum of 5 years.
Is interest charged?
The SFM Repayable Grant is provided as a zero-interest loan. No interest is payable on outstanding amounts.
Eligible projects
What is a community clean energy project?
A community clean energy project is a project in which a community of geography or of interest is involved in initiating, developing, owning, operating or benefiting from renewable energy, energy efficiency or storage development.
Crucially, a community is involved in both the process of establishing the project, as well as benefiting from its outcomes. Common benefits from community clean energy projects include:
- reduced electricity costs
- increased energy self-reliance
- income generation
- increased knowledge and awareness of renewable energy, energy efficiency and energy storage.
Can the SFM Repayable Grant be used to fund part ownership or minority ownership of a project?
Yes, the SFM Repayable grant can be used by a community entity to ‘buy’ part ownership or minority ownership of a renewable energy, energy efficiency or storage project if the project meets the criteria of being a community energy project, and the repayment conditions of the agreement will be met.
Can a project be funded if it creates cost savings but does not generate its own income?
The SFM Repayable Grant provides a repayable grant in the form of a zero-interest loan. To enable the loan to be repaid, a community group must have sufficient cash flow to meet the scheduled repayment terms. Where a project generates cost savings only it may be unable to generate such cashflow. However, the community entity may be able to demonstrate that the energy cost savings are greater than the repayments, and that cost savings will be used to meet the terms of the repayable grant agreement.
Are projects on leased space eligible for the SFM Repayable Grants
Community energy projects on leased space are eligible for the SFM Repayable Grant, but are subject to any additional conditions of the property lease. The property lease would need to be secure for at least the five years term of the repayable grant and included in the applicant’s documentation.
Can the SFM Repayable Grant be used for projects on school property?
No.
Are electrical vehicles/chargers eligible for funding under the SFM Repayable Grants?
Where a project involves EV charging stations it would be eligible for funding under the SFM subject to it satisfying the criteria of a community energy project. In particular, the project would need to demonstrate that it had sufficient cashflows to repay the loan and the community was benefiting from it.
Funding amount and co-contributions
What is the minimum and maximum repayable grant amount?
Minimum $30,000 per application.
There is no maximum amount, however, applications are subject to the limitation of the fund’s balance at the time of application.
The fund has an initial starting balance of $1m.
Why is there a $30,000 minimum?
The SFM Repayable Grant aims to complement rather than replace other sources of funds or Victorian Government grants for community energy projects. To administer the program efficiently it is better to have fewer, larger projects in the revolving fund at any one time.
Are co-contributions required?
Yes. The SFM Repayable Grant requires a co-contribution from the applicant of at least 20% of the grant value. That is, for a grant of $30,000 a minimum of $6,000 co-contribution is required.
A co-contribution can be made as either cash, in-kind or a combination.
Is blended finance appropriate under SFM Repayable Grants?
Yes. Sourcing funds from a variety of sources including other grants and donations is to be encouraged as it will reduce the risk of being overly reliant on a single source of funds. Using multiple funding sources may also benefit the overall financial projections and return on investment.
There is a minimum 20% co-contribution (actual or in-kind) required for the SFM repayable grant.
Why do funds need to be repaid within 5 years?
Funds are required to be repaid within 5 years to ensure that sufficient funds continue to flow back into the SFM and can in-turn be reallocated into new community energy projects.
Extending the duration beyond this limit would increase the likelihood that the SFM would become ineffective as a revolving fund.
Application and assessment process
Is there a closing date for applications?
Applications open on 1 September 2022 and close on 31 October 2022 (or prior if funds are fully allocated).
Applications can be submitted at any time during the open application period.
How will grant applications be assessed?
SFM Repayable Grant applications will be assessed against the criteria set out in the guidelines.
Applications will be assessed in the order in which they are received during the application period.
Can multiple similar projects or sites be amalgamated into one SFM application?
Yes. ‘Community’ under the SFM can include a community of interests or geography. Where projects have commonality under this definition smaller projects can be added together and made under a single application. It should be noted, however, that all projects will need to be delivered within 12 months and be able to repay the loan within 5 years.