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The EIB guide to finance for drone projects

Drone projects

Drones, also known as unmanned aircraft systems, are playing an expanding role in many parts of society. With demand surging, more innovation and investment are needed in the air mobility sector. Drones offer huge potential for the private and public sectors and can provide societies with an array of benefits, from lowering pollution in transport to offering emergency medical assistance and making agriculture more precise and efficient. In the next 20 years, the European Commission expects urban air mobility to create 150 000 to 200 000 jobs in the European Union alone. But growth in the sector will also bring many challenges.

How will the guide help?

The European Investment Bank is here to guide and support clients in all areas of the air mobility ecosystem, including drones (equipment), maintenance and repair activities, flight operations, air traffic management, ground infrastructure, IT solutions and other related areas. We want to help them achieve their vision.

The guide will:

  • Provide promoters with a structured approach to assess project development, identify missing components and outline sources of funding;
  • Support the development of high-quality, efficient air mobility investment projects backed by a sound implementation plan;
  • Help promoters prepare clearly defined requests for technical assistance and/or financing.
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The guide answers questions such as:

  • Where along the development cycle is the project situated?
  • What steps need to be taken to move to the next step/complete the project?
  • What financial support is available at each stage?
  • When would the project be ready to move from grants or equity investments to applying for loans from the European Investment Bank and other institutions?
  • What documentation/information is needed to apply for financing?

How does the guide work?

The guide focuses on two main parts of a project:

1. Preparation — the project objective is defined, the vision is developed and a solution is identified.

2. Realisation — the implementation stage, where the project is rolled out and monitored, using key performance indicators that are evaluated against the objectives.

Phase 1: Preparation

Programming Identification Development

This initial stage identifies the promoter’s vision, strategy and objectives and their timeframe, providing a framework to identify and prepare projects. It involves developing an initial idea and creating an outline of the business case and its implementation.

Vision

What is the project’s vision? Is it a specific project, or an initiative to develop an ecosystem?

Opportunity

What societal problems will be improved and what are the opportunities (social, environmental or economic benefits, for instance)?

Context and conditions

What is the context of the project and what are the existing conditions? What are the public perceptions? What is the environmental situation? What policies are in place?

Market appetite

What is the market like for the project? Who are the key market players? Who are the regulators? Are they national, European or international, and what are their requirements? Is there a market analysis? What level of market development and growth is expected for the project?

Objectives and strategy

Who will benefit from this project? What are the objectives? How will success be measured? What are the constraints? Is there a business strategy? What are the key requirements of the project (regulatory, financing, procurement, production)?

Policy context

What political support does the project have? How does the project fit in with European, national, regional and local policy objectives?

Stakeholder identification

Have all of the parties who will be involved in the project through its expected social, environmental and economic benefits been identified? How closely are these stakeholders involved? What is the communication strategy and how will stakeholders be managed?

Project definition

Define the project solution and any key sub-elements (to be defined along with the objectives, with the delivery process identified).

Preparation framework

Has a development and delivery programme been developed? Is there a risk management strategy? What is the strategy for achieving benefits through the project development process?

The purpose of this stage is to identify a preferred solution that is consistent with the development priorities, and to assess its feasibility.

Explore options to identify the preferred solution

Have other solutions and options been considered? Have feasibility studies been planned or executed to test the viability of the proposed solutions? What are the benefits of the proposed solutions over their alternatives?

Refine the definition of the preferred solution

Have the project details been fully agreed on with relevant sponsors or stakeholders?

Identify technology and infrastructure development requirements

What technologies or infrastructure will the project require and what is the status of the existing facilities? Has an analysis of the missing technology or infrastructure been completed?

Define your strategy and approach for developing the preferred solution

Review other key political, technological and financial requirements. What are the other gaps/constraints that need addressing?

Establish a plan for complying with the regulatory framework

Is there evidence of a plan to ensure full compliance with national and EU regulations?

Examine alignment with the wider ecosystem

What broader objectives/agendas does the project support? In what key areas does the project interconnect with the wider ecosystem (known as project dependencies)?

Engage stakeholders

Are key stakeholders already engaged and are their expectations properly understood? Have individual stakeholder roadmaps been developed to help navigate development?

Identify the full impact of the preferred solution

Has an approach for identifying, benchmarking, measuring, quantifying and monetising the solution’s full range of effects been developed?

Demonstrate the alignment of the preferred option with the strategic objectives

How will the solution meet the strategic objectives?

Produce a development plan for the solution

Develop a programme outlining the steps to achieve the preferred solution.

In this stage, the preferred solution is fully developed and made ready for implementation. The data and information gathered in feasibility studies and collated in the outline business case will guide the development process.

Develop the preferred solution and get ready to roll it out

Develop the solution across work streams, with a focus on the technological, infrastructure, regulatory, economic, commercial and financial requirements, and on deliverability and feasibility.

Demonstrate that the preferred solution is viable

Prepare a comprehensive business case including a detailed appraisal of the preferred, fully-specified, solution.

Develop

a clear implementation plan for the proposed solution to complete this development stage successfully.

You also may need to compile a business case. For more information on this, click here  

Phase 2: Realisation

Implementation Evaluation

In this stage, the project is rolled out.

Enact the solution and roll out the project

Is the solution ready to go into operation? Have contract(s) been enacted? Has the service been sufficiently tested and deemed safe to roll out to the public?

Monitor compliance

Has the implementation’s compliance with the delivery plan been assessed? Has the implementation of technology/infrastructure been monitored? Have the budget and expected benefits been monitored? Is the certification of compliance with the applicable regulatory requirements available?

In this stage, a post-implementation analysis is conducted and the solution’s delivery of its intended outcomes is assessed.

Demonstrate the success of the solution’s implementation and its outcomes

In the assessment of what the project delivered, were the intended benefits and objectives achieved?

Assess and improve the solution throughout its lifecycle

Is there a system of continuous assessment in operation to optimise and improve the solution?

Identify lessons learnt

Have lessons learnt been identified and documented to improve the planning, design and delivery of future interventions? Has a benchmarking exercise to evaluate the solution against other initiatives pursuing similar objectives been undertaken

Funding and financing

The European Union actively funds and finances projects and organisations that foster European integration, promote the development of the European Union, and contribute to the implementation of its programmes and policies. Read the extended version of this guide here for more information on funding and finance.

Preparing a business case

  • The strategic business case focuses on the development of a clear strategic narrative and justification for the project. It is a key part of the approval process which allows a project to proceed from the programming stage to the option identification stage.
  • The outline business case identifies the preferred solution, explains why it was selected and provides evidence for its viability. This type of business case includes evidence of the process of exploring options and the cost-benefit appraisal, and sets the commercial and management requirements for implementing the solution. Generally, the outline business case must be approved before the project can proceed to the development funding stage.
  • Finally, the full business case focuses on the procurement, implementation and management of the solution and provides evidence of its deliverability, affordability and viability. The full business case is used to justify authorisation to proceed to implementation and to request capital funding for implementation.

This guide includes a template to help structure a business case. It may be necessary to adjust the level of detail, depending on the type of business case being developed.

Check out a table here to identify the level of information required for each business case type.

Getting the result you need

The EIB offers advisory support and technical assistance via a single point of entry: the European Investment Advisory Hub.

After reviewing the project against this guide and identifying its development stage, think about how the Advisory Hub support can help with your drone product. Contact us to learn about how our wealth of services and expertise can support your project.