Development and finance
Project finance: the plant pays for itself through its own contract
In project finance, debt does not rest on the balance sheet of the energy user or of the developer. It rests on the project: its energy contract, its permits and its ability to operate. That is how long-lived infrastructure gets financed.
What project finance is
Non-recourse or limited recourseThe project lives in a special purpose vehicle (SPV) that owns the plant, signs the energy contract with the offtaker and takes on the debt. Lenders are repaid from that contract's cash flows.
Non-recourse means that if the project does not pay, lenders can only go after the SPV's assets and contracts, not its shareholders. Limited recourse means shareholders are liable only in defined cases, for example during construction or until the plant proves its performance.
In exchange, lenders take a security package over everything that produces cash flow: the energy contract, the accounts, the SPV's shares and the rights under the construction and operations contracts, plus whatever the law allows over the permits.
When it is not a fit
- If the project is small: structuring, advisory and due diligence costs weigh too much on the amount financed.
- If there is no long-term energy contract with a creditworthy offtaker.
- If your company can fund it with corporate credit at a better cost and does not mind carrying it on its balance sheet.
Bankability
What makes a project financeable
What lenders review before they lendA firm energy contract
With clear tariff, term, indexation and security, and an offtaker able to pay. See PPA structuring.
Permits and interconnection
Granted, or with a documented path before the CNE and CENACE.
A secured site
Land or rooftop with use rights for the contract term, zoning and local licenses.
Proven resource and technology
A solar resource or thermal demand study, and equipment from manufacturers with a track record.
Construction with one accountable party
An EPC contract with price, schedule and performance guarantees.
Contracted operations
An operations and maintenance contract with committed availability for the term.
Corporate credit or project finance
Two ways to pay for the same plant| Corporate credit | Project finance | |
|---|---|---|
| Who borrows | Your company | The project SPV |
| Repaid from | Your whole company's revenue | The energy contract's cash flows |
| Whose balance sheet | Your company's | The SPV's |
| Security | Your company's | The SPV's shares, contracts and accounts |
| Structuring time | Shorter | Longer: technical, legal and financial due diligence |
| When it fits | Small projects or companies with a strong balance sheet | Large, long-term projects |
The role of GIS Power
Developer, builder and operatorGIS Power originates and develops the project, structures it in its SPV, negotiates the energy contract with the offtaker and prepares what equity and debt providers ask for: financial model, engineering, permits and contracts.
After closing, we design and build the plant as EPC party, with brand-authorized commercial partners, and operate it with contractual availability. For a lender, having one party answer for development, construction and operations reduces interface risk.
The group has worked in critical infrastructure since 1983 and has delivered more than USD 500 M in projects of that kind.
- Development
Site, demand, permits, interconnection and energy contract.
- Structuring
SPV, payment trust and security package.
- Financial close
Equity and debt committed on the basis of the data room.
- Construction and operations
EPC and O&M for the life of the contract.
Frequently asked questions
Does the energy user sign the debt?
No. The SPV takes on the debt. The user signs the energy contract, and that payment commitment is what backs the financing.
How much is debt and how much is equity?
It depends on the project, the energy contract and the lender. It is set with the financial model and the ability of the cash flows to cover debt service.
How long does it take to reach financial close?
It depends mostly on permits and interconnection. Once those are in place, due diligence and negotiating the loan documents are what remain.
Can several projects be financed together?
Yes. Several small projects with similar contracts can be pooled to reach a size that justifies the structure.
Assess a project
Location, demand and energy offtaker: that is where we start.
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