Banking · Project Finance
In renewable energy projects, a long-term Power Purchase Agreement (PPA) is considered central to bankability because it improves predictability of cash flows. The primary comfort provided to lenders by a long-term PPA with fixed/structured tariffs is that it:
- 1Converts construction risk into financing risk
- 2Provides off-take assurance and revenue visibility for debt servicing✓
- 3Replaces the requirement for grid connectivity approvals
- 4Eliminates technology obsolescence risk
Correct answer
Provides off-take assurance and revenue visibility for debt servicing
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