Power purchase agreements: where lenders push back

Lenders read a power purchase agreement for one question: will the project be paid, every month, for the life of the loan? The clauses below are where financial close most often slows down.

Curtailment

Define who bears the cost when the grid cannot take the power. Lenders expect deemed energy payments above a fixed number of curtailed hours each year, measured by a method both sides can check.

Change in law

Agree a clear formula, not a promise to negotiate. A tariff adjustment that only follows "good faith discussions" will be treated by lenders as no protection at all.

Termination payments

The payment due on early termination must at least cover the outstanding debt. Set it out in a schedule from the first draft, so that lenders do not have to rebuild it during due diligence.