Not all contracted revenue supports the same debt

Because lenders underwrite the terms, not the label.

Project finance still tends to divide revenue into two categories: contracted and merchant.

That distinction is useful. But it is increasingly incomplete.

The IEA reports that market-based procurement — including corporate PPAs, bilateral agreements and merchant structures — now accounts for 28% of forecast renewable-capacity growth, up from 15% in its previous analysis.

As revenue structures become more varied, the presence of a contract tells a lender less than it once did.

A PPA may provide a route to market without transferring every material risk away from the project. Lenders therefore size debt against the cash flow they believe will remain dependable after the residual exposure has been accounted for.

That can produce a meaningful difference in leverage, tenor and structure.

This is why lender selection matters more than headline pricing alone. The same PPA can support materially different debt depending on how each lender’s credit approach treats the risk the contract leaves behind.

Its financing value is ultimately reflected in the debt capacity it can support.