In structured finance like Project Finance, project documents and contracts play a predominant role in all business sectors and Renewable Energy Infrastructure is no exception. The nexus of contracts and of permits, i.e. the set of documents and how they are connected, is the main ‘asset’ of the project company. They represent the value of the existing or to-be-built project and therefore are the principal focus of technical, legal and financial advisors and reviewers. Lenders and investors, through their advisors, thoroughly analyze all the relevant project documents and from all perspectives. Their objective is to make sure that once the project is eventually built, it generates the expected cash flow. But even before starting the construction, at the final investment decision, due diligence reviews help ensure a smooth and low-risk installation of the renewable energy power plant. The Due Diligence, in form of reports, highlights any possible danger or obstacle to the proper, legitimate implementation of the project. It is also used as a bargaining tool when negotiating the purchase of project’s shares under the motto “there are still red flags, either these issues are solved, or the bid price will be less than what is asked”.

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Due Diligence for Renewable Energy Assets or Project Rights

  • Farid Mohamadi

摘要

In structured finance like Project Finance, project documents and contracts play a predominant role in all business sectors and Renewable Energy Infrastructure is no exception. The nexus of contracts and of permits, i.e. the set of documents and how they are connected, is the main ‘asset’ of the project company. They represent the value of the existing or to-be-built project and therefore are the principal focus of technical, legal and financial advisors and reviewers. Lenders and investors, through their advisors, thoroughly analyze all the relevant project documents and from all perspectives. Their objective is to make sure that once the project is eventually built, it generates the expected cash flow. But even before starting the construction, at the final investment decision, due diligence reviews help ensure a smooth and low-risk installation of the renewable energy power plant. The Due Diligence, in form of reports, highlights any possible danger or obstacle to the proper, legitimate implementation of the project. It is also used as a bargaining tool when negotiating the purchase of project’s shares under the motto “there are still red flags, either these issues are solved, or the bid price will be less than what is asked”.