In today’s market, developers of large utility-scale renewable projects are facing new friction points, not from regulators or financiers, but from their offtakers. Whether the buyer is a Fortune 500 subsidiary or an unrated commercial entity, pushback on credit support requirements is mounting.
For years, financiers have relied on a range of buyer credit support instruments to secure transactions, including letters of credit (LCs), parent guarantees, cash collateral, and more recently, surety bonds. These have been structured in various ways, such as fixed dollar amounts per megawatt or rolling multiples of project revenue over a given period.
More recently, financiers have started noticing a change. Buyer credit support coverage is shrinking and deals that once checked every box now look atypical to credit committees.
The Developer’s Dilemma
PPAs, and related credit support, are often negotiated years before a project is ready for project financing. Often there is a disconnect between the credit support the sponsor expects, and what lenders ultimately need. When financiers identify insufficient credit support, developers face an uphill climb. Asking offtakers to increase or restructure posted collateral is often unrealistic. From the offtaker’s perspective, the traditional instruments represent an inefficient use of capital.
Letters of credit draw directly on corporate LC facilities, limiting growth capacity. Parent guarantees create balance sheet liabilities for investment-grade parents. Cash collateral locks up working capital that could otherwise fund expansion.
In every case, the offtaker carries a balance sheet burden that makes it difficult to scale across multiple projects.
A Smarter Way Forward: Credit Insurance as Supplemental Support
Energetic Capital is helping developers and offtakers address this challenge in a more efficient way. Our credit insurance product, backed by an investment-grade balance sheet, fills the gap between what a financier requires and what an offtaker can reasonably post.
Instead of increasing the offtaker’s LC or collateral, developers can use a cost-effective, off-balance-sheet insurance solution that satisfies the financier’s credit committee and enhances project bankability.
An Example in Action
Consider a transaction where an offtaker is required to post two years of project revenue as credit support, or $50 million total ($25 million per year). Instead of tying up all $50 million, the structure could look like this:
- The offtaker posts $10 million through a traditional LC or parent guarantee.
- Energetic Capital provides credit insurance covering the remaining $40 million exposure.
This gives financiers full comfort since an investment-grade insurer stands behind the obligation while freeing up the offtaker’s LC capacity for additional projects.
From the developer’s standpoint, this is a triple win. The financier is protected by a strong counterparty, the offtaker frees up capital, and the developer strengthens their reputation as a creative, solution-oriented partner.
Cost Efficiency Through Layering
Because the retained $10 million functions as a first-loss layer, the insurance policy operates as an excess layer. This reduces the cost of coverage and makes the structure more efficient and scalable. Developers and offtakers can deploy capital across more projects without compromising credit quality.
Enabling the Next Wave of Utility-Scale Growth
As buyer credit support norms evolve, flexibility and creativity in financial structuring will become key advantages. Energetic Capital’s credit insurance solution provides developers and financiers with the confidence to move forward on large-scale commercial offtake transactions without balance sheet strain or lengthy renegotiations.
By turning static credit requirements into scalable financial solutions, Energetic Capital is helping accelerate the deployment of renewable infrastructure globally.
An Open Invitation
If you’re developing large-scale renewable projects or managing commercial offtake agreements, now is the time to rethink how credit support is structured. Whether you’re working with an investment-grade buyer, a subsidiary, or an unrated counterparty, there’s a scalable path forward that doesn’t tie up balance sheets or stall growth.
Bring us the transaction where credit support is holding up progress. Maybe it’s a buyer that can’t expand its LC facility or a lender that needs additional comfort to close. Energetic Capital’s mission is to unlock liquidity and enable the next wave of renewable infrastructure deployment—helping developers and offtakers move faster, smarter, and at scale.
Rethinking Buyer Credit Support in Utility-Scale Renewable Transactions
In today’s market, developers of large utility-scale renewable projects are facing new friction points, not from regulators or financiers, but from their offtakers. Whether the buyer is a Fortune 500 subsidiary or an unrated commercial entity, pushback on credit support requirements is mounting.
For years, financiers have relied on a range of buyer credit support instruments to secure transactions, including letters of credit (LCs), parent guarantees, cash collateral, and more recently, surety bonds. These have been structured in various ways, such as fixed dollar amounts per megawatt or rolling multiples of project revenue over a given period.
More recently, financiers have started noticing a change. Buyer credit support coverage is shrinking and deals that once checked every box now look atypical to credit committees.
The Developer’s Dilemma
PPAs, and related credit support, are often negotiated years before a project is ready for project financing. Often there is a disconnect between the credit support the sponsor expects, and what lenders ultimately need. When financiers identify insufficient credit support, developers face an uphill climb. Asking offtakers to increase or restructure posted collateral is often unrealistic. From the offtaker’s perspective, the traditional instruments represent an inefficient use of capital.
Letters of credit draw directly on corporate LC facilities, limiting growth capacity. Parent guarantees create balance sheet liabilities for investment-grade parents. Cash collateral locks up working capital that could otherwise fund expansion.
In every case, the offtaker carries a balance sheet burden that makes it difficult to scale across multiple projects.
A Smarter Way Forward: Credit Insurance as Supplemental Support
Energetic Capital is helping developers and offtakers address this challenge in a more efficient way. Our credit insurance product, backed by an investment-grade balance sheet, fills the gap between what a financier requires and what an offtaker can reasonably post.
Instead of increasing the offtaker’s LC or collateral, developers can use a cost-effective, off-balance-sheet insurance solution that satisfies the financier’s credit committee and enhances project bankability.
An Example in Action
Consider a transaction where an offtaker is required to post two years of project revenue as credit support, or $50 million total ($25 million per year). Instead of tying up all $50 million, the structure could look like this:
- The offtaker posts $10 million through a traditional LC or parent guarantee.
- Energetic Capital provides credit insurance covering the remaining $40 million exposure.
This gives financiers full comfort since an investment-grade insurer stands behind the obligation while freeing up the offtaker’s LC capacity for additional projects.
From the developer’s standpoint, this is a triple win. The financier is protected by a strong counterparty, the offtaker frees up capital, and the developer strengthens their reputation as a creative, solution-oriented partner.
Cost Efficiency Through Layering
Because the retained $10 million functions as a first-loss layer, the insurance policy operates as an excess layer. This reduces the cost of coverage and makes the structure more efficient and scalable. Developers and offtakers can deploy capital across more projects without compromising credit quality.
Enabling the Next Wave of Utility-Scale Growth
As buyer credit support norms evolve, flexibility and creativity in financial structuring will become key advantages. Energetic Capital’s credit insurance solution provides developers and financiers with the confidence to move forward on large-scale commercial offtake transactions without balance sheet strain or lengthy renegotiations.
By turning static credit requirements into scalable financial solutions, Energetic Capital is helping accelerate the deployment of renewable infrastructure globally.
An Open Invitation
If you’re developing large-scale renewable projects or managing commercial offtake agreements, now is the time to rethink how credit support is structured. Whether you’re working with an investment-grade buyer, a subsidiary, or an unrated counterparty, there’s a scalable path forward that doesn’t tie up balance sheets or stall growth.
Bring us the transaction where credit support is holding up progress. Maybe it’s a buyer that can’t expand its LC facility or a lender that needs additional comfort to close. Energetic Capital’s mission is to unlock liquidity and enable the next wave of renewable infrastructure deployment—helping developers and offtakers move faster, smarter, and at scale.
