Banks scrutinizing PPAs ahead of RES project financing

Banks are scrutinizing power purchase agreements (PPAs) on a case-by-case basis, applying their own assessment criteria rather than general formulas that could underestimate the risk level of transactions, before moving ahead with financing applications for renewable energy units.

A main concern for bank executives contacted by energypress is whether the risk assessment process for PPAs should also take into account risks arising from other activities pursued by applicants.

Banking sector officials added that the competent market regulator, following related discussion, is expected to intervene by issuing a decision that will not impose specific assessment rules, but, instead, describe associated risks and provide banks with flexibility to analyze corporate PPAs on a case-by-case basis ahead of their respective project financing decisions.

“Right now, off-taker assessment is the key issue for banks. It’s all about the scenarios of how we assess off-takers credit-wise, overall, not just in extreme market scenarios or special circumstances,” Argyro Banila, Head of Structured Financing Corporate & Investment Banking at the National Bank of Greece, told the recent Renewable & Storage Forum, an event organized by energypress.