Ensure project bankability by mitigating offtaker risk and ensuring diverse and certain revenues streams

To maintain momentum on clean power project build in established markets, and unlock deployment in more nascent markets, it will be important to ensure project bankability by mitigating offtaker risk and ensuring diverse and certain revenues streams. Establishing revenue certainty for clean power sources can be spearheaded by both the public and private sectors.

Governments can establish well-designed competitive auctions for long-term offtake contracts. Such measures are among the most widely implemented climate-related policies and remain fundamental to ensure continued renewables uptake. An effective clean energy policy framework provides clarity to investors, minimizes bureaucracy and incentivizes construction of new clean power capacity. Typically, strong frameworks have included at the very least a bold but feasible clean energy target, plus reverse auctions for clean- power-delivery contracts, or incentives for small-scale renewables deployment like feed-in tariffs or net metering.

Private offtakers like industrials, corporates, utilities and retailers can create demand for clean energy and sign power purchase agreements (PPAs) with generators, but governments must first ensure that clean power contracts are allowed. Policymakers and international financial institutions can also enact measures to bolster the depth of the private offtake market through PPA guarantees for clean power or standards on retailers requiring that a certain share of their energy supply is zero-carbon. Lastly, grid operators and regulators can play a role in ensuring clean power projects have access to a diverse source of revenue, including through standardized grid service and flexibility markets.