How does a lender look at a climate project?

Where does repayment come from?

Project finance is repaid from the project's own income, not from the owner's other businesses. So the lender looks first at contracted revenue: who has promised to pay, how much, for how long, and on what conditions. A long contract with a strong offtaker is the foundation, and a hope of selling on the open market is not.

What could go wrong?

Lenders work through risks one by one and ask who carries each:

• Construction: will the project be built on time and on budget?
• Technology and operations: will the technology perform as designed, year after year?
• Delivery and measurement: will output be verified in a way the offtaker accepts?
• Counterparty: will the offtaker, and the builders, be there to honour their side?
• Legal and policy: could a change in rules undo the contract?

What does the lender fall back on?

Security and structure. The lender may take a charge over the project's assets and contracts, require reserve accounts, and set covenants: promises the borrower keeps throughout the loan, such as keeping enough income to cover each repayment comfortably. If something breaks, these give the lender time and options.

What is a credit committee?

A credit committee is the group inside a bank that decides whether to lend. The committee reads a written case, tests it, and approves, rejects or sends it back with conditions. The case lives or dies on evidence: documents, independent reports, and a clear account of every risk and who carries it.

Where MOTHER Carbon fits

MOTHER Intelligence examines a contracted project through eight gates, from eligibility and climate integrity to stress and portfolio fit, each answering one question a lender would ask, with evidence. The result is a case file a lender can take to committee.