Capacity Payment

By August 15, 2022No Comments

Part of an offtake arrangement – such as a Power Purchase Agreement – which is structured so as to cover the fixed costs of a project SPV, including its Debt Service. Sometimes referred to as an Availability Payment. The payment is made to the SPV regardless of actual offtake, so long as the SPV is available to generate / provide the goods or services contemplated by the project. Such offtake arrangements – which are often referred to as “capacity-based” or “availability-based” – tend to be very bankable and capable of supporting high debt to equity levels, because revenue and therefore CFADS under such structures tends to be very predictable.Capacity Payment