Glossary

A due diligence adviser working generally on behalf of the lenders in a project finance transaction. Also known as an Independent Engineer. The ITC’s costs are met by the Borrower. The scope of work of the ITC may cover only the period up to Financial Close, although lenders will wish…

A green certificate is a tradable commodity proving that certain electricity is generated using renewable energy sources. Typically one certificate represents the generation of one Megawatt hour of electricity. What is defined as "renewable" varies from certificate trading scheme to trading scheme. Green certificates represent the environmental value of renewable…

The ratio between Equity and project finance debt within the financing structure. Usually given as Debt : Equity – thus “80:20 gearing” means 80% debt and 20% Equity. This ratio is also referred to as the project’s “Leverage”.

An engineering design approach much used in process and power plant projects to control project expenses and thoroughly plan a project. It may also be referred to as Pre-project planning (PPP), front-end loading (FEL), feasibility analysis, or early project planning. The FEE is basic engineering which comes after the conceptual…

Force majeure is generally intended to cover occurrences beyond the reasonable control of a party to a contract. It is a common clause in contracts that essentially frees parties from liability or obligation when an extraordinary event or circumstance beyond the reasonable control of the parties, such as a war,…

For most practical purposes in project financing, a FPTK contract is the same as an Engineering Procurement & Construction (EPC) Contract. The contract requires the contractor to deliver a project by a date certain and for a price which may not increase without the approval of the project owner. The…

A policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Rather than pay an equal amount for energy, however generated, technologies such as wind power and solar PV, for instance, are awarded…

An export credit agency (or ECA) or investment insurance agency is a government-owned or government-supported institution which provides export financing and / or credit insurance or guarantees to lenders. The objective of ECAs’ activities is to encourage exports and thereby to stimulate activity within their own economies. Examples are Euler-Hermes…

An occurrence which gives lenders under a project financing arrangement the right to declare the Borrower in default of its obligations under the financing agreements and to require immediate repayment of the debt in full. While project lenders rarely exercise this right, they will use their ability to do so…

A method of running businesses and select investments which takes into account the Environmental, Social and Governance impacts of business and investment decisions. “E”: concerns issues related to resource use, pollution, climate change, energy use, waste management and other physical environmental challenges and opportunities. “S”: impact on Social, inclusion, economic…