February 19, 2025
Operating Assets

Safety in numbers: renewables portfolio financing


Lenders typically want as fulsome a security package as possible, including security over all of the different asset types, eg real property, project documents and financier tripartite agreements. Sponsors, however, are likely to push for a reduced security package with fewer controls than would typically be seen on a single-asset project financing. This may include relaxed lender consent rights in relation to underlying project documents, greater remedies available and higher thresholds following project document defaults, and financier tripartite agreements limited to ‘material’ project documents.

Lenders are becoming increasingly comfortable with this—where the portfolio is significant in scale, there is relatively lower gearing and a substantial proportion of operational assets that are supported by investment grade offtake agreements (or where the portfolio has a subset of these features).

Given that many projects will have project financing in place ahead of the portfolio refinancing, an important structuring point to be considered at the outset will be the extent to which existing securities and financier tripartite deeds can be preserved as part of the portfolio refinancing. It is common for existing security trust structures to remain in place rather than new security trusts being set up. This will reduce the need to retake security and, importantly, mean that new financier tripartite agreements are not required, which can be particularly important on geographically large projects where there are multiple landowners and large portfolios where the volume of third parties to project documents can easily take the financier tripartite numbers to 50-100 or more.

To do this, multiple security trusts (ie one for each existing project) may be required and tied into a common terms structure. This can lead to complexities on closing due to the refinancing of many different assets at the same time.

To the extent that the security trustee is to be replaced, we commonly see a period of time allowed post-close of the portfolio refinancing for this to occur, given it will require novations of tripartites and security and can be time consuming.



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