Energy project finance reference. This educational resource covers project investment and financing concepts. It is separate from Jaken Energy’s commercial electricity and natural gas procurement service; it is not a financing offer or a promise of funding.
Mezzanine financing and the project capital stack
Mezzanine capital sits between senior debt and common equity in a financing structure, depending on the documents. It can add funding while increasing payment, governance and refinancing obligations. Its apparent flexibility needs to be tested against the full capital stack.
What to evaluate
Review cash interest, accrued interest, fees, maturity, equity participation and default remedies. Coordinate permitted payments and intercreditor restrictions with senior debt. The sponsor must understand whether repayment is feasible without an optimistic exit value.
Build a defensible comparison
Compare sponsor proceeds and downside losses across financing options. Additional leverage can amplify returns or eliminate equity value. Do not describe a standard market coupon or leverage ratio without a dated, project-specific offer.
Documents and questions to prepare
- Payment and accrued-return mechanics
- Senior lender consent and priority
- Maturity and refinancing need
- Equity participation and remedies
For commercial property owners
Start with the property’s actual accounts, lease responsibilities and plans for ownership or sale. Keep commodity procurement, building improvements and project investment as separate decisions. Include the costs you retain and the savings you retain after tenant reimbursement. An improvement that lowers a tenant-paid expense may benefit tenants without producing the same increase in owner income.
Prepare a base case and a downside case using dated evidence for costs, revenue and funding. Any financing rate, tax benefit or return is a project assumption until supported by current documents. Legal, tax, engineering and lender review should follow the actual transaction.
For the existing property’s supply-cost decision, use the contract-cost calculator or request a property energy review.
Primary sources
Reviewed October 12, 2026. Program rules, tariffs and financing terms should be checked again before a transaction.