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.
Recourse and nonrecourse energy loans
Recourse defines the lender’s rights against the borrower, sponsor or guarantor. A nonrecourse project loan can still contain specific guarantees and exceptions. The label is insufficient to determine the sponsor’s actual exposure.
What to evaluate
Review completion support, cost-overrun commitments, indemnities, cash sweep, pledged interests and misconduct carveouts. Confirm when a guarantee begins and ends and whether a test or lender release is required. Ownership entities should be consistent across the documents.
Build a defensible comparison
Compare risk under completion delay, environmental liability, operating default and sale. Nonrecourse financing is not risk-free for the equity investor. The investment can lose value even when the lender has limited claims on other sponsor assets.
Documents and questions to prepare
- Borrower and guarantor identities
- Guarantees and carveouts
- Completion and release tests
- Security and enforcement rights
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.