Evaluating the bankability of an energy project.

Maia-Action Insight - March 2026.

Author: Dr. Marco Iacono - Energy & Infrastructure Advisory

Three questions an investor should ask himself before investing.

In the energy sector, and particularly in infrastructure projects such as renewable energy plants, project evaluation cannot be limited to verifying technical feasibility or estimating potential revenue.

A project becomes truly investable only when it demonstrates the ability to sustain a solid financial structure over time. In other words, when it is bankable.

Bankability does not depend on a single factor, but on the balance between three fundamental elements.

1. The predictability of cash flows.

The first element that investors analyze is the stability of expected revenues.

In energy projects this means understanding:

• the expected production level (P50 and P90);

• the volatility of energy prices;

• the presence of any long-term sales contracts (PPAs).

A project may be technically sound but difficult to finance if cash flows are too exposed to market fluctuations.

The quality of the economic hypotheses is therefore one of the primary factors of credibility of the project.

2. The cost and risk structure of construction.

The second element concerns the construction phase of the system.

Investors carefully consider:

• the expected level of CAPEX;

• the presence of structured EPC contracts;

• the risks associated with connecting to the network;

• supply chain reliability.

The construction phase is often the time when the project is most at risk. Clear governance and well-structured contracts significantly reduce uncertainty.

3. The sustainability of the financial structure.

Finally, a project must demonstrate that it can sustain debt service over time.

Indicators such as the DSCR (Debt Service Coverage Ratio) or the ratio between P90 and P50 production are fundamental tools for assessing the economic resilience of the initiative.

A bankable project is not simply profitable: it is a project that remains sustainable even in less favorable scenarios.

An evaluation that precedes the decision.

Bankability is not something that happens at the end of the development process.

On the contrary, it should be analyzed from the preliminary stages of the project.

Understanding the risk structure and financial sustainability of a venture in advance allows investors and developers to make more informed decisions and avoid investments that, while promising, cannot be sustained in the long term.

Note.

If you wish to explore the implications of these issues in your specific operational context, you can start a preliminary discussion with the MAIA-Action team.

The initial discussion is aimed at understanding the context of the project or organization and assessing whether and to what extent independent advisory support could be useful in the decision-making process.

To request a meeting or an introductory call, please use the Contact section of the website.