The race to 2028 is upon us and many projects won’t make it. Especially those that weren’t able to safe harbor in 2026. Their runway is even shorter and need to complete by 2027.

Getting permit approval if you have a ground mounted project comes with risks. Layer in the interconnection uncertainty and timelines utilities have provided, creates more pressure. Sometimes the utilities own timelines slip.

These 2 elements are causing the lending community to scrutinize your projects, pipeline and your portfolio.

Section 48 credits are in short supply and 48E and its economics are less appealing. Competition for credits, tax credit insurance has hampered project finance, as the sponsor lists are dwindling. They are focused on high-quality offtakers that are IG and the non-IG often get less favorable lending terms.

Layer in pref equity structures above the waterfall, and you can see why the difficulties continue to emerge. The complexities continue to grow with uncertainty in the market and the money flows where risk is mitigated.

Then you layer on the construction to perm story. Timing, allocations, and at what terms in a higher interest rate environment also put pressure on selecting the right projects and portfolios that fit in the box for the capital stack providers.

All of this is causing developers and IPP’s to evaluate their pipelines and determine which ones that they should keep and pursue, while others won’t make the cut. This is largely driven by lenders. They’ve decided to pull out of certain markets. They also recognize the ITC will impact the economics for everyone downstream.

What is the solution then?

It is multifold and it will start with the CapEx of the project. Excel has a solver feature built in or using goal seek, you can triangulate your costs, the PPA rate and sources and uses to see if a project makes sense, before it’s delivered to the lending community.

The offtaker will most likely need to be IG. Merchant power projects are going to be discounted and less financeable. This seems unusual even though we’re running out of capacity for energy due to the data center build out and the scarcity of equipment to power them.

Finally, interest rates and inflation. They’re rising and with the price of oil touching every part of the economy, inflation silently erodes the margins needed to make projects attractive. Throw in FEOC compliance, premiums for Made in USA products, safe harbor rules pressure for all parties, makes the economics difficult for C&I and small utility scale projects.