Project finance relies on the project’s ability to perform and generate cash. A green label does not cure missing land rights, incomplete permits or weak contracts. Sponsors should organise legal diligence around the lender’s central question: can the project be built, operated and, if necessary, restructured without losing the rights that create its value?
Trace the project cash flows
Map construction funding, operating receipts, expenses, debt service and distributions. Identify restrictions in supply, offtake and account arrangements. Test whether revenue assumptions are supported by enforceable contracts or exposed to merchant risk. Where performance payments depend on energy savings, define the baseline and verification method. The financing model and legal documents should allocate the same risks to the same parties.
Build security asset by asset
Identify the available shares, real estate, movable assets, receivables and accounts. For each, assess the required creation, registration, priority and enforcement steps under the relevant law. Check existing encumbrances and restrictions on assignment or security. A list in a term sheet is not a perfected security package. Prepare a completion checklist that distinguishes executed documents from completed perfection steps.
Negotiate direct agreements with key counterparties
Consider notice, cure periods and continuity arrangements with contractors, operators and offtakers. Define how lenders receive warning of default and what steps may be taken before termination. Any substitution or step-in proposal must be checked against regulatory requirements and the counterparty’s obligations. A contractual step-in clause should not be presented as an automatic transfer of a licence or public permission.
Make completion and cost-overrun support realistic
Set objective completion tests and coordinate them with construction acceptance and revenue commencement. Identify who provides additional equity if the budget is exceeded and whether that commitment is enforceable and funded. Check guarantee expiry against a delayed schedule. Avoid a financing structure where debt service begins before the project can lawfully operate or before the principal customer’s acceptance process is complete.
Document green conditions without ambiguity
Identify whether financing terms depend on use of proceeds, environmental reporting or performance targets. Specify evidence, review periods and consequences of a missed target. Separate information failures from an underlying project default where appropriate. Coordinate the lender’s reporting package with the sponsor’s existing systems so covenants are measurable. Keep assumptions about public support distinct from cash already committed to the project.
Investor checklist
- Contract-supported cash flow model.
- Security creation and perfection checklist.
- Direct agreements aligned with regulatory limits.
- Completion tests and cost-overrun funding.
- Measurable environmental reporting covenants.
For transaction-specific support, see our tax and trade finance services and commercial contract services.
Continue with: Turkey’s November 2026 Renewable Energy Awards: What Foreign Investors Should Check Next; Buying a Solar or Wind Project in Turkey: A Legal Due Diligence Checklist.
Frequently asked questions
Does green financing remove ordinary project risk?
No. Land, permits, contracts and cash flow still need full diligence.
Is a signed security document always enough?
No. Depending on the asset, additional perfection or registration steps may be needed.
Can lenders automatically take over a regulated project?
No. Contractual rights must be assessed alongside applicable regulatory requirements.
