News & media Deep dive: Structuring Energy Transition Investments and Deploying Flexible Capital Solutions
By Harrison Parkes
The energy transition is accelerating at pace, bringing both opportunity and complexity for developers and investors. Recent research from Ember illustrates how quickly the global power system is shifting. In the first six months of 2025, wind and solar farms generated more electricity than coal for the first time, largely driven by a surge in solar production. Solar generation rose by almost a third compared with the same period last year and met the majority of global demand growth[1] and with 585 GW of capacity additions, renewables accounted for over 90% of total power expansion globally in 2024[2]. This unprecedented adoption is due to several tailwinds including significant technological advancements, economic viability (at both the asset and consumer level), government and regulatory support, and significant availability of both public and private capital.
This rapid expansion highlights the scale of change underway. It also reinforces a challenge facing the sector: as renewable generation becomes more widespread this fundamentally alters the dynamics of the power system which has been progressively adapted over the last century around relatively centralised and larger-scale fossil fuel-based generation.
A key challenge for power grids is the timing and availability of renewable generation. Traditional sources including coal and gas can produce electricity continuously, while renewables such as solar and wind are intermittent as they depend on weather conditions outside the operator’s control. Because solar irradiation and wind speeds vary by time of day and season and are often correlated across large regions, renewable output can fluctuate significantly, which can be well in excess of demand from the system. This can lead to periods of very low (or in some cases even negative) wholesale market prices as well as potential curtailment. The effect of this continues to become more pronounced as renewable energy becomes a larger portion of overall energy system. In June 2025, Spain recorded 86 hours of zero or negative market prices because of very high solar PV output[3]. By September 2025, the Spanish solar industry had already seen 693 hours of zero or negative prices, which matched the total for all of 2024[4].
This structural shift carries major implications for the economics and financing of power projects. As variable renewable energy becomes a dominant part of electricity systems, traditional financing models that were designed around predictable, baseload generation are increasingly less suitable. Questions around price volatility, revenue certainty, and ability to attract external capital are becoming central to project viability.
Merchant revenue risk and the limits of traditional financing
From a renewable asset’s perspective, managing revenue risk has never been more important. This is especially the case as current mitigation strategies, including long term offtake agreements are becoming either less available or are on significantly less attractive terms due to both increasing competition and lower demand from offtakers as a standalone renewable generation profile often does not closely align with an offtaker’s demand profile. As a consequence, we have seen a slowdown in new Power Purchase Agreement (PPA) signings in parts of Europe in 2025[5]. In response we have seen some developers attempt to move towards more varied offtake structures including shorter term rolling PPAs or portioning the offtake agreement against a basket of smaller offtake customers. These varying offtake structures need to be carefully analysed, especially when considering how loans should be underwritten and structured. For short term and non-investment grade offtakes, loans need to be underwritten on a merchant basis as this is the underlying backstop for revenues to be generated. Despite this, these dynamics provide interesting opportunities for flexible capital providers.
Projects are thus increasingly relying on either merchant revenue profiles or lower quality offtake structures resulting in renewable assets which are less bankable under typical project level financing structures. Further, the challenges in securing an offtake agreement before completion can be a significant hurdle in raising low-cost construction finance. Traditional bank lenders have a strong preference for offtake agreements to be secured ahead of providing construction finance. This may not be possible in certain markets, as offtakers prefer procuring power under a shorter timeline. This is because it isn’t their preference to wait 12-18 months for the asset to be constructed under a dynamic and evolving power system. The market dislocation from Ukraine war is a reminder of how much energy prices can change in a relatively short period of time.
As a consequence, capital constrained developers without offtake agreements are often forced to either source a merchant-based construction financing, which many banks are reluctant to provide at leverage levels acceptable to a developer, or sell their projects before starting construction. This reduces access to capital at precisely the moment when external capital is needed most.
Platform-level financing and co-located projects
Platform-level financing, where multiple assets across a portfolio are financed together, can provide a more resilient approach. This model captures diversification resulting in more resilient and stable cashflows compared to individual assets. Conceptually, this financing could be across either a portfolio of assets across different locations or multiple assets at the same location sharing the same grid connection. In the case of the latter, typical configurations include solar with battery storage, solar with wind, and wind with battery storage.
When solar, wind, or battery storage assets are co-located or bundled in a portfolio, their different generation profiles help smooth the consolidated generation and revenue. In the case of solar, surplus midday power generation, when prices are likely to be low, can be stored in batteries and released during evening peaks. Peer-reviewed analysis shows that hybrid solar PV / wind battery systems can deliver capacity factors of 60 to 80 per cent, depending on system design and resource conditions[6] – compared with average capacity factors of about ~17% for utility‑scale solar PV and ~34% for onshore wind (based on IRENA’s Renewable Power Generation Costs in 2024 report)[7] Co-location also improves the use of grid infrastructure. Research into hybrid assets suggests that co-locating renewables and storage can reduce the need for new transmission expansion by 10 to 15 per cent[8]. Sharing a single grid connection can reduce connection costs, reduce curtailment and improve the utilisation of existing assets.
This approach requires more capital than building assets on a standalone basis but as battery storage costs continue to improve, the benefits are increasingly outweighing the additional costs. Together, these factors make platform-level and co-located hybrid financings more aligned than traditional standalone project or SPV structures.
Flexible, portfolio-driven financing At Cordiant, we provide a range of financing structures that reflect the needs of the evolving energy transition. This includes holdco and platform-level facilities that group multiple assets across both technologies and geographies into a single structure, recognising the cash flow diversification that traditional SPV structures overlook.
As a flexible capital provider, we are also selective looking at opportunities where we can provide construction financing before PPAs have been secured. Bridging this mismatch in timing can generate premiums in excess of the additional risks for a diverse portfolio but requires careful diligence and structuring. This is made possible by the portfolio’s stability rather than reliance on a single asset. Once projects become operational, we work with developers to refinance and optimise their capital structure. This can reduce the overall cost of capital, unlock liquidity for growth and support long-term investment plans. In all cases, our approach is designed to align financing solutions with the new order of energy markets, acting as a strategic partner, not simply a lender.
Listening to market signals
The global shift to renewables is progressing quickly. We have seen renewables overtake coal in global electricity generation and negative-price hours becoming more frequent in high-renewables markets. This has led to adapting business models and structures towards hybrid and portfolios of renewable assets.
Of course, platform-level financing is not suitable for every situation. It requires coordination across multiple projects, careful legal structuring, and strong portfolio management. In addition, regulatory frameworks for co-located projects and hybrid PPAs are still developing in some markets. However, where assets offset their individual merchant exposures or share key infrastructure, platform financing delivers meaningful financial and operational advantages.
As renewables become the dominant source of electricity, financing models must evolve to reflect the realities of modern power markets. Platform-level financing across a diverse range of technologies and geographies have more resilient revenues and cashflows, unlocking capital for developers that are significantly capital constrained relative to their development pipelines.
By recognising the modern characteristics of renewable energy portfolios, we stand ready to help developers build and scale assets with greater confidence. In a market defined by volatility, speed and structural change, the investors who succeed will be those who adopt financing models designed for the energy system of today, not the one of the past.
[1] https://ember-energy.org/latest-insights/global-electricity-mid-year-insights-2025/
[2] https://www.irena.org/News/pressreleases/2025/Mar/Record-Breaking-Annual-Growth-in-Renewable-Power-Capacity
[3] https://strategicenergy.eu/spain-sees-86-zero-or-negative-price-hours-in-june-due-to-high-renewable-output/
[4] https://www.iene.eu/energy-news/spains-solar-industry-warns-of-price-threat-to-energy-transition-p8058.html
[5] https://www.pveurope.eu/hybrid-generators/hybrid-energy-parks-face-headwinds-europe
[6] https://www.frontiersin.org/journals/energy-research/articles/10.3389/fenrg.2023.1036183/full
[7] https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2025/Jul/IRENA_TEC_RPGC_in_2024_2025.pdf