RELP is developing iTrust Enabling Clean Power as a financial mechanism to facilitate programme-based guarantees to renewable energy projects awarded through public auctions.
We are implementing the International Guarantee Trust Fund for Renewable Energy (iTrust) with the purpose of providing customized program-based guarantees to be automatically granted to all renewable energy projects awarded in eligible participating public auctions.
Effectively designed guarantees are a very robust instrument to mitigate actual and perceived risks, resulting in lower weighted average cost of capital; longer debt tenors; and improved project cash flow stability, predictability, and bankability.
Guarantees lower actual and perceived risks, improving credit ratings and leading to:
- More lending available
- Lower interest rates
- Longer tenors for loans
Improved economics and competition result in lower prices for renewable electricity
These guarantees cover the most typical "offtaker liquidity" risk and the longer-term risk of offtaker or country default in paying for the obligations arising from the early termination of offtake agreements.
The funds for these guarantees come from different sources gathered by the iTrust, such as the countries supported by the iTrust, philanthropic donors, multilateral development banks, and institutional and private investors.
HOST COUNTRIES
Enhanced credit rating
Lower fiscal exposure
Improved investor attractiveness and competition
Faster development of renewables at lower cost
Compliance with Nationally Determined Contributions
Social and economic development
IPPs
Enhanced bankability
Knowledge and pricing pre-bids - automatic access
Lower weighted average cost of capital
Effective coverage upon payment default and/or early termination triggering events
Offshore structure under private law, with its own assets isolated and independent from the host country’s decisions
FUNDERS
High-impact investment via clean and sustainable projects
Leverage/multiply the use of funds via private sector crowd-in
Mitigated/limited risks controlled by country and program eligibility criteria and governments’ active participation and co-funding
