Supported by CBAM.Clarion.Engineer
Lenders financing renewable electricity exports linked to the EU Carbon Border Adjustment Mechanism (CBAM) need step-in arrangements that preserve not only plant operations and key contracts, but also access to the records supporting past and future electricity imports. Without those records, a project may retain its generating capacity and grid connection while losing part of the revenue assumed in its financing model.
This creates an additional continuity requirement for project finance. Contractual rights over the physical asset must be supported by arrangements that maintain the evidence needed to demonstrate electricity eligibility and substantiate the associated commercial claims.
Evidence access can be disrupted by changes in counterparties
Under the current CBAM framework, default values remain the standard route for imported electricity unless all conditions for installation-specific actual emissions values are met. These include a qualifying physical power purchase agreement (PPA), the relevant network condition, a generating installation below the 550 g CO₂/kWh fossil-fuel-origin emissions threshold, firm nominations matched with production over periods of no more than one hour, and independent verification supported by at least monthly interim evidence.
Replacing a trader or offtaker can disrupt access to the documentation required to support this treatment. The project may need continued access to PPA records, meter exports, nomination histories, network documentation, importer allocations and correspondence with the verifier. Those records may become difficult to obtain even when the generating asset and grid connection remain operational.
The risk extends beyond the immediate transfer of contractual responsibilities. If the project cannot retrieve historical records or maintain the data flow required for future reporting, its ability to support the intended emissions treatment may be affected.
Direct agreements should protect data continuity and replacement rights
Direct agreements should address the survival of data-access rights, controlled handover procedures and the ability to appoint replacement service providers. These provisions can help preserve operational records and supporting evidence following a default, counterparty replacement or transfer of project responsibilities.
A lender exercising step-in rights does not automatically become the CBAM declarant. Its role is to preserve the contractual and operational infrastructure needed to maintain project value while the relevant parties and responsibilities are reorganised.
The structure becomes more complex when renewable electricity supports industrial steel or aluminium customers through multiple contractual layers. Lenders should identify which entity controls electricity transactions, Guarantees of Origin (GoOs), industrial customer data and CBAM evidence. The contractual structure should prevent a default at one level from unnecessarily blocking access to records or value associated with the others.
Counterparty and liquidity risks remain separate considerations
Counterparty assessments should distinguish between the offtaker, intermediary and guarantor. An indemnity’s practical value depends on the counterparty’s financial capacity and the time needed to obtain payment, particularly where a statutory liability must be funded before contractual compensation is received.
Insurance and guarantees can provide additional protection, but they do not replace operational controls or enforceable data-access arrangements. Policy exclusions, waiting periods and counterparty credit risk can leave the project exposed to liquidity pressure even when contractual recovery rights exist.
Debt should therefore be sized against cash flow that remains available under the selected stress scenario. Revenue dependent on regulatory eligibility or supporting evidence that has not yet been demonstrated should be treated as additional upside rather than essential debt-service capacity.
Certificate deadlines and pricing affect continuity planning
For electricity imported in 2026, CBAM certificate sales are scheduled to begin on 1 February 2027, with the first annual declaration and certificate surrender deadline on 30 September 2027. From 2027, the general certificate-pricing mechanism moves to weekly auction-price averaging, while quarterly certificate-holding requirements become part of treasury planning.
The European Commission published definitive-period sector guidance on 14 August 2026, including dedicated guidance for electricity, iron and steel, and aluminium. It updated its general CBAM questions and answers on 15 October 2026. These materials explain aspects of implementation but do not replace the binding regulation and applicable implementing acts.
Proposed electricity reforms remain under negotiation
The European Commission’s reform proposal COM(2025) 989 would materially change electricity treatment under CBAM, including the methodology for electricity default values and parts of the conditions governing actual emissions values. It would broaden the concept of physical PPAs to include intermediaries and modify the congestion and nomination framework.
The Council adopted its negotiating position on 12 June 2026, followed by the European Parliament’s position on 15 September 2026. The proposal remains under interinstitutional negotiation and should not be treated as enacted legislation in current-law financing assumptions.
For evidence-backed electricity exports, control of the generating asset without continued access to its supporting records may provide only partial control over the revenue stream. Step-in arrangements must protect both operational continuity and the data infrastructure on which the project’s financial assumptions depend.
