Finance
Cash Available for Distribution (CAFD) is a financial metric used in renewable energy partnerships and investment funds to measure the actual cash generated by projects that is available to distribute to investors after covering all operating expenses, debt service, and capital reserves. CAFD represents the net cash flow that can be paid out as distributions to limited partners or shareholders. In solar and wind project finance, CAFD is calculated by taking the project's gross revenue from electricity sales, subtracting operating expenses (O&M, insurance, land lease), debt service payments, and any required reserves for future capital expenditures. This metric is crucial for investors as it directly impacts their cash returns and yield expectations from renewable energy investments.