Finance
Non-recourse financing is a type of project financing where lenders have a claim only on the project’s assets and cash flows, not on the borrower’s other assets, if the project fails to meet debt obligations. In renewable energy project finance, this means the loan is secured by the solar farm or wind farm itself and its contracts (like PPAs), and the lender cannot pursue the parent company’s or developer’s broader assets in case of default. Non-recourse loans shift more risk to the lender, so lenders carefully evaluate project viability (power contracts, technology, permits) before lending. For developers and investors, non-recourse financing limits downside risk beyond the project, making it an attractive structure if the project’s cash flows are deemed reliable.