Finance
A Special Purpose Vehicle (SPV) is a legal entity (usually a limited liability company) created for a specific, narrow purpose - often to isolate financial risk. In renewable energy financing, an SPV is commonly established to own and operate a particular project (such as a solar farm or wind farm). This project company holds all the project’s assets, contracts (like PPAs), and debt, while the parent developer or investors own the SPV. Using an SPV ensures that the risks and liabilities of the project don’t affect the parent company’s other assets. It also makes it easier for lenders to have a claim on project assets in case of default. SPVs are fundamental in project finance structures, providing clarity and security to investors and lenders.