Lenders financing renewable electricity exports linked to the EU Carbon Border Adjustment Mechanism (CBAM) are seeking step-in arrangements that cover more than plant operations and key contracts. The arrangements also need to preserve access to records supporting past and future electricity imports. Without those records, a project may keep generating capacity and grid connection while losing revenue assumed in its financing model.
This adds a continuity requirement for project finance. Contractual rights over the physical asset must be backed by arrangements that maintain evidence for electricity eligibility and support related commercial claims. The focus is on ensuring that compliance documentation remains available as responsibilities change.
CBAM default treatment depends on installation-specific evidence
Under the current CBAM framework, default values apply for imported electricity unless conditions for installation-specific actual emissions values are met. These conditions include a qualifying physical power purchase agreement (PPA), the relevant network condition, and a generating installation below the 550 g CO₂/kWh fossil-fuel-origin threshold. They also require firm nominations matched with production over periods of no more than one hour.
Independent verification is another condition, supported by at least monthly interim evidence. Changes in counterparties can disrupt access to the documentation needed to support this treatment. When a trader or offtaker is replaced, continued access may be required for PPA records, meter exports, nomination histories, network documentation, importer allocations, and correspondence with the verifier.
The documentation may become difficult to obtain even if the generating asset and grid connection remain operational. The risk can extend beyond immediate contractual transfers. If historical records cannot be retrieved or future reporting data flows cannot be maintained, the project’s ability to support the intended emissions treatment may be affected.
Direct agreements and lender step-in rights for data continuity
Direct agreements are expected to cover survival of data-access rights, controlled handover procedures, and the ability to appoint replacement service providers. These provisions are intended to preserve operational records and supporting evidence after a default, counterparty replacement, or transfer of project responsibilities. The aim is to maintain continuity of both operations and compliance-related information.
A lender exercising step-in rights does not automatically become the CBAM declarant. Instead, the lender’s role is described as preserving contractual and operational infrastructure needed to maintain project value while parties and responsibilities are reorganised. This distinction affects how compliance responsibilities are handled during changes in project structure.
Multi-layer contracting for industrial customers increases record-control complexity
The contractual structure becomes more complex when renewable electricity supports industrial steel or aluminium customers through multiple contractual layers. Lenders are described as needing to identify which entity controls electricity transactions, Guarantees of Origin (GoOs), industrial customer data, and CBAM evidence. The structure should prevent a default at one level from blocking access to records or value linked to other layers.
Counterparty assessments are also described as needing separate consideration of offtaker, intermediary, and guarantor roles. The practical value of an indemnity depends on the counterparty’s financial capacity and the time needed to obtain payment. This is particularly relevant where a statutory liability must be funded before contractual compensation is received.
Insurance and guarantees can provide additional protection but do not replace operational controls or enforceable data-access arrangements. Policy exclusions, waiting periods, and counterparty credit risk can still expose projects to liquidity pressure even when contractual recovery rights exist. Debt sizing is therefore described as needing alignment with cash flow available under selected stress scenarios.
CBAM certificate timing and guidance updates affect planning
For electricity imported in 2026, CBAM certificate sales are scheduled to begin on 1 February 2027. The first annual declaration and certificate surrender deadline is set for 30 September 2027. From 2027, general certificate pricing 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 also updated general CBAM questions and answers on 15 October 2026. These materials are described as explaining implementation aspects without replacing binding regulation and applicable implementing acts.
Electricity reform proposal remains under negotiation
The European Commission’s reform proposal COM(2025) 989 would materially change electricity treatment under CBAM if adopted. It would include changes to methodology for electricity default values and parts of conditions governing actual emissions values. It would also broaden physical PPA concepts to include intermediaries and modify congestion and nomination framework elements.
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 rather than enacted legislation under current-law financing assumptions. Financing expectations therefore need to reflect that status when structuring step-in arrangements.
For evidence-backed electricity exports, control of the generating asset without continued access to supporting records may provide only partial control over revenue streams. Step-in arrangements are described as needing to protect both operational continuity and the data infrastructure used in financial assumptions. This includes maintaining access needed for CBAM-related reporting as responsibilities shift.