A project may also have a multiple offtaker business model. If this is the case, the project will need to prove to the lenders that sufficient offtakers will materialise. Proving this may take the form of statistical traffic studies (toll roads) or resource assessments (oil and gas / mining) in which the extent of the reserves are ascertained with varying degrees of probability (Proven vs Probable reserves).
Project financiers will typically not take market risk – that is, they will usually require that the project has already signed up sufficient clients to cover the project’s debt repayments, rather than relying on the project’s ability to do so in the future.
An exception to this may be where there is a demonstrably deep and liquid market for the project’s offtake, such as for many mining operations. Project financiers may nonetheless require that the price of the offtake commodity is hedged.