Construction Finance for Renewable Energy Projects
By Joshua Giles, Founder and Director · Reviewed by the CoreFi credit team
Last updated 20 July 2026
CoreFi is a broker, not a lender. We do not set rates and lenders make all credit decisions.
In short: £500k - £25M over 12 - 24 months (construction), refinance to 15-25 year project finance. Renewable energy construction finance is not development finance with a green badge on it.
Renewable energy construction finance is not development finance with a green badge on it. The lender underwrites the project on its contracted future revenue, not on bricks-and-mortar security. Your power purchase agreement, grid connection offer, and EPC contractor's track record carry more weight than the land value underneath the panels.
The usual structure is a senior debt facility drawn in tranches as construction milestones are hit, with rolled-up interest during the build, then repayment or refinance to long-term project finance once the installation is commissioned and generating export income. On a strong CfD-backed solar deal, lenders on our panel have advanced 60 to 70 percent of total project cost. That number falls sharply once there is no offtake agreement in place.
Planning consent and a grid connection offer from the DNO are effectively pre-conditions. Without both, most lenders will not get past credit committee. Some will issue a conditional term sheet while planning is live, but do not bank on it. Battery storage runs on the same logic, with grid services revenue (frequency response, capacity market contracts) replacing generation income as the underwriting basis. We are a broker, so we place the deal with the lender whose criteria fit it, not one house product.
Key Benefits
- Planning consent and a grid connection offer from the DNO are the two documents that move a deal from indicative interest to credit approval, so getting them in hand first cuts the finance timeline considerably
- Lenders underwrite on contracted revenue (PPAs, CfD strike prices, SEG tariffs) rather than property metrics, so a firm offtake agreement directly lifts what you can borrow
- Rolled-up interest during construction means no cash servicing while the project is being built, which matters when your only income is still on the far side of commissioning
- Construction-to-term facilities convert to long-term project finance at commissioning, saving the arrangement fees, legal cost and execution risk of a second refinance
Frequently Asked Questions
Do I need planning permission before approaching lenders?
In practice, yes. Full planning consent and a grid connection offer from your DNO are the two documents that move a deal from indicative interest to credit approval. A handful of lenders will issue a conditional term sheet while planning is being determined, but you are borrowing time, not certainty. Get the consents first.
How are battery storage projects assessed differently from generation assets?
There is no export tariff to point at, so the underwriting sits on grid services revenue: frequency response contracts, capacity market agreements, and any behind-the-meter savings you can evidence. The lender still wants contracted income, it is just a different contract. Standalone storage deals take longer to structure and the pool of lenders willing to do them is smaller.
What is a construction-to-term facility and is it worth doing?
It is a single facility that starts as construction finance and converts to long-term project finance once the installation is commissioned and generating. You avoid a second set of arrangement fees, legal costs, and the execution risk of refinancing at a point when you are busy commissioning the project. If a lender on our panel offers it for your deal type, we will flag it.
How do government support schemes affect what a lender will advance?
They matter a great deal. A CfD (Contract for Difference) gives the lender a government-backed floor on your revenue for 15 years, which is about as clean a cash flow underpin as exists. Capacity Market agreements and Smart Export Guarantee payments add secondary revenue certainty. UKIB (UK Infrastructure Bank) also provides direct lending and guarantees for qualifying projects, which can fill gaps where commercial lenders reach their limit. As a broker we cannot promise a rate or an outcome, but contracted government revenue materially strengthens your position at credit.
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Get matched with lendersCoreFi is a trading name of JG Core Ltd (Company #16218779, England & Wales). CoreFi acts as a commercial finance broker and does not provide regulated financial advice. All products described are unregulated business-to-business finance. Information on this page is for general guidance only and does not constitute a formal offer of finance. Terms, rates, and availability are subject to lender criteria and may change without notice.