In Project Finance, the "Bankability" of a project is almost entirely dependent on the strength of its Offtake Agreement.

This is the contract between the SPV (the seller) and a creditworthy entity (the buyer/offtaker). In the energy sector, this is known as a Power Purchase Agreement (PPA). There are two primary technical structures: Take-or-Pay and Take-and-Pay. Under "Take-or-Pay," the buyer is obligated to pay for a minimum quantity of the product regardless of whether they actually take delivery. This provides the "Revenue Floor" necessary to satisfy debt obligations.

The contract also defines the "Tariff Structure." This often includes a Capacity Charge (to cover fixed costs and debt) and a Variable Charge (to cover fuel and consumables). For projects in volatile economies, the tariff may be "Hard Currency Indexed" (linked to the USD or Euro) to protect lenders from local currency devaluation. This document also explores "Change in Law" provisions. If a government introduces new environmental taxes that increase the project's costs, the offtake agreement often includes a "Pass-Through" mechanism, allowing the SPV to increase the price of the product to maintain its net profit margin and debt-serving capacity. This effectively shifts the "Regulatory Risk" from the project sponsors and lenders to the end-buyer or the host government.