Decarbonisation Technology November 2025 Issue

institutional stakeholders. It reflects the project’s ability to withstand technical, financial, regulatory, and commercial scrutiny (see Figure 1 ). For FOAK decarbonisation initiatives, achieving bankability is both a milestone and a negotiation, balancing innovation with investor confidence. At its core, a bankable project aligns three interdependent pillars: financial viability, technical soundness, and investability. A shortfall in one area increases pressure on the others. Together, they enable structured risk allocation – a prerequisite for attracting capital in today’s risk-averse, policy-driven markets. Financial viability: can the project survive market stress? Financial viability means demonstrating the ability to generate predictable cash flows, service debt, and deliver returns under expected and adverse conditions. FOAK projects need robust financial models as well as scenario- tested stress testing to prove resilience against external shocks and operational uncertainties. The goal is not to eliminate uncertainty but to quantify and contain it within a range that investors can price. A financially viable project demonstrates: • Credible revenue forecasts anchored in validated offtake or market analyses. • Defensible cost assumptions based on vendor quotes, early-stage engineering estimates (Class 3-4, typically reflecting ±20-50% accuracy), and conservative contingencies. • Sensitivity-tested models showing impacts of fluctuating inputs, such as feedstock costs, carbon credit values, or energy tariffs on Internal Rate of Return (IRR) and Net Present Value (NPV). Technical soundness: is the risk manageable? Technical soundness addresses whether technology is reliable and executable. For FOAK projects, integration of individually proven components (such as gasifiers, electrolysers, and reactors) introduces significant execution risk. These technologies, while mature in isolation, have rarely been configured together in a single system. Each unit may perform as expected under standalone conditions, but when combined, interfaces can introduce untested dependencies. Without prior demonstration of

full system architecture, real-world performance can deviate from modelled expectations. Credibility depends on showing risks have been anticipated and mitigated through: • Testing and validation : pilot projects or bench-scale results under realistic conditions. • Independent technical review : third-party verification that the design complies with codes, standards and field data. • Contingency planning : fallback options or system redundancies for underperformance. • Track record of the delivery team : Engineering, procurement, and construction (EPC) contractors’ and project developers’ experience with similar complex projects. Investability: are project terms aligned with the capital market? Even promising technologies falter without the right structure. Investability measures whether project risk-return profiles meet capital market expectations, shaped by jurisdictional, regulatory, and structural elements. Investors look for: • Clear, enforceable contractual (offtake, interconnection, and leases). • Policy alignment with mandates such as ReFuelEU Aviation or the Renewable Energy Directive, which stabilise revenues and streamline permitting. • Sound capital structuring with layered financing, protections for early investors, and credit enhancements. • Transparent governance and permitting paths. The interplay of pillars No FOAK project excels across every dimension. Investors judge the holistic profile. Projects with limited technical precedent may still secure capital if supported by strong policy alignment and guaranteed offtake. Conversely, robust technical solutions in volatile jurisdictions may require credit enhancements. The objective is not perfection but a credible plan for identifying, allocating, and mitigating material risks. For example: • If technical risk is high, does the project have a government-backed offtake agreement or credit guarantee? • If returns are marginal, can policy incentives strengthen the capital stack?