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Gate 02 of 06

Decision Gate · DG2 · Capital Structuring

Debt, tax equity, and sponsor stack designed as a single optimization problem.

The capital stack decides the IRR. Everything else is execution. Most sponsors structure stacks one provider at a time and end up with a stack no individual provider designed, optimized for the path of least resistance rather than the lowest blended cost. DG2 is where that gets fixed, before financial close locks the structure for the life of the project.

Gate at a glance

Key decisions

What is the optimal blended cost of capital across all sources?
Tax equity flip, transferability, direct pay, or sale-leaseback?
Which bonus credits qualify, and at what substantiation depth?
How does PWA exposure constrain the structure?

Bankable artifacts

Capital stack model with blended cost sensitivity
Senior debt sizing + DSCR memo
Monetization comparison (after-tax NPV)
Bonus credit qualification packages
PWA compliance plan
Common information memorandum
Term sheets in flight, then definitive docs

Common failure modes

Stack assembled in series rather than optimized
Default to incumbent monetization path without modeling alternatives
Aggressive basis without contemporaneous substantiation
Lender-led structure that benefits the bank more than the project

Kill bar

Blended cost of capital exceeds project IRR threshold
No monetization path delivers acceptable after-tax NPV
PWA exposure unresolvable or uninsurable
Tax equity universe declines at deal size or sponsor profile

Sub-gates within DG2

DG2.A

Stack design

Capital stack frozen at optimized blended cost of capital. Sources sized as a single problem.

DG2.B

Term sheets

Term sheets in flight across all providers on a common information memorandum.

DG2.C

Definitive documentation

Credit agreement, intercreditor, security package marked up and converging.

DG2.D

Financial close

All CPs cleared, simultaneous funding, post-closing covenant tracker live.

Deep-dives for DG2

Available now ITC & Tax Equity → Monetization Decision → Project Finance & C-PACE →

The full lifecycle

DG1 Feasibility DG2 Capital Structuring DG3 Procurement DG4 Construction Oversight DG5 Commissioning & PTO DG6 Long-Term Operations

Have a project sizing capital, or term sheets in flight?

Initial scoping calls are complimentary. Conflict cleared on engagement, fee from the client only.

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