Ready to Build RTB

A checklist, not a date

There is no universal registry that stamps a project RTB; the milestone is a checklist, and in any transaction the checklist is written out. The core items recur everywhere: site control (a long-term lease, purchase, or exercised option), the permits construction actually needs (planning or zoning consent, environmental approvals, building permits), an executed interconnection or grid-connection agreement with its milestones and security postings in good standing, and a known connection scope — who builds which works, at whose cost.

Beyond the core, definitions diverge: some buyers require an offtake route, an equipment reservation, or an EPC contract at term-sheet stage before they will call a project RTB; others price those separately.

That divergence is the first diligence point. “RTB” in a teaser is a claim, not a fact — the buyer’s job is to reconcile the seller’s definition against the actual documents, including the expiry dates on every one of them.

Each item is evidence, and evidence has attributes. Site control: which instrument — an option, an executed lease, a purchase — for what term, recorded where, assignable to the project company and capable of being pledged to lenders, with the access and gen-tie easements secured rather than discussed. Permits: granted, past their appeal window, with pre-commencement conditions discharged and not merely listed, because a consent carrying twenty undischarged conditions is a consent you cannot build under.

Interconnection: an agreement executed by every party, milestones met and security posted, network-upgrade costs allocated and funded, and an energization date you can put in a schedule. Financing readiness is the fourth pillar and the vaguest — a term sheet is not a commitment, and even a credit-approved commitment carries conditions precedent that reach straight back into the first three.

Why RTB is where projects trade

Development value is not created evenly. Most of a project’s risk dies in the permitting and interconnection years, so value concentrates at the milestones that prove it: a project that cost tens of dollars per kilowatt to develop can trade at a multiple of that at RTB, because the buyer is paying for retired risk, not sunk cost. In congested markets the scarce asset is often the interconnection position itself — a queue position with a viable grid connection can be worth more than every other item on the checklist combined.

The trade has a standard shape: developers who are good at origination and permitting sell at RTB to recycle capital into the next pipeline, while the buyers — IPPs, utilities, infrastructure funds — bring the balance sheet for construction and operation. Selling at RTB versus carrying through to the Commercial Operation Date is a capital-allocation choice, not a verdict on the project.

RTB, NTP and COD are three different events

RTB means construction could start. The final investment decision (FID) is where the sponsor board or investment committee commits the capital; financial close is where the lenders commit theirs. NTP — notice to proceed — is the contractual instruction to the EPC contractor that it must start, and it is normally issued at or immediately after financial close.

COD is when the finished plant enters commercial service. The gaps matter: months can pass between RTB and NTP while financing closes and equipment slots are confirmed, and a grid-scale BESS then commonly takes on the order of six to eighteen months from NTP to COD depending on scale, grid works, and commissioning scope.

NTP carries conditions of its own, and they are where an RTB claim gets tested for real. Before the owner can instruct the contractor to start, the EPC and supply contracts must be executed at prices the financial model supports, financial close must have happened or happen simultaneously, the permits' pre-commencement conditions must be discharged and any notices to commence served, construction insurance must be in force, and the security package — bonds, letters of credit, parent guarantees — must be posted.

Owners frequently issue a limited notice to proceed first, releasing the contractor to order long-lead equipment such as transformers, switchgear and the DC blocks while the remaining conditions close, because the alternative is holding a delivery slot on goodwill.

The RTB-to-NTP gap is where checklists quietly rot: permits carry validity windows, land options expire, interconnection milestones fall due with payments attached whether or not the project is moving. A project that was RTB in January can be materially less than RTB by December without anyone touching it.

The seller's RTB and the sponsor's RTB

Two parties use the same three letters for different things. A developer selling a project means the fatal development risks are retired and the asset is worth institutional money: land, permits, grid. A sponsor building the project means everything needed to instruct construction and draw debt is in place, which is a longer list — an EPC price, equipment slots, insurance, a financing package with its conditions precedent satisfied. Neither usage is dishonest. They are different tests, and a project can pass the first while failing the second by a wide margin.

So when a teaser says RTB, go looking for the conditions still open. The permit whose appeal window has not expired, or whose pre-commencement conditions are undischarged. The interconnection agreement signed by the development company but not yet transferred to the project company, or carrying a milestone payment due next quarter.

The land option that expires before financing can realistically close, or a lease whose term is shorter than the debt tenor. Network-upgrade costs allocated but unfunded, or a connection scope that still contains utility works at concept design. None of these make the project bad. They mean the price is not the RTB price, and that they belong in the conditions precedent of whatever gets signed.

How it shows up in deals and diligence

In a share-purchase or asset-purchase agreement, the RTB items become conditions precedent and warranties: the seller warrants the permits are in force and unappealed, the interconnection agreement is in good standing, the land documents are as described.

Purchase price often steps with the milestones — a payment at signing, a payment at RTB confirmation, sometimes an earn-out at COD. Buyers re-verify everything independently: the permit under appeal, the interconnection agreement whose network-upgrade costs are still unfunded, and the lease with a decade less term than the financial model assumes are the classic finds.

For financing, RTB is the practical gate to financial close: lenders’ conditions precedent to first drawdown overlap heavily with the RTB checklist, which is one reason the Bankability review and the RTB confirmation usually run together.

Common pitfalls

The recurring mistakes are definitional and temporal. Definitional: assuming RTB includes an offtake contract or a signed EPC — in many markets it does not, and two parties can honestly mean different things by the same three letters. Temporal: treating RTB as a permanent state rather than a snapshot — permits, options and queue positions all age. And the flattering one: reading “RTB” as “under construction” in a pipeline slide. A gigawatt of RTB pipeline is a gigawatt that could break ground, funded and instructed — not a gigawatt that has.