Glossary Ancillary service Support services ensuring the reliable operation of a power grid. Business as usual CFPP operations without early retirement transactions. Capacity market A market where electricity providers are paid to ensure sufficient generation capacity is available. Capital stack The hierarchy of funding sources for a project, including debt, equity and grants. Carbon Border Adjustment Mechanism (CBAM)A European Union tariff on certain carbon-intensive imports not already subject to carbon pricing (to take effect from 2026). Carbon budget The permissible amount of greenhouse gas emissions to stay within global temperature limits. Coal retirement mechanism (CRM)A financing structure to accelerate coal power plant closure by incentivizing early retirement. Contracts for differenceA financial agreement where two parties agree to pay the difference between the current market price and a predetermined strike price for a specific asset or commodity, typically used in energy markets to stabilize revenues for renewable energy producers. Debt service coverage ratio (DSCR)A financial metric that measures a company’s ability to cover its debt obligations with its operating income. Debt service reserve account (DSRA)A reserve fund established to ensure sufficient funds are available to cover a borrower’s debt payments in case of cash flow shortfalls. Dispatch hierarchy The order in which power plants are called upon to generate electricity, based on factors like cost, availability and grid requirements. Equity value The market value of ownership in an asset or company. Financial engineering The use of advanced financial tools and techniques to design innovative funding structures, optimize costs and manage risks in investment or project financing. Financial re-gearing or re-leveragingIncreasing the proportion of debt relative to equity in an asset’s capital structure. Frequency response A service to stabilize grid frequency after a power imbalance. IDB Invest Inter-American Investment Corporation. Loan tenor extension Increasing the repayment period of a loan to lower annual debt payments. Marginal cost The cost of producing one additional unit of electricity, typically influenced by fuel prices, operational efficiency and system constraints. Net present value (NPV)The current value of future cash flows from an investment, adjusted for time and risk. Payment guarantee A financial assurance that payments will be made to lenders or investors. Power purchase agreement (PPA) or power supply agreement (PSA)Long-term contracts for electricity supply between producers and buyers. Refinancing Replacing existing debt with new debt under different terms. Scaling Financing for Coal Phase-out in Emerging Economies 25

Scaling Financing for Coal Phase out in Emerging Economies 2025