It is the best of times for renewable energy project developers and it is the worst of times for renewable energy project developers, and the difference lies in a single contract.

The existence of a signed power purchase agreement (PPA) between the developer of a renewable energy generation project and an established utility marks the divide between a premium-valuation market for renewable assets and a deeply discounted valuation in an overcrowded market.

In decades past, it would have been difficult to even start the ball rolling on any kind of energy infrastructure asset without a signed PPA or very deep pockets, often in the form of a regulatory mandate. Over the past decade as the utility industry has made initial, incomplete efforts to decentralize, the practice of initiating projects and eventually selling the lion’s share of the completed asset to a utility using some variety of PPAs with established energy providers and access to higher-priced competitive merchant markets became more common.

“PPAs are tough to get now,” Ewing Bemiss Managing Director Henry Berling told the Renewable Energy Finance Forum – Wall Street summit. Ewing Bemiss specializes in biomass transactions, with the fuel a popular baseload alternative in the Southeast US where the Richmond, Virginia-based firm is based. Attracted by the prospect of biomass as a “reliable renewable” alternative to coal, private equity groups have been backing biomass power plant construction and there are ten pending transactions in the sector, Bemiss said.

“The critical item to getting realization on a valuation is the possession of a PPA,” Credit Suisse Power & Renewables Group Director Christopher Radtke said. PPAs are rare because of low power prices, which are in turn depressed both by broader economic woes and the availability of cheap natural gas setting a floor on new power capacity, he said.

If a project has a PPA, there will be an attractive bid for it” – Radtke

“Recent volatility has dampened demand for new issues,” Morgan Stanley Managing Director Kevin Genieser told the REFF conference in New York, speaking on the prospect for initial public offerings of stock as an option for renewable energy project developers seeking an exit.

Late stage project financing is starting to look more like mergers and acquisitions in many of its aspects, Bemiss added.

For earlier coverage from REFF Wall Street this year, check here.

Renewable energy projects are exactly the kind of assets that investors currently in the market for new places to put their money are seeking, but the pension funds and other public finance groups interested in the projects are only slowly becoming comfortable with the construction risk in an energy project, Barclays Capital Managing Director and Head of Alternative Energy John Plaster said at the REFF event.

“There is an education process going on,” Plaster said, and cited growing success in the investment bank’s efforts as it fielded a lot of “reverse inquiry” from investors hoping to find renewable energy assets that matched their investing needs.

International investors, including European high net worth individuals with experience in that continent’s expansion of renewable energy generation and Asian firms looking to expand globally, are interested in renewable energy but still hesitant because of uncertainty surrounding tax policy, several of the bankers said.