High LeverageRelatively high leverage increases interest and refinancing risk and reduces strategic flexibility. In a rising rate or weaker merchant-price environment, elevated debt levels can strain cash flow, limit the firm's ability to invest organically, and may force higher-cost financing or equity issuance.
Volatile/negative Free Cash FlowSubstantial capital expenditures driving volatile or negative free cash flow create a persistent funding need. Even with strong operating cash generation, recurring heavy capex can require external financing, constraining deleveraging, dividend policy, and the ability to capitalize on opportunistic investments over the medium term.
Exposure To Market & Fuel DynamicsDependence on merchant market sales and thermal fuel sourcing exposes margins to commodity price swings and demand cycles. While PPAs provide contracted cash flows, merchant volatility and fuel-cost dynamics make earnings and margins less predictable, a structural exposure that can persist across multiple quarters.