Introduction to Renewable Energy Project Finance

Introduction to Renewable Energy Project Finance

Lachlan Tait

15 years: Renewable energy & project finance lawyer

This video explains what project finance actually is, with a few examples of how it differs from corporate finance. It further highlights the non-recourse nature of this type of financing and explores the role of SPVs and how they turn renewable energy and other large-scale projects from high-risk, high-cost, inaccessible undertakings into more manageable endeavours.

This video explains what project finance actually is, with a few examples of how it differs from corporate finance. It further highlights the non-recourse nature of this type of financing and explores the role of SPVs and how they turn renewable energy and other large-scale projects from high-risk, high-cost, inaccessible undertakings into more manageable endeavours.

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Introduction to Renewable Energy Project Finance

6 mins 54 secs

Overview

Project financing generally targets projects which are not yet built and only exist in the form of legal documents such as contracts and regulatory permits. As such, this area is in many ways an overwhelmingly legal exercise. This video delves into the concept of project finance, with a few examples of how it differs from corporate finance.

Key learning objectives:

  • What is Project finance?

  • What are the key features of project finance?

  • Understand the role of SPVs in turning renewable energy into more manageable endeavours

Now free to watch

This video is now available for free. It is also part of a premium, accredited video course. Speak to an expert today to watch more.

Summary

What is Project finance?

Project financing generally targets projects which are not yet built and only exist in the form of legal documents such as contracts and regulatory permits. In project financings, the borrower is often a weak credit, and its revenue streams are often highly risk-exposed and unpredictable. This unpredictability stems from the type of underlying assets being financed; whereas such assets can be integral to the functioning of an economy, the revenue derived therefrom can be dependent on factors which are not easily predictable.

What are the key features of project finance?

A key feature of project finance is that it involves no, or at least limited, recourse against the sponsors, the ultimate owners of the project being financed. Project finance focuses more or less entirely on the underlying assets of a project, often in the form of a term facility to fund the construction of the project.

What is SPV?

This is a company often referred to as a project company or a special-purpose vehicle (SPV), which is generally the bottom subsidiary in a broader corporate structure. Its only assets will be those required for the project. These assets will initially consist of just a set of contracts and permits; for example, a permit to supply power.

 

Now free to watch

This video is now available for free. It is also part of a premium, accredited video course. Speak to an expert today to watch more.

Lachlan Tait

Lachlan Tait

Lachlan Tait is a lawyer specialising in renewable energy and project finance, and has been for 15 years. For the last 5 years he has worked in-house with renewable energy developers active across a range of jurisdictions, including both developed and emerging markets. He has participated in the negotiation, documentation and closing of numerous renewables project financings, involving a wide range of lenders including smaller national banks and international commercial banks.

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