Current trends, challenges and opportunities for Renewable Energy project

Havelet Finance limited

 Current trends, challenges and opportunities for Renewable Energy project finance cannot be over emphasized. Looking back at 2020 and the development of renewable resources, notwithstanding the COVID-19 pandemic, renewable energy continues to be a rapidly growing segment of the economy. In first three quarters of 2020, 70% of all new U.S. power capacity came from renewable energy, almost entirely solar and wind. Expected challenges in project finance include:

Current Trends and challenges for Renewable Energy Project Finance
  1. Is there a significant level of technology risk? Project lenders may not want to be the first to finance an untested technology. Demonstrated successful use will help secure project financing and assure the lender there is a future project owner willing to invest long-term in the project, once de-risked and fully developed.
  2. Does the project have contractual relationships with reputable companies (e.g., offtake for the project’s output, or an agreement to purchase the project once certain milestones are achieved)? Is there a “Plan B” with respect to interest in the project’s output or targeted buyers?
  3. Will there be physical assets sufficient to ensure lender repayment in case of foreclosure including firm, binding agreements for site control and other project contracts? Can the developer secure the loan with assets outside of just the projects? How will the lender share development risk with the developer?
  4. Does the lender expect control and ownership at the company level or solely with recourse to the projects? How will this play out as the development landscape changes and evolves due to changing market conditions, like Interconnection delays and supply-chain issues?
  5. Do the developer and other interested parties have ESG (Environmental, Social, and Governance) or JEDI (Justice, Equity, Diversity, and Inclusion) goals and practices? Are non-financial metrics considered in the projects and processes the company considers?
International Loans, Project Finance,
Location: Austria

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