A windfall for investors in clean energy

As the search for new energy sources continues, the financing tools that are to fund renewable energy projects have moved from being a niche investment product into the mainstream of capital markets.

The growing market is supported by the political urge to develop a renewable energy industry, in order to reduce CO2 emissions and to secure energy supplies at a time of uncertainty in many oil-rich regions.

Political support comes in the form of financial incentives for new energy projects, which is where an increasing number of investors are seeing investment opportunities.
“Ten years ago the wind sector was a marginal part of our project finance business. Now it’s a substantial part of the market,” said Emmanuel Rogy, deputy head of energy project finance for Europe, the Middle East and Africa at BNP Paribas. “There were about 10 banks in this market in the 1990s, but now there are 30-40 commercial banks all willing to put their balance sheets behind these projects.”

The growth of the industry and the number of banks entering are driving the development of new financing structures. Competition between banks has given borrowers access to capital at lower margins with longer tenors.

Financial Times