International Energy Project Finance

Project finance is a capital-raising technique frequently employed to build or purchase energy assets that produce reliable cashflows.  The investment’s risks are mitigated through contracts with project counterparties; project capital is sourced among various investors: corporate sponsors, project developers, investment funds, commercial lenders, development banks, export credit agencies.  Projects related to the energy transition to lower-carbon or no-carbon power generation and the parallel expansion of global LNG markets are the most prominent examples of international energy project finance today. The course takes a case-study approach, reviewing these trends and drawing lessons through a survey of international project financings: electric generation both renewables and gas-fired, price-hedged and merchant, along with infrastructure projects linked to natural gas including LNG export/import. Government policies providing incentives for investment in renewables, for promotion of exports, or for monetizing energy resources are featured in this survey. The objective of the course is to provide students with a practical grounding for market participants or policy analysts to appreciate which types of energy projects can attract investors and lenders in current financial markets. The course employs financial modeling and credit risk-rating exercises for students to develop basic skills in identifying the principal project risks, performing cashflow analysis, and measuring the investment and credit metrics for equity and debt capital sources.