THE FUTURE OF RENEWABLE ENERGY - RENEWABLE POWER GENERATION, MERCHANT RISK AND THE GROWTH OF CORPORATE PPAS - Acuris
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THE FUTURE OF RENEWABLE ENERGY
RENEWABLE POWER GENERATION, MERCHANT RISK
AND THE GROWTH OF CORPORATE PPAS
2 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 01
CO N T ENT S FOREWORD
Foreword 01
Executive summary 02
01: Renewables – the best laid plans 04
02: The impact of subsidies 12
03: Opportunities and risks in subsidy-free investments 18
04: Corporate power purchase agreements 24
05: Energy storage infrastructure 30
Conclusion 34
The rise of renewable energy has been a success story over
the past decade and, despite a recent fall in investment in
European renewables due to subsidy reductions and auction
access, all signs point towards further growth.
New investment in renewable energy is, however, fast approaching a key milestone:
reliance on subsidy-free power generation. As this milestone is reached, industry
incumbents will have no option but to adapt to what a subsidy-free market means
for the industry and their business models. This new era will present challenges and
opportunities in equal measure. Competitive advantage is likely to be achieved
by those that are best able to understand and manage merchant risk, engage
with and develop corporate power purchase agreements (CPPAs), and help tackle
intermittency through energy storage solutions.
Europe will lead the way in this journey, but the Asian market will follow and Malte Jordan
face the same challenges. In the meantime, fragmented regulation is the primary Co-head Global
hurdle for the growth of renewable energy in Asia. Energy Sector
t: +49 40 800 084 461
WFW has been in the renewable energy sector since its inception and, through mjordan@wfw.com
our sector-focused approach, we have remained at the forefront of the industry
and are well placed to observe these trends. Henry Stewart
This report, based on interviews with 150 senior level investors, financiers, developers Co-head Global
and utilities in Europe, South East Asia and the Middle East, provides insight at this Energy Sector
pivotal moment for the renewable energy sector and identifies regional and global t: +44 20 7814 8404
trends, as well as key issues that will shape the future of renewable energy. hstewart@wfw.com
02 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 03
EXE C UT IV E S UMM ARY The race to invest
in renewables
is accelerating Interest in CPPAs is on the rise
63%
83% 53%
Investment in renewable energy is rising
Government targets for a more sustainable energy mix have resulted in more of respondents in Europe and
power producers decarbonising their portfolios. This, combined with sector- of all respondents say South East Asia agree that the of respondents in Europe
wide technological improvements, has resulted in an increase in investment in they have directly low uptake in CPPAs in some believe an increase in
renewable energy. Two-thirds of developers in our survey expect to be involved invested in, developed regions is due to a lack of availability of alternative
or financed an generators offering CPPAs that PPA structures, e.g consortia
in seven or more projects in the next two years, up from one-third who were
onshore wind are suitable for prospective PPAs and joint tenancy,
involved in the same number of projects in the previous two years. In terms of
project in the past offtakers, e.g. SMEs with lower would be most likely to drive
direct investment, offshore wind, onshore wind and solar photovoltaic (PV) lead power demands
the way with 86%, 83% and 86%, respectively, of respondents directly investing in, two years an uptake of CPPAs among
smaller offtakers
developing or financing projects over the past two years.
Regional differences exist in the need for subsidy support
The European market is sufficiently mature that subsidies are no longer required
to maintain growth, while these are still needed in Asia. In our survey, 70% of
respondents believe that subsidy reductions would have no impact, or in fact have 51%
of respondents overall
a positive impact on M&A activity in Western Europe, while 82% think it would
have no impact on or increase the availability of project finance. This contrasts believe that a net
with 63% of respondents who believe that subsidy reductions in Asia would have reduction in carbon
a negative impact on M&A activity, and 61% who say it would decrease the emissions to meet
company goals is one of
availability of project finance in the region.
the most important
In a European market without subsidies, being able to deal with the benefits for offtakers in
challenges of merchant risk will become increasingly important entering a CPPA
86%
Opinions vary among our respondents as to whether the market is adapting
quickly enough to accept merchant risk, but what is clear is that, while the
availability of project finance will remain strong, changes will be seen in the of all respondents
documentation to manage merchant risk, with cash sweeps and tenor reduction say they have directly The impact of subsidies for renewables projects
becoming more common features. invested in, developed or
financed an offshore
Restrictive and unsupportive regulation is the primary hurdle for the Asian
market to overcome in order to achieve subsidy-free renewable projects
Just under three-quarters (74%) of South East Asia-based respondents cite this as
wind project in the past
two years, with an equal
22%
of respondents say that
52%
of respondents say a
proportion saying the
the main obstacle holding back subsidy-free renewable projects in the region for lower subsidies could have reduction in subsidies
same about solar PV
offshore wind, in contrast to only 43% in Europe. a positive effect on the would have no impact on
availability of renewables M&A opportunities in
Interest in CPPAs is booming, especially as subsidy support is project financing in renewables in Western
being withdrawn Western Europe (rising Europe in the next two
The key to unlocking this potential is through the aggregation of corporate demand. to 30% in the Nordics) years – and 18% say it may
Nearly two-thirds of respondents in Europe and South East Asia consider the lack of even have a positive effect
generators offering CPPAs that are suitable for SME offtakers, who have a relatively
lower power demand, as the main reason for lower uptake. More than half of
respondents cite alternative CPPA arrangements, including consortia and joint 61%
63%
tenancy, as being one of the single most important factors in unleashing CPPA growth. of respondents say that
69%
lower subsidies would
With the rise in intermittent energy, energy storage will play an
have a negative impact of respondents say a
important role in maintaining a resilient energy system on the availability of
of developers expect to reduction in subsidies in Asia
Co-location of batteries with renewable energy projects and increased corporate project finance in the
be involved in seven or would have a negative
self-consumption will likely lead the way. Nearly half of respondents based in Europe renewables sector in Asia impact on M&A opportunities
more renewables projects
are already actively investing in, developing or financing energy storage infrastructure, in the next two years in the next two years in renewables
with nearly all respondents viewing this as a strategy with solid potential for managing
CPPA balancing risks. The rise of batteries may well be linked to the rise in CPPAs.
04 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 05
CH A P T E R ONE
R EN E WABLE S – T HE B EST L AI D PL ANS
The race to invest in renewables is accelerating and intentions are “Renewable energy development still needs Developers are natural pathfinders because they
positive, with developers, financiers, investors and power producers significant capital and other support, and it has understand construction risk and know how to
yet to compete with some other sources of energy deliver complex projects from scratch. Our survey
planning to increase the number of renewable energy projects on when it comes to cost.” confirms that they will continue to set the pace:
their books. How are they taking advantage of the opportunities almost a third of developers say they have taken on
The changing pace of development
while overcoming obstacles? These differences in the market are having a clear
seven or more renewables projects over the past two
years, and two-thirds expect to be involved in seven
impact on the speed and scale of renewables projects or more in the next two years – far ahead of
development and investment. any other group of respondents.
The renewables landscape was once a cautious As a result: power producers are also looking for
and relatively slow-moving space, but it is now ways to decarbonise their portfolios while they
going through a determined transformation. What build their business; investors are looking for new FIGURE 1: How many renewable energy generation projects have you directly invested in, developed
were once considered untested, unpredictable and opportunities as returns from fossil fuel sources begin or financed over the past two years? And how many do you anticipate over the next two years?
unreliable have become proven technologies, from to decline; and businesses of all sizes are looking for
offshore and onshore wind to solar PV power. And safe ways to shift to reliable green energy sources,
governments around the world are taking steps – with many choosing CPPAs as the way forward. Last two years Next two years
some faster than others – to build a more sustainable 0% 0%
The result is an increasingly attractive and active
energy mix, combat the growing impact of climate 0% 1 0%
renewables investment market – although the 5% 0%
change, cut energy costs and free themselves from
transition is not without its challenges. 6% 0%
their dependency on fossil fuels.
While European investors enjoy a relatively 0% 0%
For example, in June 2019, the UK’s National Grid 23% 3%
homogeneous marketplace and more renewables- 2
announced that “Britain is set to achieve a historic 15% 5%
friendly regulations, the Asian market is more 23% 9%
electricity generation milestone this year, with more
fragmented, with inconsistent regulatory environments
electricity generated from zero carbon sources than 12% 3%
and economic uncertainty causing some hesitation 30% 10%
fossil fuels”.1 3
among potential investors. 40% 7%
That same month, France enshrined in law its 31% 20%
Participants in our industry survey understand these
intention to achieve carbon neutrality by 2050.2 31% 3%
regional differences better than anyone. As the 23% 22%
In terms of German domestic power consumption, 4
director of corporate strategy and development at an 7% 10%
the share of renewable sources had already reached 8% 5%
independent power producer in Germany points out,
37.8% by 2018 and the country aims to cut up
“The way renewable energy is looked at in Europe is 20% 11%
to 95% of greenhouse gas emissions by 2050,
completely different to the way it is looked at in Asia or 5% 5 22%
compared to its 1990 levels.3 23% 30%
the Middle East. Renewable energy is not just another 23% 34%
Taiwan has announced plans to phase out nuclear source of energy in Europe – it is seen as the answer to
power after the Fukushima Daiichi nuclear disaster climate change dangers and cutting greenhouse gases 6% 14%
7% 6 15%
and is taking aggressive steps to achieve 5.5GW at the consumer level. People are willing to support a 0% 13%
of installed offshore wind capacity by 2025.4 shift to renewable energy sources.” 3% 9%
Vietnam has set targets for hydro, wind and solar “In Asia and the Middle East, when it comes to 31% 69%
12% 28%
power generation by 2020, 2025 and 2030, renewables, cost is still the deciding factor rather 10%
7+
35%
respectively, aiming to increase the proportion than climate change concerns and environmental 6% 23%
of renewable energy in their power generation issues,” adds the director of investment of a specialist
structure despite their fast-growing power demand.5 renewables/energy investment fund in Singapore.
Developers Financiers Independent power producers/generators and utilities Investors
06 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 07
Offshore and onshore wind and FIGURE 2: Which of the following renewables subsectors
solar PV projects dominate investments have you directly invested in, developed or financed over
“The shift in focus to renewable power sources the past two years? (Select all sectors that apply)
is not surprising, given the steady evolution of the
technology at its heart,” says Henry Stewart, co-head
of the global energy sector at Watson Farley &
Williams. “The days when people asked what would
happen if the wind didn’t blow or clouds blocked the
sun are gone. And renewables technologies have
become increasingly reliable.”
Wave
Offshore wind is a prime example: “It has moved
3%
from a pioneer’s market to mainstream technology
and this is likely to have significant consequences,”
says Stewart. “First, it will produce rapid growth
and larger projects. Second, more offshore wind
developers are likely to enter the market. Third, it
will attract more lenders and increased competition
to provide debt, which means offshore pricing may Tidal
continue to go down.” 11%
Offshore wind is not the only success story. Onshore
wind and solar PV have both become bedrock
investments, an idea that Stewart confirms and our
survey findings support: offshore wind, onshore wind, Geothermal
as well as solar PV had each been invested in by over 13%
80% of respondents over the past two years.
There are still risks of course, many of them driven
by subsidies or a lack thereof. In Europe, there has
Biomass
been limited new solar PV development during 39%
the transition from a subsidy-driven market to an
increasingly subsidy-free/grid parity market. This may
be why only 57% of developers in our survey say they
71%
have invested in solar PV over the past two years.
Hydroelectric power has also seen less activity, Hydroelectric
with around half of respondents saying they have 52%
of investors expect to back four or backed hydro schemes in the past two years. This
is due in part to a lack of available projects – there
more renewables projects over the are few remaining untapped sources for potential
hydropower projects to be developed.
next two years
Geothermal, tidal and wave were the least popular Onshore wind
with respondents over the past two years. Tidal and 83%
wave in particular face significant construction and
technology risks. Tidal has the added challenge
of relying heavily on political sponsorship.
And where developers lead, others follow as the Investors are similarly enthusiastic: 21% acknowledge Respondents see biomass as more promising, but
Solar PV
pipeline grows. Respondents throughout the sector that half or more of their portfolio already includes air quality concerns mean it remains controversial 86%
say they expect to increase their engagement in direct investment in renewable energy generation in some territories.
renewables over the coming two years, with the vast projects and 71% expect to back four or more projects
majority of independent power producers/generators, over the next two years.
utilities and financiers saying they expect to back four
It’s clear that the renewable energy market will
or more projects in that time.
continue to grow significantly and quickly. The only
questions are which technologies will take the lead Offshore wind
86%
where, when and – perhaps most significantly, given
the obstacles many face – how.
08 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 09
33%
Regional focus: Europe leads FIGURE 3: In which countries have you directly invested in, developed or financed a renewable
in renewables investments generation project? And in which country have you most recently done so? (Top results shown)
Europe has dominated renewable energy
development and investment for more than
a decade. What is behind this steady growth?
of respondents overall have Germany 33%
“Support from the authorities, in terms of permitting, already directly invested in, 12%
23%
dealing with environmental constraints and eliminating
administrative and technical barriers, have all been
developed or financed a UK
9%
important drivers,” explains David Diez, regulatory renewable generation Sweden
5%
23%
and public law partner in the global energy sector at
Watson Farley & Williams in Madrid. “For example, project in Germany France 22%
9%
Spain has solid wind and solar resources, and land
available at a reasonable price. But the main driver Norway 15%
has been the government’s energy transition strategy. 5%
Around 50GW of conventional power is expected “Looking forward, the preference is to establish 13%
Spain
to shut down in the next 15 years and this capacity long-term grid-parity projects instead of participating 3%
must be replaced by renewables. Replacing 50GW in auctions, in order to avoid future dependency on 13%
regulatory regimes and dealing with governmental Switzerland
of conventional power capacity will require around 3%
100-120GW of renewables.” bodies,” says Tranchino.
Netherlands 11%
This combination of regulatory policy, greater liquidity 7%
This shift in focus can have a clear knock-on effect
in renewables investment. Historically, Diez points among banks, investors and financial institutions, as 11%
Denmark
out that drastic changes in Spain affected asset well as lower technology costs, has created a positive 3%
remuneration and tariffs were cut retroactively. atmosphere for renewables in Europe. 11%
Thailand
But the government’s renewed commitment to 2%
Regional focus: Asia looms on the horizon
renewables (at a national, regional and local level)
Our survey shows that Germany has dominated
is attracting developers back to the market.
renewables investment up to now, followed by
All countries invested/developed/financed Most recent country invested/developed/financed
The benefit of a stable regulatory regime is most the UK, Sweden, France, Norway, Spain and a handful
evident in the UK and German markets. Malte of other European markets. But it also suggests that
Jordan, co-head of Watson Farley & Williams’ global investors see future opportunities in Asia. Activity in the
energy sector, based in Hamburg, notes that “the region reflects a growing interest in renewables and
well managed support shown through subsidies has many hope to get in on the ground floor.
enabled the growth of infant technologies to a stage banks increasingly unwilling to finance coal projects, This balance between the enormous potential
“The renewables market in Asia is being driven in
where the markets are now, broadly speaking, close combined with the demand for power in the country of the Chinese market and the difficulty for foreign
part by structural energy shortages rather than purely
to achieving grid parity”. forecast to grow at 10% annually, the development investors is well understood by Stergoulis, who notes:
environmental factors,” says Evan Stergoulis, partner in
of a renewables market in Vietnam is essential. “China is a big market, but it’s more of a Chinese-
“Across Europe, many new projects are now being the global energy sector at Watson Farley & Williams.
to-Chinese market and it’s difficult to access for
developed under CPPA schemes,” adds Diez. Not all change is structural, however, and some shifts
“For example, Taiwan is reluctant to rely on nuclear foreign investment.”
“We are seeing more and more companies with to renewables can be attributed to environmental
power in the wake of Fukushima and there’s limited
100 per cent renewable energy consumption targets factors. As Christopher Osborne, a corporate partner This insight is well supported by the survey results.
scope for onshore wind because the country is
that are considering CPPAs rather than using electricity in Watson Farley & Williams’ global energy sector While half of respondents in our survey believe the
mountainous. Offshore wind has become a natural
suppliers with guarantees of origin, which are not in Bangkok, highlights, the expansion of renewable best offshore wind investment opportunities will be
choice, notwithstanding typhoon and earthquake risk.
considered reliable enough from an additionality energy in Thailand reflects aspirations for cleaner offered by Germany, China comes a close second and
The structural need for energy, the declining cost of
perspective. These projects do not depend on energy sources to meet anticipated increases in it leads the pack in onshore wind with more than half
offshore wind and the ability to build up its own local
regulatory remuneration, so the impact of potential demand. This is evident in the recent increase of seeing it as providing the most attractive investment
supply chain have really kicked off the programme.”
regulatory changes on the income of projects like non-hydro renewable targets from 20% to 30% by opportunities – well ahead of Germany. And with
these is much less than a few years ago.” Japan is following suit, albeit a bit more slowly, 20367, as well as protests against coal projects that solar PV, China’s lead is even more decisive: two-thirds
says Stergoulis: “The Japanese government prevented the expansion of two coal fired power of respondents rank it best for investment opportunities
This assessment is notably seen in Italy, where the
acknowledges that reliance on fossil fuels and plants that would have generated 2,800MW.8 versus just over a third selecting the US and Germany.
government has recently launched a 5.5GW series
nuclear is not sustainable. This is partly driven by
of tenders for renewable energy subsidies.6 Eugenio Recent developments – including EDF’s landmark These results strongly indicate the market shares
green concerns, but it’s more to do with a structural
Tranchino, partner in Watson Farley & Williams’ agreement with state-owned China Energy our view that while opportunities to invest in China
change in the energy mix.”
global energy sector, based in Milan, explains Investment Corporation to jointly develop an offshore are large, and respondents view China as being
that “despite this new regime, which shows strong Similarly, Linh Doan, partner in Watson Farley wind power project9 – also suggest that China’s one of the most attractive investment opportunities,
government commitment, the PPA market is now & Williams’ global energy sector in Vietnam traditionally closed renewables market is opening up fundamentally it is still a challenging market to break
where most solar and wind investors and developers explains that, to date, Vietnam has been reliant on and investors are taking note, although opportunities into for foreign investors and, in the short term,
are focussing their efforts”. conventional and hydropower, but with international remain limited. opportunities in Asia may lie elsewhere.10 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 11
FIGURE 4: Which countries do you think will
provide the best opportunities for investment
in offshore and onshore wind, and solar PV? U.K.
(Select top three countries; top results shown) 13% 16% 19%
Norway
15% 17% 18%
Sweden
15% 24% 31%
13% 15% 15%
Denmark
Germany
France Switzerland
36% 39% 50%
13%
China
U.S.A.
24% 33% 39%
India
12%
13%
47%
36%
10%
12% 53%
South
Africa
Legend 62%
Offshore wind
7%
Onshore wind
Australia
13% 12% 12%
Solar PV12 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 13
CH A P T E R T WO FIGURE 5: How do you think a reduction in subsidies or other support might impact
M&A opportunities in the renewables sector in the next two years in the following regions?
T H E I MPAC T O F SU B SI DI ES The Nordics 16% 64% 20%
Western Europe 30% 52% 18%
1%
Middle East 63% 36%
As renewable energy becomes the norm, backed by subsidies and other
forms of support, governments are now assessing whether such subsidies
are still required. But what does a shift to “subsidy-free” mean for M&A Asia 63% 37%
and project financing in the sector?
Negative impact No impact Positive impact
22%
Governments across Europe are looking to wind “The renewable energy sector in Europe has already in both regions in the short term. A reduction
down subsidies for renewables projects. The sector’s adjusted itself to changing subsidies and is no longer in subsidies and support will naturally slow down
maturity and lower costs are making the political dependent on them for development,” says the growth in renewable energy, making it difficult
case for subsidies harder to justify. In short, the managing director of a project financier based in to sustain M&A activity.
sector is under pressure to go it alone. Finland. “M&A activity in renewable energy is strong of respondents believe that a
“In Asia, cost is the primary driver and, in such
Market participants are somewhat divided on
and is a very attractive option for investors, especially
institutional investors. Renewable energy is turning out
a young market, any decrease in subsidies will create reduction in subsidies or other
the impact of any subsidy reduction or removal. a slowdown in the market as a whole, and this in turn
For example, our survey suggests that 18% of
to be a great opportunity for alternative investment
will impact M&A activity,” says Osborne. He further support could have a positive
that offers long-term, high-value returns for corporates
respondents see a move away from subsidies in
and power companies. It gives them the diversification
explains that subsidy decreases in one Asian country impact on the availability of
Western Europe as advantageous for longer-term can result in an internal slowdown but increased
decision making. While seemingly counterintuitive,
they need while also promising growth.”
activity elsewhere in the region: “A recent absence of project finance in Western
this is likely to reflect the fact that, while government The director of corporate strategy and development subsidised PPAs above 10MW with Thai state offtakers
support has played a big part in growing renewables, at an independent generator/power producer in has resulted in an increase in outbound M&A activity as Europe in the next two years
it has also left the sector vulnerable to policy shifts. Germany agrees: “Subsidies in Europe now really do Thai developers look to Myanmar and Vietnam for both
not play a big role in renewable energy development. greenfield and operational wind and solar projects.”
However, it would be an oversimplification to see
They have become cost competitive through A notable proportion of respondents go so far
subsidy withdrawals or reductions alone as the Impact on project finance
innovation and strict government policies regarding as to argue that a decrease in subsidy support
primary cause of this shift in sentiment. Instead, the As with M&A opportunities, our survey shows that
carbon emissions. Companies and investors could increase the availability of project finance
increasing maturity of renewable energy markets – renewables industry players in Europe believe that
understand its potential, so they will increase their in Western Europe (22%) and the Nordics (30%),
of which subsidy withdrawals and reductions are a a reduction in subsidy support would have no short-
investments in renewable energy, which will lead to and this mirrors the response seen with regards
symptom – is boosting confidence among lenders term impact on the availability of project finance.
increased M&A activity.” M&A opportunities.
and buyers.
In fact, the outlook for European renewables M&A This positive perspective is also indicative of a
Subsidies, support and M&A activity maturing market, in which early adopting banks will The message is clear: renewable energy projects
activity is so promising, according to the managing are becoming stable enough in Europe to no longer
There is a clear move towards subsidy-free development director of an investment firm based in Switzerland, remain, but will now also be joined by other lenders
in both Western Europe and the Nordics, and most that have an increasing desire to bulk up their green require subsidies to maintain their growth. For a
that there is a call from some companies and growing number, removing subsidies is seen as a
respondents in our survey believe this will have no investors to cut subsidies entirely “so that renewable and sustainable financing portfolios – renewables
impact on M&A opportunities in those regions. Indeed, projects tick the right boxes. vote of confidence. Given the historic reliance on
energy can be free from government involvement, subsidies, this seems surprising, but it suggests that
a significant proportion see subsidy reductions as which will make the industry more robust and open”. And as the director of corporate strategy and once grid parity is reached and subsidies are no
having a positive impact both in Western Europe (18%)
The renewables market in Asia and the Middle East, development at an independent generator/power longer required, more lenders will be willing to lend
and the Nordics (20%). This suggests that purchasers
by contrast, is not as mature and almost two-thirds producer in Germany points out, “regardless of and there will be one less hurdle (accreditation or
are comfortable with the risk and have been able
of respondents argue that a reduction in subsidies subsidies or government support, project financing equivalent) to overcome. The focus is shifting away
to build a subsidy-free renewables market into their
would have a negative impact on M&A opportunities in the renewable energy sector in Europe is going from subsidies and on to achieving grid parity, as
revenue forecast models.
to increase”.14 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 15
well as the use of longer-term CPPAs to manage “It may not have been significantly used in the past for
merchant risk and allow more consumers to take renewables projects, but the same considerations and
advantage of a renewable energy mix. principles apply and the same project finance teams
involved with the financing of renewable projects have
In Asia and the Middle East, the outlook for project
been financing other infrastructure projects, including
finance is once again markedly different and again, it
conventional power generation projects, on an
is a question of maturity. The adoption of renewables in
ongoing basis – in some countries, like Indonesia and
Asia and the Middle East is still relatively nascent and it
Vietnam, it’s been happening for over a decade.”
is too early for these regions to be weaned off subsidies
entirely. Asia’s vast renewables market is also much The difference is that, with the exception of a few
more heterogeneous than in Europe and investors may outliers, very few renewables deals in the region have
be wary of entering this relatively new territory. been done on a “traditional” non-recourse project
finance basis in the manner with which international
The fragmented nature of Asia’s renewables markets
European banks are familiar. This may be a function of
is probably most apparent among the 10 countries of
the size of the earlier Asia-based developers and the
the Association of Southeast Asian Nations (ASEAN).
familiarity of the regional banks with the asset class.
All 10 ASEAN members have set a target of achieving
According to Er, banks did not historically view
23% of their power generation from renewable
renewables as a separate asset class. Instead, many
energy sources by 2025.10 At present, only five ASEAN
regional commercial banks and some international
members, namely Indonesia, Malaysia, Thailand,
ones, treated renewables as a subset of their regular
Singapore and, most recently, Cambodia, have
corporate lending business. Developers were often
moved to some sort of competitive bidding process
offered corporate lending products rather than
for renewable energy generation projects. Rather than
project finance, mostly because early renewables
signalling a stable renewables market and a new
projects were not deemed to be sizeable enough
opportunity for investment, any hint that subsidies may
or sufficiently bankable. An exception to the above
be withdrawn is going to be scrutinised very carefully.
approach would be the renewable projects that were
At the same time, project finance is not a new funded by multilateral agencies such as the Asian
arena for countries in the region. Options have been Development Bank.
available to fund infrastructure projects throughout
Asia for years.
“The project finance market in Asia is generally
mature,” says Shawn Er, a finance partner in Watson
Farley & Williams’ global energy sector in Singapore.
FIGURE 6: How do you think a reduction in subsidies or other support might impact the availability
of project finance in the renewables sector in the next two years in the following regions?
The Nordics 8% 62% 30%
Western Europe 18% 60% 22%
1%
Middle East 62% 37%
1%
Asia 61% 38%
Negative impact No impact Positive impact16 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 17
58%
This may explain why so many respondents in our FIGURE 7: How well do you think the financing market is adapting to a greater degree of merchant risk?
survey believe that any reduction in subsidy support
in Asia (61%) and the Middle East (62%) will have a 0%
The market is not adapting/ 2%
negative impact on the availability of project finance hardly adapting at all 2%
in those regions. of financiers believe the 6%
At the same time, 38% of our respondents believe financing market is adapting 26%
25%
that a decrease in subsidy support in Asia will have The market is adapting slowly
no impact on the availability of project finance. to accept a greater degree 31%
35%
“While this is significantly lower than Western Europe of merchant risk quickly, The market is adapting quickly,
46%
58%
and the Nordics, it is higher than anticipated,” says
Er. For example, the initial proposed reduction of but not quickly enough but not quickly enough 30%
46%
Taiwan’s offshore wind FIT by 12.71%, announced in
28%
2018, created a significant backlash in the industry The market is adapting 15%
and resulted in some developers announcing that However, some are circumspect about rushing sufficiently quickly 33%
17%
they would reconsider their investments. Since then, headlong into uncharted territory: “It takes time for
the government has adjusted its plans and reduced the investor market to understand the application of Financiers
Developers Independent power producers/ Investors
FITs by just 5.71%.11 risks,” cautions the head of finance at a utility based generators and utilities
in the Middle East.
“All of this suggests a market that is largely still
not prepared to thrive in a subsidy-free environment,” Projects that rely on exposure to wholesale electricity
he adds. markets, without the safety net of price guarantees, FIGURE 8: How well do you think the developer/investor market is adapting to a greater degree of merchant risk?
present a new type of risk for lenders. This is likely
Merchant risk
to have repercussions throughout the financing 6%
Clearly, any reduction in subsidies and other forms The market is not adapting/ 5%
ecosystem. Banks, for example, are likely to respond hardly adapting at all
of support can have significant implications for 2%
to increased merchant risk by requiring cash sweeps, 0%
project finance and investment, but both are still potentially making renewables a more challenging
viable without subsidies, provided merchant risk proposition for equity investors. This, in turn, is likely
26%
The market is adapting slowly 20%
is properly managed or mitigated. to stimulate demand for alternative non-bank finance. 35%
23%
The financing market is adjusting quickly to the While a majority of respondents in Europe believe that
idea of a post-subsidy world. project finance will remain available in a subsidy-free
48%
The market is adapting quickly, 60%
“Given the more market-driven approach and rapid market, over half of respondents overall think that but not quickly enough 45%
cash sweep or other tenor reduction mechanics will 60%
development happening in the renewable energy
sector, the financing market is adapting to the become a standard feature of project finance loans for 20%
The market is adapting 15%
merchant risk involved quite quickly,” says the head projects that are exposed to merchant risk. This rises to sufficiently quickly 18%
of finance at a developer in France. “The energy 68% among independent power producers/generators 17%
market is transitioning and the financing market has and utilities.
to develop ways to manage that risk effectively to As with the evolution of any new business model, new Developers Financiers Independent power producers/ Investors
make a competitive offer for investment.” generators and utilities
approaches and protections will need to be tested
However, some respondents question whether the to determine what works and what does not. The
financing market is moving quickly enough to accept wind subsector underlines this point: 15 years ago, FIGURE 9: Do you think cash sweep or other tenor reduction mechanics will become a standard feature
a greater degree of merchant risk. success hinged on predicting wind resources and of project finance loans for projects that are exposed to merchant risks?
understanding turbine technology; today, reliable
Opinions on the financing market vary greatly among technical modelling is a given. The challenge now 46%
the different respondent groups: 58% of financiers is predicting power prices and having the necessary 58%
Yes 68%
think it is adapting quickly, but not quickly enough tenor reduction mechanics in place to mitigate risk. 49%
versus just 30% of independent power producers/
generators and utilities respondents. 28%
22%
No
As for the developer/investor market, 53% of 22%
respondents think it is adapting quickly, but not quickly 23%
enough to accept more merchant risk. Financiers and 26%
investors are the most likely to say this (both 60%), while Not sure 20%
10%
independent power producers/generators and utilities 28%
are the least (45%).
Developers Financiers Independent power producers/ Investors
generators and utilities18 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 19
CH A P T E R T HRE E
O P P O R TUNITIE S AND R I SKS
IN SUBS IDY- FRE E I NVESTM ENTS
The outlook for subsidy-free investment opportunities is bright – FIGURE 10: When do you think a notable number of attractive subsidy/support-free investment opportunities
it’s simply a matter of where and when. are likely to become available for the following renewables? (Select one for each)
Offshore Onshore Solar PV
Those working on the renewable energy frontlines, The right time and place to invest 11% 7% 7% 5%
15%
22%
particularly in Europe, can already see a future with Future investment opportunities vary significantly 18%
subsidy and support-free investment opportunities in by geography. Attractive subsidy-free investment 26%
solar PV and onshore and offshore wind. opportunities may be within reach in Europe, Europe
25%
“The main driver behind subsidy-free projects is the but local governments throughout Asia are
levelised cost of electricity (LCOE) coming down,” says proceeding at very different rates. 49% 60%
Jordan at Watson Farley & Williams. “Fundamentally, While China has announced it will prioritise 55%
LCOE is driven down by lower capex/opex and subsidy-free wind and solar12 – and reduce
greater simplicity in the permitting process.” curtailment rates13 – some governments are
proceeding with caution, even where renewables 3% 7% 3% 7% 3%
In Germany, for example, the relatively cumbersome 20%
permitting process has contributed to higher LCOE in Europe have reached grid parity. But they are
and has slowed the reduction of capex in onshore taking steps, and there is clear interest among 27%
30%
investors and financiers alike. South 40%
wind compared to other jurisdictions. But Germany East Asia
is on the brink of its first subsidy-free projects and, “Investors are deploying hundreds of millions in 50%
in particular, solar PV projects have already enjoyed equity in the Asian market,” says Stergoulis. “In 63%
a degree of subsidy-free success. countries like Taiwan, where you have political risk 47%
What is particularly interesting is the market’s bullish and less currency liquidity, the export credit agencies
view of offshore technology. Respondents in our are unlocking project finance: without the export
credit agencies, you wouldn’t have large financings There are already a notable Will likely take 1-2 years Will likely take 5-10 years
survey clearly see offshore wind projects as capable number of attractive subsidy-free
of thriving in a post-subsidy world. This is despite going through. In more established markets like Will likely take 3-4 years Will likely take more than 10 years
investment opportunities
the fact that they are significantly more complex and South Korea and Japan, there is plenty of project
require much higher capex than either onshore wind finance. But all of this investment relies on tariffs –
or solar. Subsidy-free or zero-bids were pioneered in otherwise no one would take the risk.”
Germany’s 2017/2018 auctions, which produced These different levels of regional optimism are In South East Asia, by contrast, subsidy-free Regulation: beating the blockers
the world’s first subsidy-free bid for offshore wind, clearly shown in our survey findings: 60% of opportunities are expected to emerge one after What is holding back the development of subsidy-
and many other jurisdictions have since followed suit. respondents in Europe say that it will only be a the other over a longer period, with solar PV first, free projects? Overall, it’s a mixed picture, which is
couple of years before a number of subsidy-free followed by onshore wind and finally offshore wind. to be expected given the bullish outlook on subsidy-
“Capex levels need to come down to the point where
a project can thrive in a subsidy-free environment, investment opportunities emerge for onshore Almost two-thirds of respondents say it will take free opportunities. Lenders are willing to take a
based on the prevailing power prices. Those who have wind, while only 7% of South East Asia-based anywhere from five to ten years for subsidy-free degree of risk and allow developers operational
made zero-subsidy bids in offshore auctions are, to respondents say the same. offshore wind investment opportunities to reach flexibility to drive down costs through the lifetime
some extent, speculating on capex coming down by significant numbers. of the project, and this trend is likely to continue.
The homogeneity of Europe’s technology timeline
the time they have to deliver the project,” adds Jordan. is also notable. Solar PV, onshore wind and For example, economies of scale are particularly
“We have yet to see a fully subsidy-free offshore offshore wind are all marching (more or less) in important in bringing down capex as a percentage
project that has achieved its commercial operation step, with all three expected to offer subsidy-free of total spend in offshore wind projects. But if
date, when the system becomes fully operational and investment opportunities in the near term among developers are going to drive down capex by
can begin selling power under the terms of the PPA.” survey respondents.20 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 21
FIGURE 11: Which of the following do you see as the biggest obstacles holding back the development FIGURE 12: Which of the following do you see as the biggest obstacles holding back the development of subsidy/
of subsidy/support-free projects? (Select top three) support-free projects for the following renewables? (Select top three, regional splits)
66% Offshore wind
Bankability concerns 53%
56% Bank/financial institutions “aren’t ready” to move away from 63%
Bank/financial institutions long-term contracted revenues at the start of construction 71%
“aren’t ready” to move away from 57%
65% Levelised cost of electricity in the 63%
long-term contracted revenues 54%
52% relevant jurisdiction is still too high
at the start of construction
43% Bankability concerns 52%
Levelised cost of electricity in the 51%
60%
relevant jurisdiction is still too high 56%
Restrictive/unsupportive/complex 43%
34% policies and regulation 74%
Increased technology risks 22%
Low demand from potential electricity buyers 31%
46%
and/or underdeveloped CPPA market 21%
30%
Risk of cannibalisation 21% Increased technology risks 26%
20% 11%
50% Risk of cannibalisation 22%
Restrictive/unsupportive/complex 18%
51%
policies and regulation 43%
Low demand from potential 20% Onshore wind
electricity buyers and/or 28%
underdeveloped CPPA market 27% Bank/financial institutions “aren’t ready” to move away from 55%
long-term contracted revenues at the start of construction 63%
Onshore wind Offshore wind Solar PV Levelised cost of electricity in the 42%
relevant jurisdiction is still too high 47%
Bankability concerns 66%
70%
scaling up, then a reasonable and stable regulatory A different story emerges in Asia, where restrictive, 48%
Restrictive/unsupportive/complex
environment surrounding onshore grids becomes unsupportive and complex policies and regulations are policies and regulation 53%
even more important. This is an area where clear obstacles, particularly for offshore wind projects. Low demand from potential electricity buyers 22%
developers may still be dependent on the local and/or underdeveloped CPPA market 13%
“EU regulations have an impact on all countries
government, even in a subsidy-free environment.
within the EU, but there are currently no equivalent Increased technology risks 38%
“In Europe, the stable regulatory environment is already supranational regulations in Asia,” says Jon Thursby, 17%
allowing for a transition to subsidy-free projects,” says a projects partner in Watson Farley & Williams’ global 29%
Risk of cannibalisation
Jordan. “These projects are often backed by CPPAs to energy sector in Singapore. “The regulatory regimes 37%
help stabilise the cash flow – and we’re already seeing of the countries hosting renewables projects can vary
these in Spain and the Nordics.” dramatically. Further, although the regulatory regimes
Solar PV
in some countries in Asia, such as Taiwan, are well
There is also the question of regulation as it relates
established, regimes elsewhere in the region were only Bank/financial institutions “aren’t ready” to move away from 53%
to capacity: is the existing grid capable of consuming long-term contracted revenues at the start of construction 51%
introduced very recently or are still being developed.”
the electricity that will be generated by a hypothetical
Levelised cost of electricity in the 61%
offshore wind project? If not, there is significant Policy and regulation to support offshore wind are still
relevant jurisdiction is still too high 44%
curtailment risk and this is even more acute in works in progress in the region. Thursby highlights
offshore wind projects, which have a single point that “Japan has only recently passed legislation on Bankability concerns 51%
74%
of access to the grid. setting up a national framework for offshore wind that,
among other things, addresses fishing rights, which Restrictive/unsupportive/complex 43%
As Jordan notes: “If the grid has not been policies and regulation 40%
are particularly contentious in Japan”.
sufficiently upgraded, it may not be possible to feed Low demand from potential electricity buyers 29%
in that electricity on a technical level. Therefore, Meanwhile Doan adds that, in Vietnam, there is and/or underdeveloped CPPA market 17%
understanding the regulatory answers to curtailment currently uncertainty over which government entity is 46%
risk is becoming increasingly important, as well as ultimately responsible for granting offshore sea rights, Increased technology risks
44%
helping evaluate the consequences of the offshore as well restrictions on mortgaging assets and sea
Risk of cannibalisation 17%
project being compensated for electricity it is not sites to lenders. 30%
able to feed in because the grid has not been
sufficiently upgraded.”
Europe South East Asia22 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 23
74%
Supportive and unambiguous policies and Lack of subsidies: the impact on returns FIGURE 13: Do you think that if a renewable project
regulations are vital for the development of offshore The renewables market is somewhat divided over were subsidy/support-free, it would result in a tightening
wind, which is complex and risky. While the market the impact that a lack of subsidies might have of the assumed IRR?
is demonstrably comfortable dealing with technology on the anticipated internal rate of return (IRR) in
risk (in Asia, adaptations include dealing with of respondents in South East investments, but the overall trend is positive.
deep water installations and managing typhoon
resistance), it is much less sanguine about the
Asia believe that bankability Yes
“We understand the true potential of renewable Yes 58%
74%
60%
potential impact of regulation. Three-quarters (74%) is one of the biggest obstacles energy and believe that it will not depend on subsidies
No
or government support in the future,” says the
89%
of respondents in the region cite this as a blocker.
holding back the development managing director of a project financier in Finland.
No
26%
42%
The sense that Asian countries need to up their “We are among those investors who believe that 40%
regulatory game is not restricted to offshore wind, of subsidy-free solar PV projects subsidies restrict the potential of renewable energy, so 11%
as the Mumbai-based managing director of a we are open to taking risks when investing in projects.”
project financier points out: “Because of poor policy Developers Financiers
A healthy proportion of survey respondents seem
implementation by regulators and complex policies,
Bankability concerns are holding back to agree: nearly a third say it would not tighten the Independent power producers/ Investors
renewable energy investments continue to remain in
subsidy-free renewables projects assumed IRR. And even those respondents who predict generators and utilities
the nascent stage in most of Asia. New investment
The transition to subsidy-free renewables is one of the that subsidy-free projects will temper IRR expectations
and progress in development will remain slow until
biggest systemic changes the industry has faced to cannot be assumed to be ruling out investment.
more effective policies are implemented. We need
regulations and policies that reduce the risks, and date. The situation is complicated by the speed with
As has already been pointed out, a majority of FIGURE 14: Do you think that if a renewable project
those policies should be flexible to adapt to new which some renewables are approaching grid parity.
respondents believe there will be attractive subsidy- were subsidy/support-free, it would result in a tightening
technologies and changing markets quickly.” In the case of utility-scale solar PV, for example, the
free investment opportunities for onshore, offshore of the assumed tenor of any available financing?
price has declined so fast that it is already cheaper
and solar in the very near future, although it is
A clear example of a successful flexible approach, than coal in some geographies.
open to debate whether these respondents have
and one that highlights how specific sectors in certain 69%
The shifting interplay of costs, revenue and subsidy assumed they will be able to mitigate increased 50%
countries can flourish, is the deployment of solar Yes
for each renewable technology makes weighing up levels of merchant risk through alternative 47%
rooftops in Thailand, which has resulted in subsidy- 71%
the bankability of projects increasingly complex. instruments, such as CPPAs.
free projects.
31%
“The key issue in Asian renewable project finance is Investors in our survey are the ones most likely to 50%
As Osborne notes, “solar rooftop developers are No
the bankability of any given project in the particular believe a lack of subsidies will tighten the anticipated 53%
in fact selling electricity to commercial users at a 29%
jurisdiction and the credibility of the developers IRR, with 89% saying this is the case versus 58%
discount to the prevailing government tariffs”.
involved,” says Er. among financiers at the other end of the scale.
Of the obstacles identified, it is encouraging to see Investors are also most likely to point to subsidy-free Developers Financiers
the relatively low rank given to technology risk and “Government subsidies, such as feed-in tariffs,
projects tightening the assumed tenor of available
low power demand among survey respondents in increase the bankability of those projects for Independent power producers/ Investors
financing (71%). generators and utilities
both Europe and Asia. As renewable projects and international banks, providing certainty of revenue.
And while the fact that many banks have a mandate In terms of the impact of subsidy removals on
the underlying technology are better understood
to increase their participation in green financing is technological innovation, the regional differences
by lenders, covenant packages in respect of the
helpful to the growth of the industry, it will not be highlighted in our survey findings are stark: 84% of FIGURE 15: How do you think a future reduction in subsidies/
operation of projects are likely to be loosened,
enough to enable governments in Asia to withdraw respondents in South East Asia believe that a lack support and benefits for renewable generation projects would
allowing developers to improve their projects.
subsidies for renewables projects entirely.” of subsidies/support/benefits would slow the pace
affect the pace of technological advances in the sector?
As Stewart points out, “this has already been of technological advances in the sector versus just
seen in covenant packages, which potentially Looking at onshore wind, two-thirds of respondents
16% in Europe. In fact, 42% of respondents in Europe
allow UK solar projects to include a battery overall agree that bankability concerns are the
argue it would speed up technological advances. Cause it 16%
storage component retrospectively”. biggest obstacle holding back the development 84%
to slow
of subsidy/support-free projects. As the subsidy-free era draws closer, especially
in Europe, attention is rapidly turning to what Have no 42%
A similar percentage of respondents say that subsidy/ effect 13%
replacement long-term, sustainable and guaranteed
support-free offshore wind projects are being held 42%
sources of revenue will be available to renewable Cause it to
back by banks and other financial institutions that speed up 3%
energy projects.
aren’t ready to move away from long-term contracted
revenues at the start of construction. More detailed questions on the role of PPAs and Europe South East Asia
new trends in the market, particularly CPPAs, are
Just over half of European respondents also believe
becoming increasingly important.
that bankability concerns are an obstacle for solar
PV – rising to 74% among respondents in South East
Asia. Meanwhile, 61% of respondents in Europe say
the high LCOE in the jurisdiction is an obstacle to
subsidy-free solar PV projects.24 WATSON FARLEY & WILLIAMS THE FUTURE OF RENEWABLE ENERGY
Renewable power generation, merchant risk and the growth of corporate PPAs 25
CH A P T E R F O UR
CO R P O RATE P O WER
P U R C H AS E AG RE EM ENTS
CPPAs are on the rise as more businesses strive to improve their green credentials FIGURE 16: Which of the following do you believe are seen by offtakers to be the most important benefits
while also controlling their energy costs. But there are still obstacles to be overcome. to committing to a CPPA? (Select top two)
49%
Net reduction in carbon emissions 53%
to meet company goals 47%
The growth in the use of renewable CPPAs is Drivers of growth in CPPAs 58%
continuing to make waves in the market. The likes of CPPAs are attractive to both offtakers and generators 49%
Google, Mercedes-Benz, Unilever and Amazon have alike because they meet multiple goals, including Ability to market company 45%
been grabbing headlines over the past few years with access to finance, carbon reduction, price and as sustainable 50%
58%
their entry into renewable CPPAs – Amazon alone revenue certainty, security of supply and risk control.
has now entered into CPPAs for a reported 1.3GW 43%
of green generation capacity globally.14 The influence For renewable generators and their financiers, Savings in cost of power 48%
a key attraction of a CPPA is predictable long- 53%
of these pacesetters should not be underestimated. 35%
term revenue. This helps to secure funding for
“Clients are increasingly interested in the potential for new projects, which is increasingly important as 34%
corporate offtake. This is no longer a niche position, government subsidies for renewables in Europe and Price certainty 32%
35%
and even relatively traditional players are now looking elsewhere are slowly withdrawn. 26%
at this for a number of their projects,” says Diez.
Long-term revenue certainty can also be obtained 25%
Interest in CPPAs is not limited to European or US Increased security of supply via 22%
by generators entering into long-term PPAs with diversification in power sources 15%
markets either, and there is an expectation that they traditional utility offtakers on the basis of fixed or 23%
will also develop a substantial role in Asian markets floored prices. While this is a stable, growing market,
in the near future. the scope for significant increases for such contracts Developers Financiers Independent power producers/generators and utilities Investors
“There has been an increase in CPPAs over the is viewed as relatively limited compared to that for
past couple of years and this will prompt better the young CPPA market.
acceptance rates in the coming years as well,” CPPAs can also provide generators with access to For offtakers, CPPAs offer a similar list of potential While we expect that, over time, these would give
says the CEO of an independent generator/power higher electricity prices: while utility counterparties benefits. CPPAs can provide offtakers with access way to other considerations, these are currently the
producer in Singapore. come to PPA negotiations benchmarking against to cheaper power (as compared to retail pricing), primary drivers for offtakers.
wholesale prices, corporate counterparties, and greater certainty of cost and security of supply
CPPAs: what are they? “The sustainability provisions that are now available
particularly smaller ones, are often benchmarking over long-term horizons than would be available under
A renewable CPPA is an agreement for the sale have been one of the main reasons for the surge in
against retail. conventional electricity sourcing arrangements. This is
and purchase of electricity between a renewable CPPA uptake and changes in pricing structures aimed
particularly attractive to energy-intensive businesses.
generator (such as a windfarm operator) and a Some financiers also look to CPPAs to provide risk to be beneficial to the corporate setting would be one
company that needs to buy electricity for its own use diversification within their portfolios. But it is the need to both be green and to be seen to of the key drivers,” says the director of M&A at a utility
(as opposed to a supplier or reseller that intends to be green that is also a key draw of CPPAs for offtakers, based in Spain.
“With the utility-offtake model, the ultimate credit driven in large part by shifts in consumer expectations
on-sell the electricity).
for lenders ends up being a relatively limited list around climate change and corporate responsibility.
CPPAs are usually entered into on the basis of an of utilities with similar exposures and more or less Half of all respondents back up this idea, agreeing
electricity price that is fixed or otherwise limits the correlated financial health. Injecting corporate that a net reduction in carbon emissions to meet
parties’ exposure to movements in the market price, offtakers into lenders’ portfolios broadens their company goals and the ability to market the company
e.g. via a cap and collar arrangement. exposures to a wider and less correlated group of as sustainable are two of the most important benefits
credits,” explains James Harrison, senior associate to offtakers committing to a CPPA.
in Watson Farley & Williams’ global energy sector
in London.You can also read
