Financing the Transition to Renewable Energy

The following quote is taken from a Report published by the International Energy Agency (IEA) in June this year:

"There is no shortage of money worldwide, but it is not finding its way to where it is most needed.” - Fatih Birol, Executive Director, IEA

Indeed, there is ‘no shortage’ of money.  It is in abundant supply and held principally by more than 31,000 alternative investment funds worldwide.  Research and data from different sources reveals circa $20tn private capital ready to be allocated into alternative assets, with renewable energy favourite among lenders.  As the saying goes, you can’t argue with the numbers, and the data supporting the numbers presented here, and much more besides, are available in our Media Backgrounder.

Mr Birol, the Executive Director of the IEA was also right when he said: “…it is not finding its way to where it is most needed...”.  That’s simply because the private/alternative capital market, over more than two decades, grew to a point where it became populated by at least 31,000 funds and thousands of projects at any one time.  Overcrowded, fragmented and opaque it was virtually impossible for buy- and sell-sides to connect and engage.  No more.  In April this year, after three years of development and testing, The Project Finance Exchange (PFX) was launched to enable projects and fund managers to connect and engage seamlessly.

If it helps, I have recently had an article published in EPCWorld, a magazine for the EPC (Engineering Procurement and Construction) contractors who actually build the projects.  How to Finance Renewable Energy Projects is written for a ‘trade’ audience, but it clearly explains how to finance renewable energy projects, worldwide, with alternative/private capital.  PFX enables the global renewables industry to turn to the world’s deepest and most liquid capital market, private/alternative capital, enabling a smooth transition to renewables without imposing any burden on the taxpaying public, anywhere.

The defining tenet of project finance is that it is predicated on the track record and financial stability of whoever is contracted to buy the output from the built project.  In the case of energy, this means the PPA.  This leaves the project principals be they a team, company, local or national government free and clear of any financial liability whatsoever.  For those new to the project finance structure we publish a guide, The Raising Project Finance Handbook, which assists in preparing submissions in project financing format, which is far different to the traditional business plan or prospectus.

This information is being sent as source material for use in content you might be preparing on financing renewable energy projects. A recent PFX press release can be viewed HERE.  PFX is ready, willing and eager to facilitate funding renewable energy projects, with no limit on our capacity.  We have built the long-awaited mechanism through which trillions of dollars of private capital can now be unleashed into targeted, individual renewable energy projects worldwide or, as the IEA says, “…to where it is most needed…”.  There is no cost for renewable energy projects to raise finance through PFX.  There is a comprehensive FAQ zone at the site.

Read the latest issue of the OGV Energy magazine HERE.