In Renewable Energy World Article, Akin Gump Project Finance Lawyers Offer 2019 Predictions for Renewable Energy Projects

Renewable Energy World has published the article “Projecting 2018 Trends and Macroeconomic Conditions: What to Expect for Renewable Energy Projects in 2019,” written by Dan Sinaiko, co-head of the global project finance practice at Akin Gump, and Andrea Lucan, a partner in the practice.

The article recounts some of the trends and characteristics seen in renewable energy projects in the past year. According to the authors, this included:

  • A “frothy” M&A market.
  • “A highly competitive environment among investors and lenders for an inadequate supply of projects.”
  • A continued focus on “alternative offtake structures with shorter tenors.”
  • “Shoots of energy storage solutions sprouting from the ground as stand-alone facilities and add-on’s for wind and solar projects.”

Sinaiko and Lucan note that the intersection of these trends with some macroeconomic indicators could lead to some rough times ahead. With that in mind, they offer their thoughts on what 2019 might bring in the following areas:

  • M&A: “In terms of projects with long term offtake arrangements, expect a balancing act in 2019 between investors … and constrained supply from holders of those positions who may see no better use of the capital. Developers bringing projects with long term offtake to market will seek to recycle capital into their business and should be well positioned to monetize their investments.”
  • Financing: “Low interest rates should afford continued availability of capital for the financing of renewable energy projects in 2019.”
  • Development: “The relatively high expense of short term capital may put some pressure on how projects are contracted.”