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8 Trends to Watch in 2022 Energy Project Finance

  1. Build Back Better? (BBB) – While there is uncertainty regarding whether the energy provisions included in the bill will be enacted as part of BBB or in a separate stand-alone bill, if we see this legislation become law, it will turbocharge investment in renewables and alternative energy projects. That said, new “green” projects are already outpacing traditional (fossil fuel-based) offerings. This trend will continue, and it is likely that green energy ends up dominating the energy power market in a few years – with or without BBB.

  2. Oil and Gas Majors transition into offshore projects – As oil and gas majors seek to expand into green energy, they are embarking on developing high-cost and complex offshore wind farms. Traditional players in the broader energy market may benefit from their unique experience developing successful offshore operations in the oil and gas space. U.S. offshore is set to become a major driver of growth throughout the decade.

  3. Increased electric vehicle (EV) production – The major incumbent car manufacturers are coming out with EV fleets and many new manufacturers are coming into the market with predictions maintaining that electric vehicles will be the dominant new vehicles for sale by 2030. This will require a significantly upgraded power grid and charging station infrastructure to support the vehicles’ demand/load representing trillions of dollars in new investment.

  4. COVID-19 and supply chain disruption are expected to continue project developer’s push for longer commitments from tax equity financing partners and Power Purchase Agreement (PPA) start dates.

  5. Consolidation of developers as private equity funds and strategic investors with abundant resources, as well as new, deep-pocketed players, are seeking and buying development platforms (and scooping up smaller players).

  6. Rise of Environmental, Social and Corporate Governance (ESG) focus is a catalyst for more corporate investors in the renewable energy project financing space – As public companies set their ESG goals, corporate investment in green energy at all levels of the supply chain, capital stack, technology plays, and offtake is increasing significantly.

  7. Renewable energy eclipses coal – Renewables represents about 21% of annual US electricity generation with coal currently around 19%. Expect renewables to continue to displace coal in coming years. The point of no return in this trend is when a new build wind or solar plant is less than the cost to operate an existing coal plant—which is predicted to occur as early as 2025.

  8. Convergence of Crypto and Renewables  Look for increasing participation of crypto currency companies in renewables as bitcoin miners and other crypto players seek to reduce their carbon footprint.

About the Authors

Greenberg Traurig Shareholders Jeff Chester and John Eliason lead the firm’s global Energy Project Finance & Development Practice, which has handled some of the world’s largest and most sophisticated energy projects. Team members routinely advise energy companies, utilities, project sponsors and developers, banks and institutional investors, monoline insurance companies and other energy industry participants on a wide range of energy project transactions. With decades of cross-border and project finance experience across the globe, we have developed and implemented both traditional and innovative financing and refinancing transactions. We have devised structures that accommodate combinations of private and public debt and equity funding, multilateral sources and government incentives. Our international team of attorneys have developed a reputation for their deep industry knowledge, skill and innovation, having guided many first-of-their-kind energy projects in both emerging and developed market.