Impact of the Global Financial Crisis 2007 on Project Finance in the Renewable Energy Sector

Iris Pfarl and Christian Bellak

Chapter 21 in Handbook of Energy Finance:Theories, Practices and Simulations, 2020, pp 489-507 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This study provides descriptive evidence on the adjustment in selected determinants of the credit margin carried out by project participants in the renewable energy sector facing the Global Financial Crisis after 2007.Adataset comprising financing parameters of 950 credit tranches granted in the renewable energy sector in the years 2000–2011 was retrieved from the database Dealogic ProjectWare. We provide descriptive evidence on the impact of the Global Financial Crisis after 2007 on the credit margin. The selection of determinants is based on the existent literature as well as on the realization of 13 case studies of project-financed transactions in the renewable energy sector. Our results show the substantial upward effect on the margins, shorter credit maturities and the need of considerably larger collaterals in order to achieve a Financial Close for projects initiated after the year 2007. A thorough examination of the methods of financing, the structure of project finance, the risk assessment methods and collaterals complement our analysis of the determinants of the credit margin. Overall, an adjustment in certain financing parameters as well as the application of risk-mitigating instruments such as, for example, project bonds, miniperm loans or cofinancing structures allow project finance to remain a proven and stable instrument for energy finance throughout the financial crisis.

Keywords: Energy Finance; Financial and Economic Modeling; Volatility; Forecasting; Quantitative Finance; Energy Markets (search for similar items in EconPapers)
JEL-codes: G20 G32 Q40 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789813278387_0021 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789813278387_0021 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789813278387_0021

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().