15 years: Renewable energy & project finance lawyer
This video explains what project finance actually is, with a few examples of how it differs from corporate finance. It further highlights the non-recourse nature of this type of financing and explores the role of SPVs and how they turn renewable energy and other large-scale projects from high-risk, high-cost, inaccessible undertakings into more manageable endeavours.
This video explains what project finance actually is, with a few examples of how it differs from corporate finance. It further highlights the non-recourse nature of this type of financing and explores the role of SPVs and how they turn renewable energy and other large-scale projects from high-risk, high-cost, inaccessible undertakings into more manageable endeavours.
Project financing generally targets projects which are not yet built and only exist in the form of legal documents such as contracts and regulatory permits. As such, this area is in many ways an overwhelmingly legal exercise. This video delves into the concept of project finance, with a few examples of how it differs from corporate finance.
Key learning objectives:
What is Project finance?
What are the key features of project finance?
Understand the role of SPVs in turning renewable energy into more manageable endeavours
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Project financing generally targets projects which are not yet built and only exist in the form of legal documents such as contracts and regulatory permits. In project financings, the borrower is often a weak credit, and its revenue streams are often highly risk-exposed and unpredictable. This unpredictability stems from the type of underlying assets being financed; whereas such assets can be integral to the functioning of an economy, the revenue derived therefrom can be dependent on factors which are not easily predictable.
A key feature of project finance is that it involves no, or at least limited, recourse against the sponsors, the ultimate owners of the project being financed. Project finance focuses more or less entirely on the underlying assets of a project, often in the form of a term facility to fund the construction of the project.
This is a company often referred to as a project company or a special-purpose vehicle (SPV), which is generally the bottom subsidiary in a broader corporate structure. Its only assets will be those required for the project. These assets will initially consist of just a set of contracts and permits; for example, a permit to supply power.
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