Risks Affecting Project Financing for Offshore Wind Projects

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Abstract: Renewable energy is a growth market, and lender and investor confidence is increasing. However, obtaining project finance or investment cannot be taken for granted. This paper discusses the key technical factors and risks which influence project investment decisions and which can affect financial close, including such aspects as energy forecasts, technology risks, project structure, and participant capabilities. An important understanding of the need and benefit of due diligence is provided by looking at how each risk is assessed, as well as possible mitigants, for offshore wind projects.
By drawing on direct experience in undertaking technical due diligence prior to successful project financing for several major onshore and offshore wind energy projects, considerable insight will be provided into what technical issues most affect project finance and investment decisions.
* L" V+ n# L7 y- e. G) M* GThe paper will outline what these key risks are, why they are so important, and how they are assessed during the due diligence phase of seeking project finance. Each key risk area is discussed in turn. Possible risk mitigants are also discussed. Poor understanding of what issues matter the most to lenders and investors, and how a lenders engineer undertakes his work, are frequently the cause of delays and difficulties during the financing of new projects. Lenders and investors who are new to the sector, especially to offshore wind, will also find the conclusions important.