x
Project Finance & Infrastructure Deal Digest Q3 2018
Reports & Whitepapers

Project Finance & Infrastructure Deal Digest Q3 2018

Rishin Patel Project Finance & Infrastructure October 2018
Overall, the number of global infrastructure deals was down in Q3 2018 with 65% of deals secondary stage assets and 32% Greenfield. And this is reflected in JCRA’s client engagements also.
Renewables evolution

The evolution within renewables continues. Ever decreasing capital costs means renewable power is now almost on par with conventional power. Investors understand new PPA structures and merchant risk now more than ever and competitive auctions are dramatically decreasing the cost of subsidies.

In South Africa, the integrated resource plan has been out for comment for almost two months with 26 October as the cut-off. On the face of it the document appears to be very supportive of renewable energy, although the timing for further rounds of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) seems to suggest that projects would only come on stream around 2024/25.

Working backwards and allowing an average two years for construction, plus one year to reach financial close, we may be looking at only five renewable energy projects being awarded in 2021. This would leave the renewables industry sitting on its hands again, having recently recovered from the three-year delay to round four and the cancelation of the expedited round.

The fastest way to address the countries’ energy shortage is to expedite the REIPPPP. Round five is supposedly due to be announced in November but will depend on the issues raised in the IRP comments window expiring later this month.

Scandinavia

During this quarter, GIG alongside SCA Energy, closed its second PPA-driven wind farm deal in Sweden. The transaction is underpinned by a fixed volume PPA with aluminium producer Norsk Hydro’s Hydro Energi subsidiary. It has been described as the longest corporate wind energy PPA in the world – lasting over 29 years.

Australia

Turbulent times for politics in Australia saw Scott Morrison become prime minister in August – the fifth change to the country’s leadership in five years. So far the government has not voiced many positive signals for the renewables market and many in the sector are keenly awaiting the next election, which will take place in Q2 2019 – with Labour well placed to win.

From an interest rate perspective, recent economic activity has given the Reserve Bank of Australia a more optimistic outlook, which could mean a rate hike in the second half of next year but for now, it remains firmly at 1.5%.

For more information, please contact Rishin Patel, Head of Project Finance & Infrastructure at JCRA: rishin.patel@jcrauk.com.

Deals we recently advised

Here is a list of some of the clients we have worked with in the last quarter

 

Project Finance case studies

Case studies
Hedging advice for a Canadian Infrastructure Sponsor
Project Finance & Infrastructure October 2018
Case studies
Interest rate hedging for M25 road refinancing
Project Finance & Infrastructure October 2018
Case studies
Interest rate hedging for Wren House Infrastructure
Project Finance & Infrastructure October 2018

Contact us

If you need hedging or debt advice or would like to speak to the team, please get in touch.