{"id":141834,"date":"2026-05-13T08:06:29","date_gmt":"2026-05-13T08:06:29","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=141834"},"modified":"2026-05-13T13:04:07","modified_gmt":"2026-05-13T13:04:07","slug":"united-states-project-finance","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/united-states-project-finance\/","title":{"rendered":"United States: Project Finance"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-141834","comparative_guide","type-comparative_guide","status-publish","hentry","guides-project-finance","jurisdictions-united-states"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">DLA Piper<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/admin-ajax.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">DLA Piper<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/admin-ajax.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Project Finance laws and regulations applicable in United States<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical ownership structures for project companies in your jurisdiction? Does this vary based on the industry sector?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., nearly every project company is structured as a special-purpose entity (SPE) organized in the State of Delaware-typically as a limited liability company that is treated as either a disregarded entity or a partnership for tax purposes (dependent on whether there is more than one owner). The SPE holds all of the assets relevant to the specific project\u2019s development, construction, and operation, and the SPE\u2019s sole purpose is the development, construction, ownership, and operation of the project. Typically, the SPE project company is, in turn, directly owned by an SPE holding company (commonly referred to as a \u201choldco\u201d), also typically organized as a limited liability company and treated as a disregarded entity or partnership for tax purposes, which may itself be owned by one or more upstream holding entities, depending on the complexity of the capital structure, and which may hold multiple SPE project companies. This nearly universal project-level ownership structure is driven primarily by the expectations of financing parties, who require \u201cbankruptcy remoteness\u201d characteristics such as this to facilitate an eventual enforcement action.<\/p>\n<p>The more interesting action is typically above the SPE holding company level, where ownership structures vary greatly by the nature and type of project, the industry sector, and the nature and type of investor capital. For example, in the renewable energy sector where tax equity investors have historically played an important financing role, intermediate holding companies are formed to bifurcate tax credit-driven investor equity from sponsor equity (often referred to as \u201ctax equity partnerships\u201d) and SPE project companies may be transferred or sold to such tax equity partnership before the commercial operations date to obtain a more favorable tax basis. Intermediate holding company ownership structures are also increasingly contemplating the growing role of sophisticated private equity capital on a portfolio-wide basis, where private equity investors are investing in sector-\/regional-specific markets with equity and equity-like capital deployed for development activities and to fuel sponsor-led growth strategies.<\/p>\n<p>In many non-U.S. jurisdictions, the project-level SPE and immediate holding company SPE are also typical. Though, depending on the country and sector of the project, many project company ownership structures involve concession or concession-like arrangements with governmental and quasi-governmental entities, reflecting a significant difference in the qualitative nature of the project company\u2019s assets. This is particularly relevant to financing parties, and oftentimes multilateral financing institutions and development banks play a role in bridging the risk gap reflected in private lending parties\u2019 generally lower valuation metrics.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any corporate governance laws or accounting practices that foreign investors in a project company should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Most foreign investors investing in U.S.-based projects have an established track record in such activities and are familiar with Delaware corporate governance principles, U.S. GAAP and\/or IFRS accounting practices, and the expectations and requirements of private financing parties. The Inflation Reduction Act (IRA), which was enacted in 2022, created new tax incentives, tax credit \u201cadders\u201d for domestic content, energy communities, and low-income communities, and expanded existing categories. This IRA incentive framework was drastically modified \u2014 and complicated \u2014 by the subsequent passage of the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025. Among other far-reaching impacts, the OBBBA significantly narrowed many IRA benefits and eliminated others entirely, while also introducing a complex set of phase-outs and safe harbor dates for tax credit eligibility, including many based on when construction began.<\/p>\n<p>From a corporate governance and accounting perspective, the OBBBA\u2019s introduction of \u201cprohibited foreign entity\u201d (PFE) restrictions (and \u201cspecified foreign entity\u201d and \u201cforeign influenced entity\u201d sub-classifications) is highly relevant to investors. Analysis of an entity\u2019s PFE status can be complex as are the PFE-related sourcing rules, but as a general matter, foreign investors should be prepared to demonstrate they are not a PFE before being accepted as an investor (including questions about ties to, and control by, any \u201ccovered nation\u201d (i.e. China (including Hong Kong), Russia, Iran or North Korea)) as well as conduct diligence to confirm the project company they are investing into is not a PFE and that the PFE rules have been complied with in construction of the project to ensure eligibility for expected tax credits.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If applicable, what forms of credit support from sponsors or host governments are typically provided?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Most project financings continue to fall somewhere on the recourse spectrum between non-recourse and limited-recourse to project sponsors and, where applicable, governmental authorities. In a true non-recourse structure, financing parties look solely to project cash flows and collateral for repayment, with no ability to seek recourse against the project sponsor\u2019s balance sheet beyond its equity investment in the project. In practice, however, sponsors in project financings manage balance sheet exposure by negotiating limited and clearly defined recourse obligations. Financing parties may receive support in the form of capped equity capital contribution commitments, make-whole arrangements, completion guarantees, or cost overrun funding commitments for example. Credit support also remains a key requirement for pre-financing project development activities, including posting of letters of credit, bank guarantees and surety bonds for construction activities, capacity auctions, interconnection obligations, and other counterparty arrangements; and governmental authorities often require credit support in the form of corporate guarantees from a creditworthy sponsor entity, typically requiring an investment grade rating (i.e., at least Baa3\/BBB- from Moody\u2019s, S&amp;P, or Fitch, respectively) or, where the sponsor is unrated, alternative credit enhancement such as a letter of credit or cash collateral. Additionally, we see limited credit support structures playing an increasing role in build-transfer transactions entered into among utilities and renewable energy developers, continuing to blur the lines between M&amp;A and financing in such deals.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of security interests are available (and suitable) for a project financing in your jurisdiction? Are direct agreements used?\u00a0<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Throughout U.S. jurisdictions, the standard suite of security interests granted by project sponsors to construction financing parties continues to encompass all assets of the project company owning all rights to the project\u2019s development, construction, ownership and operation, including all personal property (so-called \u201cU.C.C. Article 9\u201d collateral) and all real property rights of the project company relevant to the project. Additionally, construction financing parties typically receive a pledge of all equity interests in the project company. Financing parties also seek to bolster their security interests in Article 9 collateral comprising contract rights by entering into direct agreements (also often referred to as a consent agreement) with each major commercial counterparty to the project, whereby financing parties seek additional rights, including step-in rights, cure rights, and rights to receive notice of defaults or proposed terminations, directly from such project counterparties under the key project contracts.<\/p>\n<p>In the area of renewable energy, these project-level security interests are often structured to fall away upon the project\u2019s completion (or placed in service date, in tax terms), whereupon a \u201cback-leveraged\u201d financing structure has operated to remove liens at the project company level and refinance the outstanding project-level construction debt with proceeds of new debt issued to an intermediate holding company of the project (controlled by the project\u2019s sponsor) and with liens on all of the holding company\u2019s personal property as well as contractual rights to distributions from the project company for application to holding company debt service.<\/p>\n<p>Additionally, we are increasingly seeing more complex structures of security interests granted at the intermediate holding company level of project structures, including \u201chybrid\u201d collateral structures more familiar to private equity funds that include pledges of capital call rights against limited partner equity investment commitments. Such capital call pledges are not customary in traditional to project financing debt capital structures, but are increasingly being included in bespoke structures in which project sponsors are deploying capital from private equity, insurance and other co-venturer capital. These arrangements require careful attention to the intercreditor relationships among project-level lenders and holdco lenders, as well as to the enforceability of capital calls under the governing fund documents and applicable partnership or LLC law.<\/p>\n<p>In non-U.S. jurisdictions, traditional security interest packages remain the standard requirement of financing parties, including pledges of all project-level personal property and real property interests. There remains little appetite outside of the U.S. for non-traditional approaches, and typically any valuation gaps are expected to be covered through credit support, often in the form of a sponsor corporate guaranty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are the above security interests perfected?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., the primary method of perfecting project-level security interests remains the centralized filing of UCC financing statements over \u201call assets\u201d of the project, often filed with the Delaware Secretary of State. This covers perfection over a majority of the usual Article 9 collateral. Common exceptions include the need to perfect by control over the project\u2019s bank accounts, typically pursuant to an account control agreement and often, in the case of projects, subject to the sole dominion and control of the financing parties. Another exception often applies to the pledged ownership interests in the project company when constituting limited liability company interests; rather than perfecting in these interests as \u201cgeneral intangibles\u201d pursuant to the filing of a UCC financing statement and in order to better protect themselves against a potential future priority claim by a competing creditor (including a bona fide purchaser for value), financing parties often require such equity interests to expressly be both certificated and deemed to comprise securities under and for all purposes of Article 8 of the UCC so that the financing parties can perfect such security interests by possession of the physical certificates representing such ownership interests. Real property interests, whether fee simple or leasehold, are perfected by the filing of a mortgage \u2013 and often accompanying fixture filings \u2013 in the appropriate state and local filing office. While not relevant to the perfection analysis, financing parties often view for practical purposes the contractual rights they seek to obtain from key project counterparties (direct agreements, in the case of contract rights in key project documents (e.g., operations and maintenance agreements, engineering procurement, and construction contracts, power purchase agreements); landlord estoppels and non-disturbance agreements, in the case of leasehold interests; title insurance policies, in the case of fee simple interests) as essential counterparts to their perfected security interests.<\/p>\n<p>In certain non-U.S. jurisdictions, there have been in recent decades significant developments in most countries to modernize their security interest recording systems, including adopting more centralized registries for perfection of security interests resembling the UCC filing process in all U.S. states. These more centralized registration processes have gained efficiencies and transparency for international financing parties. Local filing and registration regimes remain for real property interests. There remain more legal formalities associated with these registrations than generally applies in the U.S., such as notaries and stamp\/documentary taxes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please identify how security is enforced (notably the enforcement options available for secured parties) both pre and post insolvency\/bankruptcy of the project company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The legal process for enforcing on project security is well established under U.S. law. However, the practical and commercial considerations facing financing parties, including relationship management with sponsors, reputational concerns, regulatory constraints, and the complexities of operating infrastructure assets, often renders the practice of enforcing on project security more fraught.<\/p>\n<p>As a practical matter, distressed projects typically first enter into an out-of-court workout process, commonly referred to as a \u201cforbearance\u201d arrangement. During this period, the project\u2019s equity owners seek to restructure the project\u2019s debt obligations in a manner acceptable to the financing parties. Workout negotiations often involve concessions on construction or operational timelines, revised budgets, temporary or permanent covenant relief, and modified reserve account funding requirements. More often than not, this workout process is preceded by an extended period of incremental waiver requests from the project\u2019s owners.<\/p>\n<p>When financing parties are not inclined to agree to a waiver request \u2013 typically in cases involving an event of default resulting from a material problem that is not easily or readily cured by the project\u2019s sponsor, such as sustained underperformance, contractor insolvency, or irreparable technology failures \u2013 the first tool in their arsenal is the delivery to the project and sponsor of a reservation of rights letter. This letter memorializes the relevant event(s) of default and expressly reserves the financing parties\u2019 rights to exercise any and all remedies available under the financing documents and applicable law at a future date. While such reservation of rights notice is not a formal legal prerequisite for financing parties to enforce on collateral, it is a practical tool utilized by financing parties while determining among themselves (and potentially different classes of secured creditors in multi-tranche structures) how they intend to proceed.<\/p>\n<p>If financing parties determine to move ahead to foreclose on project collateral on an out-of-court basis, Article 9 of the UCC provides several pathways for enforcement against personal property collateral, including strict foreclosure (whereby the secured party accepts the collateral in full or partial satisfaction of the secured obligations), public or private disposition sales, and collection of receivables. Consensual foreclosure, where the debtor agrees to the disposition, is generally preferred as it avoids disputes over commercial reasonableness. Judicial foreclosure, while available, is less frequently pursued due to the associated time and expense. Typically, a financing party\u2019s first action when enforcing on project collateral is to block the project\u2019s access to its bank accounts by delivering control instructions to the account banks. Financing parties will deliver default notices to project counterparties under the various direct agreements and estoppel certificates, instructing such parties to recognize the financing parties (or their collateral agent) as the sole party entitled to direct performance and receive payments. Article 9 of the UCC provides financing parties broad authority to foreclose on collateral without judicial involvement, provided the statutory requirements of the UCC are strictly complied with, including delivery of commercially reasonable notice and adherence to the UCC\u2019s overarching standard that all aspects of a disposition must be commercially reasonable.<\/p>\n<p>In practice, traditional financing parties\u2019 \u2014 including commercial banks, institutional investors, multilateral development banks, and export credit agencies \u2014 rarely seek to own and operate project assets directly. Their collateral enforcement strategies accordingly go hand-in-glove with such parties\u2019 loan assignment rights under the financing documents. Traditional financing parties are typically not in the business of owning, constructing and operating projects and often face regulatory constraints or corporate charter limitations that preclude direct ownership of operating infrastructure. Consequently, foreclosing financing parties typically seek to identify a buyer of the secured debt obligations\u2014often a distressed debt fund, infrastructure-focused private equity sponsor, or strategic acquirer\u2014at a negotiated discount to the par value of the outstanding debt. The foreclosure process is then coordinated with the debt purchaser, who upon assignment may elect to pursue its own UCC remedies to enforce on the project collateral and assume ownership of project assets, or alternatively negotiate a consensual restructuring with existing stakeholders.<\/p>\n<p>In the event the project company files for protection under Chapter 11 of the U.S. Bankruptcy Code, enforcement on collateral is effectively stayed at the outset of the filing. This stay prohibits secured creditors from taking any action to enforce their security interests, foreclose on collateral, or exercise setoff rights without bankruptcy court approval. The ultimate resolution of secured creditors\u2019 claim on project collateral is then subject to a plan of reorganization (or liquidation under Chapter 7 of the U.S. Bankruptcy Code) approved by the bankruptcy court.<\/p>\n<p>In many non-U.S. jurisdictions, enforcing on project collateral may be considered to be a more complicated process with less predictable outcomes, both legally and commercially. Whether due to labor protections, or governmental regulations applicable to (or state interests in) key project assets, enforcing on local project collateral usually requires availing themselves of local courts and the concomitant legal risk and delays. For these reasons, foreign financing parties seek to structure as much project collateral as possible in offshore vehicles, including offshore bank accounts and intermediate holding company share pledges which are easier to enforce on quickly. Additionally, certain jurisdictions have developed local structures to facilitate foreign financing parties ability to enforce on project collateral without getting tied up in unpredictable and drawn-out court processes, including security trust vehicles and expedited enforcement on debt obligations evidenced by promissory notes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are other important considerations in relation to the security regime in the jurisdiction that secured parties should be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., the overriding principle governing the security regime is the parties\u2019 broad ability to contract directly as to their relative rights, priorities, and remedies in an enforcement action, subject to the relatively light-touch and predictable approach of the UCC statutory regime applicable to the creation, perfection, and enforcement of security interests in personal property and to the involvement of courts upon a voluntary or involuntary bankruptcy\/insolvency filing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What key project risks should lenders be aware of in project financings in your jurisdiction? This may include, but may not be limited to, the following risks: force majeure, political risk, currency convertibility risk, regulating or permitting risk, construction\/completion risk, supply or feed stock risk or legal and regulatory risk).<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., all traditional project risk considerations apply \u2013 regulatory and permitting risk, technology risk, construction and completion risk, force majeure, supply chain risk, and offtake and market risk \u2014 though in different proportions depending on the nature of the project, sector, and sponsor profile. Construction risk is typically mitigated through fixed-price, date certain EPC contracts, performance bonds and sponsor completion guarantees, while technology risk varies significantly between proven technologies (solar PV, onshore wind etc.) and emerging sectors (offshore wind, green hydrogen, nuclear in the form of small modular reactors, geothermal etc.). In recent years, political and policy risk has become an increasingly relevant consideration for financing parties due to structural challenges to federal spending authorizations. Particularly relevant in recent years, supply chain disruptions and inefficiencies have had a significant flow-through effect on project timelines and inflation of project budgets. For renewable energy projects specifically, regulatory and permitting risk posed by multi-year interconnection queue backlogs at transmission organizations has emerged as a critical concern. Climate-related physical risks from extreme weather events are also receiving increased attention from financing parties, who may require climate risk assessments and enhanced insurance coverage for projects in vulnerable geographical locations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are any governmental \/ regulatory consents required and are any financing or project documents requirement to be filed with any authority in order to be admissible in evidence in a court of law, valid or enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., financing documents generally do not require governmental approval or filing to be valid, binding, or enforceable, nor to be admissible as evidence. UCC financing statements must be filed to perfect security interests in most relevant categories of personal property, and mortgages and deeds of trust must be recorded with county recorders to perfect real property liens, but these are security interest perfection tools to establish a financing parties rights vis-\u00e0-vis other third-party creditors rather than legal requirements to establish contractual validity. Certain regulated sectors (energy, telecommunications, transportation) may require regulatory approvals for changes of control or the grant of security interests over licensed assets.<\/p>\n<p>In Latin America, formality requirements are more extensive. Many jurisdictions require notarization of financing. Security documents typically must be registered with public registries, including mercantile registries, real property registries, and pledge registries, to be perfected. Foreign currency loans may require registration with the central bank. Apostilles may be required for documents executed abroad to be admissible in local courts. These formalities vary by jurisdiction and should be confirmed with local counsel.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there are any specific foreign exchange, royalties, export restrictions, subsidies, foreign investment, that are relevant for project financings (particularly in the natural resources sectors)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., the OBBBA and related PFE restrictions are applicable to projects in the natural resources sector, most often impacting mining projects involving critical minerals and renewable energy supply chain inputs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please set out any specific environmental, social and governance issues that are relevant. For example, are project companies subject to certain ESG laws, reporting requirements or regulations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., ESG considerations in project financing are shaped by a combination of federal and state regulatory requirements and financing party expectations. Environmental compliance is the most established area, with projects potentially subject to federal review under the National Environmental Policy Act, species protections under the Endangered Species Act, and air and water quality regulations under the Clean Air Act and Clean Water Act. State environmental laws (such as California\u2019s CEQA) may impose additional requirements. Financing parties typically require Phase I\/II environmental site assessments and environmental compliance representations. Social considerations include federal prevailing wage and apprenticeship requirements, as well as community benefit agreements for large infrastructure projects. In the rapidly expanding data center and AI infrastructure sector, ESG considerations of financing parties have become particularly acute. Water consumption for cooling systems has drawn regulatory scrutiny and community opposition in water-stressed locations, while concerns over energy demand and grid capacity have prompted certain jurisdictions to impose moratoriums on new data center development. Institutional investors and multilateral lenders may require adherence to international standards such as the IFC Performance Standards or Equator Principles. Governance requirements focus on SPE organizational covenants (e.g., anti-corruption compliance). The growing market for sustainability-linked loans and green bonds has introduced additional ESG reporting and verification requirements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has any public-private partnership models or laws been enacted in the jurisdiction, and if so, are they specific to certain industry sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Many states in the U.S. have enacted so-called PPP laws and structures, nearly exclusively in the context of transportation and social infrastructure. Notwithstanding these laws and structures, PPP transactions remain relatively uncommon in the U.S., due largely to an ongoing public preference for public financing regimes (including municipal bonds) and the relative depth of private financing markets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Will foreign judgments, arbitration awards and contractual agreements to arbitrate be upheld?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, these are key components to the nearly universal perception of the U.S. as one of the jurisdictions with low legal risk to projects and business generally.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is submission to a foreign jurisdiction and waiver of immunity effective and enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, see above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please identify what you consider to be (a) the key current issues for project financing in your jurisdiction; and (b) any emerging trends or topics which should be considered or focused on by project financing stakeholders in this jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Current key issues in the U.S. for project financing generally are the dual headwinds of geopolitical and economic uncertainty, including with respect to price rises including but not limited to energy commodities, and inflationary effects on project inputs and labor costs. This is broadly applicable to projects of all types.<\/p>\n<p>In the energy sector specifically, these general headwinds have been joined by significant additional sources of friction, including increasing demand for energy, aging grid infrastructure, untenable delays by grid interconnection authorities in certain regions, and the continued mismatch between a project\u2019s costs and the contractually agreed purchase price for generated electricity in V\/PPAs. These challenges, combined with the OBBBA rollbacks and resulting regulatory uncertainty, have been operating to constrain what had been extraordinary momentum in the renewables sector due to the IRA\u2019s massive governmental investments by subsidy attracting record in-bound private capital investment interest into the U.S. renewables and energy transition assets.<\/p>\n<p>Particularly relevant to the energy transition economy is the role the IRA had already played before OBBBA passage to meaningfully accelerate the advancement of projects in clean technology areas that, to date, have had limited (if any) private financeability. Battery storage projects went from being the frontier of project finance a few short years ago to a staple of the solar\/renewables project financing market. Deployment of clean hydrogen (green and blue) alongside industrial commercialized products, carbon capture technologies, and less mainstream generation sources like geothermal and small nuclear are gaining financeability through monetization of newly generous tax credits under the IRA, many of which survived OBBBA rollbacks and reductions.<\/p>\n<p>Critical minerals and mining represent a significant emerging focus for project financing stakeholders both within and beyond the U.S. Driven by the energy transition\u2019s demand for lithium, cobalt, nickel, copper, and rare earth elements, financing parties are increasingly interested in this sector. In the U.S., domestic content requirements and critical mineral sourcing rules are reshaping supply chains, while the U.S. Department of Energy Loan Programs Office has expanded its mandate to include critical mineral processing facilities.<\/p>\n<p>Additional growth trends include data center and AI infrastructure financing (driven by exponential growth in computing demand), grid infrastructure and transmission development, and the growing role (although still modest compared to bank financing) of private credit funds across the project finance capital stack.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please identify in your jurisdiction what key legislation, subsidy regimes or regulations have been implemented (or will \/ plan to be) for projects in connection with the energy transition and\/or specific projects due to energy security?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>See above. In the U.S., the IRA, as modified by the OBBBA, constitutes the primary legislative landscape with respect to the energy transition.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please identify if there are any material tax considerations which need to be taken into account for a project financing in your jurisdiction, and if so, how such tax issues can be mitigated.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As described in more detail above, subsidies and incentives implemented through the tax code have long been staples of renewable energy project financing in the U.S. Historically, the tax credit regime in the U.S. was only accessible via tax equity investment, which operated functionally as a high hurdle for foreign investor capital, in part due to the legal complexity of the tax-inflected financing regime and its particularity to the U.S. When combined with the relatively high U.S. legal costs and general bespoke nature of each project\u2019s contractual arrangements, foreign investors had long been reluctant to dedicate the resources and capital to such projects. The passing of the IRA, however, allowed such tax credits to be sold to unrelated third parties for cash, eliminating the long-term commitment and legal complexity required by a tax equity investment, and introduced historically generous subsidies making a larger pool of new projects \u201cpencil out\u201d profitably. The resulting enthusiasm from new entrants has been tempered somewhat by restrictions imposed by the OBBBA, but an increased focus on energy independence and a continued increase in demand for foreign private capital has offset negative OBBBA impacts to some extent.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of funding structures (e.g. debt, equity or alternative financing) are typical for project financing in your jurisdiction. For example, are project bond issuances, Islamic finance and \u2013 in the context of mining deals \u2013 streams or royalties, seen as attractive (and common) options for stakeholders? Are you seeing private credit in project financing in your jurisdiction or other alternative financiers? If so, what types of projects are they looking to finance and what are the key structuring issues of such financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As described above, in the U.S. the \u201ccapital stack\u201d for projects is oftentimes deep and layered. Depending on market sector, this capital stack will include federal grants and loans (U.S. Department of Energy Loan Programs Office, U.S. Department of Transportation TIFIA\/RRIF), local and state grants and subsidies, development\/FEED-stage debt from shareholders or investors, a growing class of private alternative lenders to energy project developments, traditional financial institutions for construction debt, tax credit-driven investment capital \u2013 whether from tax equity investors or tax credit buyers, growing private equity fund capital ranging from equity to mezzanine debt to senior secured debt (in the case of credit funds), and increasingly private equity capital funding development-level capital requirements of project portfolios to generate scale. Recently insurance players have been entering the project development financing market with unfunded capital commitment facilities. Project bond issuances remain less common than bank debt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please explain if there are any regional development banks or export credit agencies, and if so, what is their role in project financing in your jurisdiction and beyond.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S. domestic context, development bank and ECA financing is less common for project financings than in many non-U.S. jurisdictions given the depth of private capital markets in the U.S. However, there are relevant examples: EXIM may participate in U.S.-based projects in certain circumstances; the Department of Energy\u2019s Loan Programs Office provides concessional financing for innovative energy, infrastructure and critical mineral projects; and non-U.S. ECAs may combine with one or more private lending institutions to support the development and construction of a project sited in the U.S. involving the purchase of equipment or other content from a national company which such ECA is supporting.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please explain if there are any important insurance law principles or considerations in connection with any project financing in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the U.S., financing parties require comprehensive insurance packages covering property damage, business interruption, general liability, and builder\u2019s risk. Key considerations include adequate coverage limits, lender loss payee and additional insured endorsements, and compliance with financing document requirements. Insurance proceeds are typically subject to the cash waterfall provided under the financing documents and may be applied to restoration or debt prepayment at the financing parties\u2019 discretion. Insurance products specific to tax credit risk, while not new, have rapidly adapted to meet the needs of tax credit buyers. Additionally, we are seeing certain insurers provide unfunded capital commitment facilities to support project development portfolios.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4994<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/141834","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=141834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}