Bank Financing Of Wind-Farm Developments

The successful development of wind farms is not only dependent on efficient technology and available wind resources. In the current market price scenario for electricity, and as discussed under separate heading in this Update, the availability of sufficient subsidies will be a key parameter. Further, the availability of project financing from investors and banks will be a main prerequisite. As discussed in this Article, project financing of wind farm developments poses particular challenges which need to be dealt with in an adequate manner.

Introduction

Wind farm developments have a long horizon, are capital-intensive, and entail a range of risk elements. These projects require authorizations and often financial support from public authorities, who then become part of the stakeholder group in such projects. Future production volumes and power prices are difficult to estimate and fluctuate widely, making it difficult to estimate revenues and cashflow for servicing