Renewable Energy Finance : Theory and Practice / Santosh Raikar and Seabron Adamson.

Format:

Book

Author/Creator:

Raikar, Santosh, author.

Adamson, Seabron, 1964- author.

Language:

English

Subjects (All):

Environmental economics.

Mines and mineral resources.

Power resources.

Physical Description:

1 online resource (376 pages)

Edition:

Second edition.

Place of Publication:

London, England : Academic Press, [2025]

Summary:

Renewable Energy Finance: Theory and Practice, Second Edition integrates the special characteristics of renewable energy with key elements of project finance.Through a mixture of fundamental analysis and real-life examples, readers learn how renewable energy project finance deals mix finance, public policy, legal, engineering and environmental.

Contents:

Front Cover

Renewable Energy Finance

Disclaimer

Renewable Energy FinanceTheory and PracticeSecond EditionSantosh RaikarSilverpeak, New York, NY, United StatesSeabron Adams ...

Copyright

Dedication

Contents

Preface

Acknowledgments

1 - Financing the global transition to renewable energy

Renewable energy-Past and future

Flows of energy in a modern economy

Financing a low carbon energy future

The role of project finance

Organization of this book

2 - Public policy mechanisms to support renewable energy

Support renewable energy or tax conventional energy?

Carbon taxes

Tradable permit systems

Direct subsidies

Quantity-based mechanisms

Price-based mechanisms

Impact of public policies on renewable energy finance

3 - Basic project finance concepts

Project finance defined

History of project finance

Comparing project finance with traditional corporate finance

Limitations of project finance

Why use project finance?

Project finance loans versus bonds

4 - Modeling project cash flows and debt service

Modeling project cash flows

Project generation

Power prices

Modeling project revenues and costs

Debt sizing for a fully contracted project

Other debt sizing parameters

Debt sizing example

Debt tranching

Prioritization to assets

Debt-tranching example

Loan structuring considerations

Project debt versus holding company loan

Construction loan versus term loan

Fully amortizing loans versus mini-perm loans

Cash flow waterfall

Letters of credit

Reserve accounts

DSCR triggers

Financing merchant power projects

The cash sweep structure

Merchant financing example

5 - Renewable project finance structures and risk allocation

Basic project finance structure

Main parties in a financing

Project sponsor.

Project company

Offtaker

EPC contractor

O&amp

M contractor

Project lender

Tax partner

Back-leverage lender

Risk allocation

Assessment for project risks

Technology choice

Construction

Operational risks

Commodities market and fuel supply

Offtake credit quality

Transmission interconnection

Resource risks

Regulatory risks

Environmental and permitting matters

Natural catastrophe risks

Real estate matters

Other project finance characteristics

Domicile

Asset class

Currency

Interest rate and inflation

Source of financing

Structural issues

6 - Overview of tax credits in the U.S.

A brief history of renewable energy tax incentives in the U.S.

Production Tax Credit

Investment Tax Credit

ITC in lieu of PTC (or PTC in lieu of ITC)

Overview of the Inflation Reduction Act provisions for renewable energy and clean energy projects

Changes to the PTCs and ITC

Creation of new tax-neutral clean energy tax credits4

Two-tier credit system

Tax Credit Adders6

Direct pay and transferability provisions

Depreciation benefits

Bonus depreciation

7 - Tax structures for financing U.S. renewable energy projects

Illustration of the tax absorption problem for a wind project

The partnership flip structure

Purchase options in a partnership flip structure

Variations in the partnership flip structure3

Partnership structure requirements

Structural considerations governing the partnership flip structure11

Transaction timing

Contribution versus purchase model

Capital accounts and deficit restoration obligations

Explanation of inside and outside tax basis

Back-leverage considerations

Other risk allocation issues

The sale/leaseback structure

Advantages and disadvantages of the sale/leaseback structure.

The inverted lease structure21

Bank regulatory matters

A critical assessment of tax credits as an incentive mechanism

Tax equity structures in the postIRA investment world

Sale and transfer provisions

Direct pay option

Solar PTC versus ITC

Wage and apprenticeship requirements and Tax Credit Adders

8 - Financing distributed generation projects

Introduction to distributed generation

Net metering

Virtual net metering

Tax credits for distributed generation in the U.S.

Business models for distributed generation and financing structures

Third-Party Ownership model

Solar loan financing model

PACE financing

Community solar

Community Choice Aggregation

Rooftop solar installations for commercial and industrial applications

9 - Renewable energy in power markets

Basics of power market design

Transmission congestion and LMP

Transmission congestion concepts

Examples of LMP markets

Zonal markets in Europe and elsewhere

Capacity and ancillary services markets

Resource adequacy mechanisms

Ancillary services markets and payments

The future of energy markets

10 - Managing transmission costs and risks for renewable projects

Connecting new generation projects to the grid

Proposing a new interconnection

Determining interconnection costs

Continuing transmission costs

The UK zonal system

US physical transmission rights-based systems

Dynamic pricing systems

Transmission risk in LMP systems

Managing LMP transmission basis

FTR payoff example

Transmission risks in zonal systems

11 - Alternative off-take strategies and managing merchant risks

The benefits of traditional utility offtake

Corporate PPAs

Commodity hedges

Types of hedges

Key elements of hedge contracts

Tracking accounts in hedge contracts

The proxy revenue swap.

Structure of a proxy revenue swap

The proxy generation swap and put structures

Comparing project off-take options

Quantifying and managing merchant price risk exposures

Uses of market price forecasts and analysis

Approaches to developing merchant price forecasts

Forward market prices

Commercial price forecasting services

Fundamentals-based models

Risk management strategies for merchant power price risks

Stack-and-roll hedging

Hedging in correlated markets

Lessons learned from storm Uri

12 - Project development and valuation

The renewable energy project lifecycle

The project development phase

The construction phase

The operations phase

Valuation of renewable energy companies

Valuation of an operating renewable project

Project valuation example

The breakeven PPA price

Valuation of a renewable energy project under development7

13 - Energy storage financing: Opportunities and challenges

Types of energy storage

Value of storage

Demand response and duck curves

Tax incentives for storage projects in the US

Battery business models and financing strategies

Challenges to the adoption of battery systems based on the experience in the US

14 - Financing clean hydrogen projects

Colors of hydrogen1

Hydrogen production methods

Alkaline electrolysis

Polymer electrolyte membrane (PEM) electrolysis

Hydrogen transportation5

Hydrogen liquification

Ammonia as a hydrogen carrier

Ammonia production6

Ammonia transportation

Liquid Organic Hydrogen Carriers (LOHC)

Government incentives and regulations related to clean hydrogen projects

Challenges to financing clean hydrogen

Government incentives and regulations

Scarcity of fixed price offtakes

Hydrogen production technology risks

Transportation risks.

Collateral and liquidity risks

15 - Financing offshore wind: Lessons learned from Taiwanese offshore industry

Estimation of offshore wind energy generation3,4

Estimation of offshore wind energy generation in Taiwan10

Overview of Taiwan's offshore wind policies

Yunlin wind farm case study

Lessons learned from Taiwanese offshore wind industry21

Learnings from the U.K. offshore wind experience and the blueprint for new entrants

16 - Renewable energy finance in the international context

Recent global experience in renewables finance

Future needs for private investment in the energy transition

India

Renewable policy and support mechanisms in India

Financing challenges for India's renewable energy plans

Chile

Renewable resources in Chile

Chilean renewable energy auctions

China

Renewable support mechanisms in China

Financing mechanisms for Chinese renewables

Renewables integration challenges

Uruguay

Lessons from the international experience

Appendices

Appendix A: Glossary of terms and energy units

Energy

Power versus energy

Example

Power plant efficiency metrics

Appendix B: Levelized cost of electricity

Termsheets

Syndication back leverage loan term sheet (residential solar)

Construction loan term sheet

Tax equity term sheet

Sample confirm for a physical power hedge

Ammonia offtake term sheet (1.11.24)

Glossary

Index

Back Cover.

Notes:

Includes index.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

0-443-15954-8

OCLC:

1457640842