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Stratton Report event coverage at Projects & Money in New Orleans
Written By: Jen Neville
January 22, 2018
The event developed a growing, dedicated following by creating a powerful venue for the project finance community to connect, share information about upcoming project opportunities, and hear the best available outlook on the financing landscape and deal-making opportunities.
A photo of the panel, Assessing the Changing Power Market Landscape.
While onsite, Stratton Report had the chance to sit in on the 2018 Financing Outlook panel where financiers shared their views on market uncertainties that are shaping the financing landscape this year. Thomas Hoffman, a partner at Ballard Spahr, was the moderator. During the panel, Hoffman reached out to the panelists for their expert insights on corporate PPAs. Below is a transcription of their discussion.
Hoffman: Let’s talk about corporate PPAs. They are an increasingly important segment of the renewable markets. Any special credit concerns when you see a corporate PPA?
Jeff Currie, Managing Director, BMO Capital Markets – I mean, if you look at the corporate market, traditionally, the maximum tenders is 5 years. When we think about corporate PPAs in 10 to 15 years, we have to question, why would you deviate from that lending discipline? I, as a lender, sort of struggle with that and how it is going to be financed within the market.
Brian Goldstein, Managing Director, Cobank – I share Jeff’s view with it. It’s been a challenge for us. We have seen a lot of good in the market, but it is something to think about in terms of how far you can go.
Hoffman: I think you’re both saying, the way you think about corporate lending and shorter tenders is being hybridized with classic renewables, PPA tenders? 10 years is sneaking in.
Bob Simmons, Senior Managing Director, Marathon Capital – There have been a couple done in Texas, and I think you start to see, maybe more and more done to the extent where ERCOT goes up and is not able to meet its supply aggregations versus demand. I think you may see more people moving in that direction, particularly Gulf Coast Petroleum and whatnot.
Alok Garg, Managing Director & Team Lead, Wells Fargo Energy Group – This is how Wells Fargo differentiates itself. We run an advisory ad and we say, okay, as an institution we don’t lend more than 5 years, but who does lend to these corporates for the long term? And as an institution, you have a great, healthy institution bond market that lends to these corporates for 20-30 years. So is there a way that we can finance these projects on a shorter term basis, or 5-year basis? And once you set a portfolio, get it regularly distributed into the institutional market. So we spend a lot of time on corporate PPAs, it’s our priority to be a leader in that. There are issues around whether the PPAs is a corporate entity or subsidiary of that entity, there are issues like that.
Hoffman: Last word.
Patrick Trears, Principal Head of Infrastructure Debt Americas, AMP Capital Investors (US) Limited – From the investor perspective, it depends on the corporate, you know, who’s backing that corporate PPA, what are their strengths and credibility? What is their intention? But investors are definitely going to come for corporate PPAs, we see them as a way to get deals done. I think on the institutional side, we can be a little bit more flexible versus banks traditionally giving out loans to PPAs.’
Stratton Report had a great experience onsite. The venue, located at the Roosevelt Hotel, was the perfect compliment to the lively New Orleans atmosphere. The event itself had over 200 renewable and finance professionals in attendance as well as over 10 spot-on panels. Overall, it was a fantastic conference for project financiers. For information on next year’s conference, click here.
A photo of Karl Dahlstron, partner at Halyard Energy (pictured on the left) and Robert Helton, Sr, Director of Regulatory Affairs at Dynegy Inc (pictured on the right), both speakers at the ERCOT – A Market of Opportunity panel.
What would you say are the major trends impacting the future of renewable development
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