Project Finance in the Energy Industry: New Debt-Based Financing Models

Abstract:     
The paper aims to examine the development of new financing models for project finance to attract private investors to finance large European energy infrastructure projects. In particular, the paper investigates the uniqueness of the project finance as a rapidly growing field in finance, the financial characteristics of the project bond market as one of the vehicles for funding energy projects, and the role of the credit support provided by the European Investment Bank and the European Union to promote the bond-based financing schemes. The paper is organized as follows.

Section 1 provides a general description of project finance. Section 2 identifies the economic reasons for using project finance and assesses the role of the project bond market to fund project finance in the energy industry. Section 3 evaluates the proposed financial support from the European Investment Bank and the European Union to boost the European project bond market. Final sections discuss policy implications and conclude.

Number of Pages in PDF File: 11

Keywords: Project finance, Energy industry, Project bond, Credit enhancement

JEL Classification: G10, G11, G15, G18, G21

Accepted Paper Series