Sources of funding for new transmission developers ‘changing guard’ – banker

The amount of time it takes to develop a transmission project is discouraging certain lenders from financing that development phase, Roberto Simon, managing director of energy project finance for Societe Generale, said at TransmissionHub‘s TransForum Texas April 26.

Transmission developers today report it is taking them about 10 years to permit their projects, obtain rights-of-way, and negotiate their tariffs and contracts, Simon said.

“What we’re finding is the equity typically to back these developers is changing guard,” Simon said. “We’re seeing equity funds and infrastructure funds are growing tired of the long development time frame so it’s becoming more difficult for developers who don’t already have existing assets to find entities to back them during the development process, which is problematic.”

As the world of equity and infrastructure funds shrinks, development lending will become concentrated in more experienced funds with larger coffers, Simon predicted.

“The smaller funds who find the space attractive but don’t have the stomach for development risk will fall by the wayside,” Simon said.

Lending could also migrate to corporate developers that have specifically targeted the transmission space, said Michael Tribolet, managing director, power and utilities, for Wells Fargo.

For corporate-sponsored projects, “there is no shortage of money,” Simon said.

 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.