What key trends do infrastructure investors face in 2019? For one, nationalist and populist movements are on the rise – creating an environment of heightened political risk, which investors may find hard to navigate. The result could weigh heavily on regulatory stability, as well as country risk or sovereign credit quality.
In tandem, environmental, social, and governance (ESG) matters are beginning to rise in prominence. Increasingly, investors are stepping up their focus in their investment mandates on companies that are seen as acting more sustainably.
Against this backdrop, the latest edition of Outlook keeps investors abreast of the most-read research from the past quarter – offering insights into how the Infrastructure segment is changing and, importantly, how it may yet evolve.
Outlook is available in PDF here
Moorgate compiles, edits and designs Infrastructure Finance Outlook.
In September 2018, now-outgoing California Governor Jerry Brown signed SB100: a mandate to keep California on a path to deriving 100% of its power from clean sources by 2045. In an article for Utility Dive, S&P Global Ratings’ Michael Ferguson explains how this may mean significant credit implications for the state’s power generators.
Undeniably, SB100 is a boon for renewable energy assets in California. But it’s a mistake to consider these benefits to be mutually interchangeable — instead some assets stand to benefit more than others.
Ferguson writes: “While SB100 will naturally benefit existing solar and wind power, less obvious is by how much and when. Both asset types represent most renewable installations in the Golden State. Yet they are by no means immune from risk.”
Read the article here.
In September, California Governor, Jerry Brown, unveiled a new gold standard for renewable energy in the U.S. – a mandate requiring the state to go 100% “green” by 2045. Yet for all the bill’s praise, a report published by S&P Global Ratings suggests that numerous technological and political challenges lie ahead.
As California edges towards its renewable goal, the economics of gas-fired generation promises to worsen. On the flip side, renewable energy will of course benefit though the extent of this will depend on the asset type. The durability and reliability of hydro and geothermal power, for instance, put these assets in pole position. Question marks remain over solar and wind, however: the intermittent nature of these resources will, according to some estimates, necessitate a 200-fold increase in battery storage. Development in this sector has yet to truly take off.
Following Moorgate’s outreach, Climate Change News, Infrastructure Investor, Energy Manager Today, Energy Manager Today, NA Clean Energy, and Environmental Finance covered the news.
With ample desert space and swathes of sunshine all year round, the countries of the Gulf Coorporation Council (GCC) are well placed to benefit from renewable technology advancements and lowering costs in the solar industry. Rachel Goult, Director at S&P Global Ratings, explores developments in the region in Power Energy Solutions Solar.
To read the full article, please click here.
S&P Global Ratings rated its first onshore wind project in 2003. Since then, the renewable energy sector has undergone tremendous expansion. In Latin America in particular, onshore wind power sources are playing an increasingly important role. Julyana Yokota, Director, considers the unique challenges and opportunities facing onshore wind power producers in the Latin American region.
To read the full article, please click here.
With ongoing advances in sustainability, the risk of being unable to monetise carbon assets grows by the day. A new book from Routledge, Stranded Assets and the Environment: Risk, Resilience and Opportunity, explores the ramifications of asset stranding across various sectors of the global economy.
Mike Wilkins, Head of Sustainable Finance at S&P Global Ratings, supplies chapter 8, drawing on research and real-world corporate case studies to focus on the credit implications of stranded assets.
The GCC faces high spending requirements on two fronts. Infrastructure projects require approx. US$120-150 billion between now and 2019, while refinancing corporate capital market debt also demands US$23.6 billion, due before 2019.
However, green Islamic financing fuelled corporate and infrastructure Sukuk issuance in the GCC last year, writes Michael Wilkins, Head of Sustainable Finance at S&P Global Rating. So, it appears that this nascent asset class could help the development of Sukuk issuance overall in the region.
Read the full article here on pages 44-45.
Thanks to increasing levels of debt financing for climate-aligned projects, wind-generated power has become one of the fastest-growing green industries.
Jessica Williams, Infrastructure Analyst at S&P Global Ratings, considers the undersea transmission cables that are making this progress possible by spurring distribution of the energy created.
Read the full article here.
As key providers of financing, banks have a significant role to play in the transition to a low-carbon economy. S&P Global Ratings’ recent report considers the growth of green bonds issued by banks in recent years and prospects for continued green financing to account for an increasing proportion of bank lending in the future.
The news was covered by Environmental Finance, The Asset, and Quartz.
The proposed bonds that will finance the Eólica Mesa La Paz wind farm, in Mexico, have received an S&P Global Ratings Green Evaluation of E1/91 – the highest score available. Eólica Mesa La Paz will finance the construction of a 306-megawatt (MW) onshore wind project, located in Tamaulipas, by using a new senior secured bond for $303 million with final maturity in December 2044.
Benefitting from a robust project finance legal structure and high-level commitments to reporting on carbon reduction efforts, the project received scores of Transparency (80), Governance (95) and Mitigation (92).
This news was covered by Windpower Engineering and Development, Power Finance & Risk and Renewables Now.