S&P’s December edition of Infrastructure Outlook looks to Paris for a future energy framework

As the United Nations Framework Convention on Climate Change (COP21) draws to a close in Paris this week, Michael Wilkins, Managing Director of Infrastructure Finance and Head of Environmental Research at Standard & Poor’s Ratings Services (S&P), explores the likely outcomes in this month’s Infrastructure Outlook.

Wilkins suggests that COP21 success would be the realisation of a flexible, high-level political framework that allows for bottom-up national pledges, which could later be translated to concrete policies to decarbonise global economies by 2100 and limit the world’s rising temperature to 2 degrees centigrade. Of course, one way to achieve this is to place great emphasis on renewables.

Highlighting the growing appetite for renewables, last month saw S&P’s first ever rating of an offshore wind project, WindMW. The project to operate a 288 megawatt offshore wind farm in the North Sea has been assigned a ‘BBB-’ with a ‘stable’ outlook due to predictable wind resources which should maximise availability.

Certainly, cleaner, greener energy is at the top of the agenda in Paris. But in another prominent feature, S&P’s Pierre Georges explains how European utilities are having to set to aside large sums – potentially up to €100 billion in total – to cover the costs of decommissioning nuclear plants and the disposal of nuclear fuel waste over the next two decades. Given the size of these provisions, any change in their valuation would most likely have implications for their credit metrics and their ability to invest in new projects.

To view these articles and other key rating movements, please see the full version of S&P’s infrastructure newsletter in pdf or e-book format.

Investors would do well to consider environmental factors, S&P’s Michael Wilkins tells the ICC

ICCAs world leaders meet in Paris, many are looking to their governments to drive the fight against climate change and contribute to the transition to a low-carbon global economy.

To this end, directing future investment away from fossil fuel-based energy projects towards clean, green energy alternatives will be key, says Michael Wilkins, Managing Director of Infrastructure Finance and Head of Environmental Research at Standard and Poor’s, in an article for the International Chamber of Commerce (ICC). He points out that as climate-related risks are increasingly being factored into credit ratings, investors would do well to take notice.

To view the full article, please click here.

S&P analysis of European nuclear power debt picked up by City AM and Energy Live News

nuclearplantEurope’s reliance on nuclear power has given it the largest fleet of plants in the word. Yet as countries – notably Germany – begin to phase out their nuclear portfolio, the financial impact is set to be significant. The considerable costs of decommissioning nuclear plants and dealing with the fuel waste will highlight the financing provisions demanded of nuclear operators by regulators – but will such provisions be sufficient?

Standard & Poor’s has released a targeted report assessing the credit implications for the nuclear energy industry in an environment of low growth and phase-out. Specifically,  the report looks at the risks and liabilities of the nuclear industry, and the implications on investment and credit ratings. S&P shows that at the end of 2014, the largest eight plant operators in Europe faced gross nuclear liabilities of $100 billion.

The report was picked up by the environmental and financial press, including Energy Live News and City AM.

S&P’s first rating of an offshore wind farm covered by the specialist press

windfarmThe energy market’s transition from fossil-fuel dependency to a cleaner, greener system has been gaining significant momentum over the past five years. In particular, offshore wind has gone from strength to strength. As such, Standard & Poor’s Ratings Services assigned their first ever preliminary credit rating of ‘BBB-’ to offshore wind project WindMW.

Commonly known as Meerwind, the wind farm is located off the north coast of Germany, and has launched dual-tranche bond issues totalling over $1 billion. According to primary credit analyst Michael Ferguson, the stable outlook reflects the expectation of predictable wind resources and operations that should maximize availability, as well as an agreement with Siemens.

Thanks to targeted media coverage from Moorgate, the news was picked up by a range of specialist energy and investment press, including Environmental Finance, PEI’s Low Carbon Energy Investor, PFI (Paywall) and IJGlobal (Paywall).

Securitising sunshine: Environmental Finance talks to S&P about the future of solar asset-backed securities

Solarsonne_4Following Standard & Poor’s (S&P) key role in helping to bring some of the first solar power asset-backed security (ABS) transactions to the market, Environmental Finance interviewed Trevor D’Olier-Lees, Director US Utilities & Infrastructure at S&P, about the future of the sector. D’Olier-Lees stresses that the development of solar ABS relies heavily on approval from credit rating agencies, and although the limited operational history of the sector means solar projects will remain at low investment grade credit levels for now, shorter tenor deals could see the situation improve.

“Traditionally, there would be conventional lending to an asset class for a decade before the move to securitisation,” he points out. “A lot can happen over 20 years….that’s up to the bankers.”

To read the interview in full, please click here. (Please note this link lies behind a paywall)

SFS’ Roland Chalons-Browne writes for Environmental Finance on best practices in offshore wind financing

26281-windWith climate change climbing higher on the political agenda for most countries in Europe, governments are increasingly exploring alternative sources of energy. One key candidate is offshore wind power. But establishing the proper financing necessary for offshore wind projects is no easy feat. As such, Roland Chalons-Browne, CEO at Siemens Financial Services, writes for Environmental Finance on the challenges to financing offshore wind projects at different stages of a project’s lifecycle, from early stage negotiations to operations and maintenance. Building on SFS’ extensive experience in the sector, he goes on to suggest a number of ways that these challenges can be overcome in order that the sector realises its full potential.

To read the full article, please click here.

Natixis Closes Marcona and Tres Hermanas Financings

Marcona, Peru’s largest wind project, has secured two financing agreements totalling $254 million from Natixis. The French bank acted as sole institution tranche underwriter, sole subordinated loan placement agent and sole hedging provider.download (7)Natixis’ Pascal Soldaini, Managing Director, Head of Global Infrastructure & Projects Latin America, said, “Natixis is pleased to have supported its valued client, Cobra, on these two landmark transactions with a tailor-made financial structure combining various sources of financing.”

Following Moorgate outreach, the news was covered by Bloomberg, TXF, GTR, Trade Finance, Energy Investor, Latin Finance, InfraLatin AmericaNews Renewables, ReNEWS and Peru Week.

Siemens Financial Services (SFS) Gemini offshore wind project awarded Wind Deal of the Year 2014 by Environmental Finance magazine

The Gemini offshore wind project – in which Siemens Financial Services (SFS) was an equity provider – has been awarded a Deal of the Year award by Environmental Finance magazine.

The record EUR2.8 billion wind deal reached financial close in May last year, setting a new benchmark for project finance volumes in the offshore wind and renewables sector.

In an in-depth award write-up, Environmental Finance cites stakeholders on both the debt and equity sides of the Gemini transaction, including Siemens Financial Service’s EMEA Head of Energy Investments, Wolfgang Bischoff, explaining: “SFS brought investing experience and credibility to the finance process”.

To read the Environmental Finance Wind Deal of the Year 2014 write-up, please click here.