European renewable power asset holders and buyers should quickly re-evaluate their methods and enterprise fashions, confronted with inflationary and provide chain pressures, alongside ongoing regulatory uncertainty pushed by the power disaster.
That is in accordance with digital funding platform, RealPort, whose particular report Profitable in Inexperienced Power’s Age of Inflation, launched on 15 September, outlines the attributes that may outline the ‘winners’ and ‘losers’ in immediately’s unprecedented market surroundings.
The following few years for the renewable power sector will look very completely different from the last decade simply handed. Whereas some tasks are insulated by inflation-linked returns, and there’s short-term reprieve for tasks with excessive publicity to service provider threat and spiralling European energy costs, many different firms within the renewable power sector will likely be compelled to vary tack.
The report finds that many buyers may have no selection however to rethink the debt financing phrases and off-take buildings presently in place. That is very true of tasks financed within the early 2020s, a interval of excessive asset costs and unsustainable yield compression.
For firms that leveraged aggressively on this interval, refinancing and follow-on financing methods within the coming years should pivot towards the fairness markets. These failing to take action will discover the danger of stranded property to be excessive and rising.
Ekow Yankah, Founder, RealPort AG, mentioned: “Our report lays out why renewables buyers can now not depend on the normal guidelines of engagement which have served them so effectively till now.
“Confronted with a extremely advanced inflationary surroundings, renewables corporations are grappling with appreciable uncertainty and have to be alive to a re-evaluation of strategy to proceed delivering the power transition we want.
“After all, there will likely be winners: tasks with inflation-linked returns, stability sheet or all-equity financing, or excessive share publicity to service provider threat are amongst these more than likely feeling assured concerning the financial surroundings the sector finds itself in immediately.
“However for a lot of others, notably those that introduced tasks to market for the reason that flip of the last decade, the market adjustments outlined in our report demand a radical rethink.”