The use of project finance in various sectors of the world economy has been growing over the past 10 years. In this context, thermal power plant project financing becomes extremely important. Despite the rapid development of renewable energy sources around the world, thermal power plants will remain a viable option for energy security and economic growth in many regions of the world in the coming decades. These projects are actively developing in Russia and the CIS, the EU, the USA, Latin America, Africa, the Middle East, India and East Asia.
Project finance helps solve this problem by providing several principal benefits for sponsors:
•Off-balance sheet accounting •Improving overall project efficiency •Attracting funding on the most favorable terms •Minimizing the project’s impact on sponsors’ creditworthiness •Optimizing taxes in the best interests of the participants •Rational distribution of project risks, etc.
Viola Funding Limited offers comprehensive financial services, including investments and financing of thermal power Plant around the world.
We also perform financial modeling and advise clients at any stage of the project. Our partners include the high net-worth angel investors and other investment funds, venture capital firms, construction companies and electrical equipment manufacturers from all over the world. We are ready to find the optimal financial or technical solution that will satisfy your needs and become the basis for building a successful and sustainable business.
Despite the rapid development of renewable energy sources around the world, thermal power plants will remain a viable option for energy security and economic growth in many regions of the world in the coming decades.
Benefits of project finance for Thermal power plant
Thermal power plant project finance differs significantly from other methods of financing business activities and is characterized by a number of features. Project finance is based on a system of interconnected participants, formed for the implementation of a specific project.
The financial documentation for project finance is stricter and more complete than for conventional finance models. Unlike corporate finance, project finance focuses primarily on the cash flows generated by the project, such as projected or average debt coverage ratios.
The choice of a financing model is based on a financial strategy that covers the activities of a particular company. Meanwhile, it can also be useful for financing the construction of gas storage facilities, any power unit and a piece of infrastructure that is a separate business entity.
In the past decades, the project finance model has rarely been used in the European energy sector and has mainly been implemented to finance wind or solar power plants.
Model of financing for thermal energy sector
Among the key elements of thermal power project conventional finance, experts name special provisions that determine the acceptable level of the company’s financial indicators. Given the ease of obtaining corporate finance, the low cost, and the relatively low level of debt among thermal power companies, they usually prefer this type of financing.
In thermal power plant conventional finance, the borrower displays the investment project on the balance sheet and is fully responsible to the lender with all assets. The loan is repayable according to the agreed schedule and the maturity depends on the company’s projected cash flows.
Corporate finance usually includes loans based on the results of the company’s current business activities.
Another option is a bridging loan. This assumes a short-term loan until long-term financing is organized as a result of the completion of another investment project.
Investments involve additional risks, so banks seek broader recourse and prefer to work with clients with a strong market position. Given the high investment costs of building thermal power plants and the capital intensity of such projects, many companies are looking for alternative sources of funds.
Acting as your advisor, Viola Funding Limited is ready to develop optimal financial models to attract funding through our well-to-do high net-worth angel investors and investment funds.
Together with our angel investors, we have successfully implemented dozens of projects in many countries around the world. Today, our experience and network of business contacts will serve the success and prosperity of your energy business.
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