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International Project Financing

Obtaining financing is the most difficult challenge that site owners face when completing an energy efficiency retrofit or installing on-site power generation in commercial buildings or industrial plants. The owners must decide whether to self-finance or seek third party investors, for example, or whether their financing will be defined as debt, equity or both.

Energy savings themselves often provide enough return on investment to justify a project, but specialized financial institutions and sources can also provide funding. Historically, financing has been limited for projects with capital costs under $100 million. New enterprise funds, however, along with multi-lateral bank programs and equity investors, have created pools of capital for energy efficiency, cogeneration and renewable energy projects. Performance contracts, equipment leasing and "shared savings" are financial techniques that can help to fund energy projects. The due diligence requirements of capital sources are often the key to obtaining financing.

Realizing that funding energy projects can be difficult, the California Energy Commission provides information and contact names that can help find sources of capital.

Two financial handbooks describe the project financing process. Each handbook includes a self-evaluation test for project developers to help them determine their own financial readiness and evaluate the risk of their project to a potential investor. Each handbook identifies project opportunities and provides a step-by-step process to complete the projects.

International Project Financing, Volume I: A Handbook for International Energy Project Developers (PDF file, 80 pages, 6 MB) addresses power generation projects. The companion handbook, International Project Financing, Volume II: International Financing Strategies for Energy Efficiency Projects which focuses on energy saving projects is currently unavailable. (To download a free copy of the Adobe Acrobat® Reader, visit the Adobe website.)

This website will also include information on annual International Energy Project Financing Conferences.