Energy Finance, Project Finance and Valuation

Energy is the most capital-intensive consumer business in the world. A wind farm, a gas field, a transmission line or a nuclear plant is paid for almost entirely before it earns anything, and then earns slowly for twenty to sixty years. That makes the price of money a cost of energy: in a stylized onshore wind project, raising the cost of debt and equity by about 2.5 percentage points raises the power price the project needs by roughly a quarter, with nothing about the turbines or the wind having changed. This section explains how energy assets are actually financed and valued. It covers non-recourse project finance and how lenders size debt on cash flow (the debt-service coverage ratio, P50 and P99 production cases, sculpting and reserves); tax equity and, since the Inflation Reduction Act of 2022, the transfer market for US clean-energy tax credits (~$42bn of credits transferred in 2025, ~$63bn monetised in total, Crux, reported); yieldcos and why most of them failed or were absorbed; reserve-based lending and net-asset-value (NAV) valuation for oil and gas producers; regulated-utility valuation (rate base × allowed return); the valuation of integrated majors; infrastructure funds; securitisation; and state lenders such as the US Department of Energy's Loan Programs Office. It closes with the cases (SunEdison, Ørsted's 2023 impairments, Vogtle, Hinkley Point C, Kinder Morgan's 2015 dividend cut) that show what happens when the capital does not match the asset, and how an experienced project-finance banker, utility analyst or energy investor reads a deal.