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Merchant Power: Financing strategies
01 January 2000
By James Bartlett and Reiner Boehning from the Global Energy and Project Finance Group at CSFB.
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The US electric generation market is rapidly evolving towards a merchant environment, where electric energy and capacity is sold into open wholesale electricity markets under short-term power sales contracts or spot arrangements. As a consequence, non-recourse financings with varying degrees of merchant exposure are not the exception to the rule, they are becoming the rule. The traditional PPA-based project financing in its pure form is a vanishing breed.
This article outlines how the various US financing markets have adopted to this paradigm shift and highlights a number of representative deals that were recently executed.
Overview
1999 has seen a significant supply of financing transactions with either fully merchant or semi-merchant characteristics. This supply was fueled by two parallel developments: (i) the continued stream of utility asset divestitures with more than 30,000MW changing hands this year, and (ii) the significant growth in greenfield merchant plant financings. The latter has...
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