Renewables supply chain costs are going up. The cost of project debt is going up. The cost of hedging is going up. But costings for many projects were agreed long before the current turmoil, which will leave some out of pocket. Add merchant risk to the mix and what had become a largely vanilla project finance market is looking decidedly tutti frutti.
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Traditional infrastructure deals in Europe have been sporadic in the first half of 2022. But strong bank and investor appetite is keeping European project deal flow regular in the rapidly growing fibre sector.
In the face of rapidly increasing development costs, the US solar sector has witnessed a notable uptick in PPA prices. Higher prices may persist until inflation lessens and until greater regulatory security is offered to developers in terms of solar panel supply chains.
The successful close on the Kenhardt solar and storage portfolio marks a bright spot in an otherwise frustrating period in South African power. But battery technology probably still needs to develop a wider local lender following.