FTI Consulting has announced the release of the Innovative Financing of Offshore Wind report. The report focuses on renewable energy and explores the significant potential for cutting the cost of energy from offshore wind power by reducing financial fees and interest charges, which represent 28 per cent of project life cycle expenditures.
The report is authored by members of the FTI-CL Energy practice, a cross-practice team of energy experts from both FTI Consulting and its subsidiary, Compass Lexecon. A cost-of-equity sensitivity analysis by FTI-CL Energy professionals demonstrates how small changes in financing variables have a major impact on offshore wind energy costs to the consumer. The levelised cost of energy ("LCOE") is extremely sensitive to changes in debt margin. This analysis found that an increase of 100 basis points results in an average 3.4 percent increase in LCOE. The report also found that the entry of new investors and lenders to the renewable energy sector with innovative ideas for structuring both equity and debt is applying beneficial pressure to financial margins. The report further discovers that offshore wind now rates as an infrastructure asset favourably comparable with airports and highways, qualifying it as a safe harbour for investment and unlocking money markets previously closed to the sector. The report includes an analysis of this trend and reveals that 46 percent of the required investment by 2020 will be met by recycled capital.
