To meet the rising demand for affordable, reliable electricity, energy developers and manufacturers need trillions of dollars in capital. Connecting to the necessary financing at each stage of a project lifecycle can present challenges, however. 

On March 14, Crux CEO and co-founder Alfred Johnson sat down with a panel of experts to discuss clean energy debt financing markets. Panel members included:

• Daniel Fuchs - Managing Director, BlackRock, High Yield Infra Debt
• Nick Sarro-Waite - Associate Director, Macquarie, Metals & Energy
• Elena Maria Millerman - Partner, Davis Polk & Wardwell LLP
• Andrew Hsiung - Capital Markets Solutions & Finance Lead

Current state of the market

The panelists began by discussing the trends in the debt financing market. They noted that market participants face a range of challenges. Developers and manufacturers face gaps in knowledge of financing structures — particularly in an evolving market landscape — bandwidth to effectuate several transactions for every single financing across a project’s lifecycle, and connectivity in the markets. For lenders, sourcing high-quality deal flow is a major pain point. The panelists see a great deal of opportunity for more targeted matching and outreach.

Market participants are also evolving as the macroeconomic environment changes. They must think creatively about the different stages of the financing journey and their business plans. New debt products and financing structures are emerging to meet evolving developer needs, and new pockets of capital are appearing to target more specific opportunities in the market. 

Increase in new technologies

Buoyed in part by the ability to monetize transferable tax credits, more new technologies are entering financing markets. While the amount of capital flowing into the system has increased, panelists noted that the rise of new technologies can in turn lead to the rise of novel issues. Developers need to take the time to understand any risks and how to mitigate those risks with capital providers. 

Panelists recommended that developers working on newer technologies ensure the rest of their structure (e.g., high-quality sponsor, ability to operate at scale, conservative take-off structure, decent amount of equity). The underlying cash flow stream is also a critical consideration for potential lenders.

Cost of capital, capital planning, and more

Panelists went on to discuss:

• How the cost of capital is evolving.
• Frameworks for how developers should think about cost of debt, leverage, and other relevant metrics.
• Financing tools and structures that developers and manufacturers can use to optimize their capital structures over time.
• The effect of transferable tax credits on financing structures.
• What they’re watching in 2025 and beyond.

Register below to watch the discussion on-demand.