Renewable Energy Financing: Protections, Exit Options, Key Considerations

Description

Continued demand and advancements in clean energy have enhanced the growth of creative project development transaction structures for the success of these projects and the returns to their investors. However, these investments involve a variety of risks for minority investors. Counsel for both sponsors and investors must recognize critical issues in renewable energy investments and develop methods of structuring deals to protect minority interests.

In recent years, investors have increased their focus on renewable energy assets with significant capital being raised each year. A sponsor may source or initiate the project, recruit co-investors, and issue equity stakes to investors or prospective off-takers participating at a minority investor level. Renewable energy counsel should have a working knowledge of the common structural considerations for such transactions and critical provisions to ensure minority investors are adequately protected. Essential conditions to negotiate involve project information rights, the appointment of representatives, restrictive covenants and consents, voting rights, anti-dilution, transfer restrictions, and other vital items.

In addition, investors must have a firm grasp on available exit options upon realization of returns and liquidating their positions or to limit their losses. Before committing to specific investment agreements, renewable energy sponsors and developers must understand potential investors' exit expectations.

Listen as our authoritative panel discusses key provisions when negotiating and structuring investments in renewable energy projects, minimizing liability, and offering exit options for minority investors of renewable energy projects.