Spotlight on due diligence: The more cautious lending environment means wind projects will only get off the ground once they pass the scrutiny of some major due diligence investigations.

Abstract

Developing a wind farm is a heavily capital-intensive task. While the costs for onshore projects have fallen significantly over the years, securing the up-front finance required to proceed with a development - be it on- or offshore - is a major undertaking. This has been even more apparent since the credit crunch, and many banks previously active in the wind market have withdrawn to focus on their core areas instead. Those that remain are more cautious than ever when it comes to lending. There are various types of financing options available to prospective wind developers these days, but Project Finance – a mortgage-like finance structure for power projects – is a popular option for larger onshore developments, and most offshore wind farms (see box, page 30).