The Magazine: Has financing become a “deal winner” or “deal breaker” for big energy projects?
Roland Chalons-Browne: Financing is definitely a key differentiator. Particularly in developing countries, there is a need for help on the financing side. But even elsewhere, customers increasingly expect technology suppliers not just to provide the kit, but also to participate financially – or at least help mitigate the risk.
Remember, most large projects are now structured as special purpose vehicles. Siemens can take minority equity stakes, bring in other parties and even help develop the entire contractual framework to make the project more “bankable”. Risk mitigation is key: It is often impossible to avoid risk entirely, but it is crucial to formulate a scheme that reduces risk to a manageable degree or allocates risk to the party who can deal with it best in a project.
Finance is the go-between here. There is tremendous demand for infrastructure development. And there is lots of liquidity available. But investors can have different time frames, risk tolerances and return spectrums. It is challenging to bring the two sides together.