A new global study commissioned by CSC, a leading provider of global business administration and compliance solutions, has revealed that 86% of industry experts predict a surge in project finance deals over the next two years. Project finance is expected to remain a key mechanism for funding large-scale infrastructure projects, with North America leading the charge.
- 86% of Industry Experts Expect Growth in Project Finance Deals Worldwide
- North America Anticipated to Lead with Renewable Energy Projects at the Forefront
- CSC Report Highlights Solar and Wind as Key Sectors for Future Deal Activity
North America to Drive Project Finance Growth
According to CSC’s Project Finance Report 2024, North America is set to experience the largest increase in project finance activity, with 39% of respondents citing the region as the most dynamic. This growth is attributed to a combination of regulatory incentives, particularly the Inflation Reduction Act (IRA), and increased activity by Export Credit Agencies (ECAs), which are driving institutional investments in infrastructure and energy projects.
Bryan Gartenberg, Managing Director at CSC, explained: “We’re witnessing renewed momentum in project finance across markets as the pandemic subsides, regulatory changes take hold, and the urgency to invest in renewable energy grows. This presents both opportunities and challenges for investors and developers globally.”
Renewable Energy Projects to Lead Sectoral Growth
The report highlights renewable energy as the dominant sector for project finance deals, with over half (55%) of respondents indicating that they are focusing on projects in this area. Solar energy is expected to see the largest increase in deal activity, followed by wind, fuel cells, and green hydrogen technologies. These renewable sectors are set to attract significant investment due to their proven bankability and increasing demand.
Within renewable energy, solar projects are anticipated to experience the most growth, driven by advancements in technology and regulatory support. Wind projects come next, while emerging technologies like hydrogen and fuel cells are predicted to rise as they gain financing traction.
Global Market Trends
CSC’s study also provides insight into other global markets. Europe, the U.K., and Latin America are all expected to see increased project finance activity, with 29% of respondents predicting growth in each of these regions. Europe is benefitting from the implementation of European Long-Term Investment Funds (ELTIF 2.0), which provide new opportunities for infrastructure investment.
Michael Morcom, Managing Director for Latin America at CSC, noted: “Although Latin America has lagged behind in infrastructure investment in recent years, countries like Brazil and Colombia are now introducing reforms aimed at attracting foreign capital. These initiatives will help fuel economic growth and create new opportunities for project finance in the region.”
Asia Pacific Emerges as a Key Player
The Asia Pacific (APAC) region is also expected to see a significant rise in project finance activity, with 26% of respondents identifying it as a key growth area. Australia’s commitment to achieving net-zero emissions, coupled with Japan’s role as a major investor in regional projects, is helping to drive the growth of renewable energy infrastructure in APAC.
Con Kleanthous, Managing Director for APAC at CSC, remarked: “The APAC region is seeing heightened activity in project finance, especially within renewable energy, with Australia and Japan spearheading key initiatives.”
Future Challenges and Opportunities
As the project finance landscape evolves, it is expected that increasingly complex financing structures will be required to accommodate new asset classes, such as hydrogen. This will place greater importance on ensuring that all stakeholders, including trust and agency service providers, have the necessary expertise to navigate these sophisticated deals across multiple jurisdictions.
“With the rise in complex project finance structures, having the right experience and local knowledge is crucial for ensuring smooth transactions that protect stakeholders’ interests,” added Gartenberg.
