ABSTRACT
The term “project finance” is commonly used while talking about green businesses, but for many people little is understood about how it actually works and its importance in the large scale, capital-intensive clean technology projects. The reality is that project finance has helped move solar, wind, geothermal, and other projects from the labs and small facilities into utility-scale projects. Project finance is different from other traditional forms of financing in that the financing is based on the risk and future cash flows of the project rather than the inherent risk of a specific company. One of the catalysts for the explosive growth in clean technology investment in the past decade has come from project finance, and the opportunities it offers to certain investors. The details behind a project finance transaction can be complicated and confusing. However, there are some key things that are important to understand regarding how the transaction works and the parties that are involved.
