The wealth of opportunity After a decade of effectively zero growth, U.S. power demand is predicted to expand at a rate not seen since the 1970s. Based on the needs of data centres for cloud services and generative AI, and the electrification of transportation, approximately 500 GW of new generation capacity is expected to be connected to the grid over the next 10 years.1 This is over twice the amount added in the past two decades. The development platforms building said generation have also become increasingly capital intensive. This is driven by the race to grow project pipelines and the increased complexity of installations – interconnection queues averaging over six years and the pairing of storage with new solar installations becoming the norm, being two such examples. Inflation is also a factor, leading to higher supply chain costs and increased labor costs due to shortages of specialized labour. These platforms face higher costs of capital because they fall outside the bounds of conventional project finance. In these instances, lenders must be able to appropriately assess merchant risk, feasibility of project budgets and completion timelines, in addition to leveraging financial and operational covenants to construct a robust investment with adequate downside protection. This is just one example among many that illustrates the breadth of opportunity and the depth of knowledge an experienced credit manager can use to help investors meet their objectives.

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