2025 Global Project Finance Outlook: Steady Outlook for Renewables with Emerging New Trends; Digital Infrastructure Powers Ahead; Scope of Project Finance Expands

Our outlook for project finance in 2025, which includes renewable wind, solar and run of river hydro, thermal gas generation, midstream pipeline assets, digital infrastructure, and bespoke assets, is largely stable.

-- As repowering of ageing wind and solar assets is becoming an important option for the energy transition to net zero emission, independent engineers, financiers, and rating agencies need to have a prudent view on the useful life and future capital expenditures profile of these assets.
-- Solar power is expected to outpace wind power, as solar power is expected to meet half of the global demand growth in 2025.
-- Tax-equity credits and financings will continue driving activity in renewable projects.
-- Coal-fired power has been gradually phasing out as output from renewables is expected to outpace that from coal-fired facilities for the first time in 2025; however, natural gas generation continues to demonstrate notable resilience.
-- Battery energy storage system appears to have become mainstream and is now widely accepted by project financiers and grid operators.
-- Project-financed digital infrastructure assets will likely maintain momentum and investor attention.
-- The types of assets structured as project finance transactions have been expanding beyond traditional power generation or midstream assets, and are now encompassing areas including semiconductor fabs, financial services, and telecom core networks.
-- Indigenous equity participation in energy projects will likely increase.

According to Victor Leung, Senior Vice President, Sector Lead, "We anticipate that our existing portfolio of credit ratings will remain relatively unchanged in 2025 on a structural basis, as project finance transactions generally are designed to shield cash flow and credit metrics from macroeconomic volatility through strong creditworthy offtakers, long-term take or pay offtake contracts with mitigated pricing or volume risk, while new and expanded asset classes covered by project finance will require renewed attention to project finance fundamentals."