Welcome to the 2025 Project Finance International (PFI) Yearbook. The Yearbook is our annual publication in which we look at the events of 2024 through case studies and the PFI Awards, and look forward into 2025 with a range of themed articles and profiles in the Global section of the book.
2024 – An interesting year to say the least!
Some sectors on the up and some on the slide. The data centre financing sector was definitely on the up as the demand for its services appears to be increasing infinitely due to the AI revolution. Whether the demand projections are actually borne out in the future, time will tell, but clearly demand is on the up.
Equally important for the combined financing and energy markets, the growth of the sector is changing the relationship between clients and the providers of infrastructure services.
Behind-the-fence procurement of power generation is a fairly common feature of deals in the project finance market. If the credit quality of the buyer is good, such an arrangement is credit positive.
Given the huge demand for power from the data centre sector, this relationship is merging into one with DC companies and power generators combining their development activities.
In addition, water suppliers are an important part of the equation. And will the power be green? The best way for these relationships to work will evolve over time. Needless to say it is an exciting time with ample rewards but plenty of risk.
The first carbon capture and storage deals were project financed in 2024 in the UK. Two more are in the project finance market, in the UK and Saudi Arabia. These deals are not cheap. The technology is yet to be taken up on such a large scale although it is proven and the sponsors are major energy companies.
CCS projects are being developed across the world from southeast USA, Canada, Europe, the Gulf and on to Asia-Pacific in countries such as Malaysia and Indonesia.
CCS is not a one-stop net-zero solution for all but it will fit into some locations perhaps linked to high-intensity industrial areas or specific generation projects. What is clear is that now the first deals have been done there are templates to review, models to adapt and expand upon.
The election of Donald Trump raises some interesting questions for the largest project finance market in the world, the USA, which we explore in the Yearbook. It seems the renewables market will continue apace in the US but maybe some of the more ambitious schemes might founder.
One area under the microscope in 2024 was the EV sector – both for charging and gigafactories. While the battery storage technology is racing ahead in the power generation sector, the growth in the EV business has slowed and the sector is at somewhat of a crossroads.
Electric cars are here to stay, however. Green hydrogen is another bright prospect from a couple of years ago and while this has dimmed, it is by no means extinguished.
And offshore wind? There was a shakedown in 2024 with sponsors, particularly the energy majors scaling back.
Costs have gone up and stayed up, bidding for schemes has become a lot less aggressive. But there are still plenty of deals and plenty of interest with a range of projects financed this year and plenty in the market for the new year.
But there needs to be a realignment of the sector in 2025. As with EV and hydrogen, realistic goals and targets need to be set for what should and can be achieved.
Rod Morrison, Editor, PFI
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