Donald Trump’s election victory has prompted discussion concerning a future overhaul to America’s energy policy. In turn, this has heightened uncertainty for many U.S. infrastructure investors – notably in renewable energy projects, such as hydropower.
In an article for FTSE Global Markets, Michael Ferguson, director, US Energy Infrastructure, S&P Global Ratings, explains why these fears are largely unwarranted and that, in fact, American hydropower facilities are enjoying a financing renaissance. Indeed, he notes that asset financing transactions involving the country’s existing hydro plants have commanded bond prices more attractive than those of comparable fossil fuel facilities.
Ferguson writes: “While we are unlikely to witness the construction of new plants in the near future, this marked increase in financing for the incumbent 2,200 assets is likely to continue during the next decade.”
With industry trends suggesting that hydropower will be resilient to any market or political pressures, it appears hydro assets will continue to be refinanced – likely on favourable terms.
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