Feature
Mar 1998
Merchant generator valuation and capital structure
As electricity and fuel markets liberalize, merchant generating plant will proliferate. This trend raises the question of the best capital structure for such generators for successful project financing. Far from following rules of thumb about levels of debt and equity, correct structure must be derived from rigorous modelling of the complete system and the place of the prospective generator within it. Only then can risk be appropriately shared between lenders and investors. Lynn Smull
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