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Business & Money

Merchant plants now draw investors from three different worlds-each with its own agenda.
Fortnightly Magazine - November 2004

capital are available to support the development of renewable projects.

Energy Trading

While not a direct source of capital, the slow re-emergence of energy trading is worth consideration. Industry trading operations have been replaced and acquired by financial institutions that recognize the continuing need for liquidity and risk mitigation. Assuming these efforts are successful, merchant risk eventually will lose some of its stigma as investors regain confidence in the ability to hedge off-take price and fuel risk. It's still unlikely that a fully merchant power project with 80-percent leverage will be financed in the near future. However, carefully structured projects with a good fundamental story will be able to carry some element of merchant risk. A broad and reliable trading market will help accelerate this process. -R.P.

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