The Price is Wrong: Why Capitalism Won't Save the Planet

by Brett Christophers

To understand the financing of renewable power development, there is one final crucial consideration. This is the question of how – or perhaps more accurately, where – particular projects are held in legal– organizational terms. If the developer is a major energy company (say, Sweden’s Vattenfall), a wind or solar farm is generally held like any other fixed asset: it appears on the company’s balance sheet. In the case of specialist developers, however, this is rarely how it works. More commonly, an individual project is made into a ‘company’ in its own right, using a special-purpose vehicle (SPV) structure. In other words, the asset does not appear directly on the developer’s balance sheet; it sits within the SPV, in which the developer, in turn, owns shares. Sometimes, in the case of especially large projects such as offshore wind developments, major energy companies also use off-balance-sheet structures, establishing SPVs that are often joint ventures in which more than one energy company holds shares.