Abstract

This paper focuses on overcoming the challenges of developing integrated gas-to-power infrastructure. It discusses strategies for driving the viability of LNG-to-power megaprojects– providing considerations for financing and risk mitigation. Additionally, it examines the merits of adopting an integrated approach to project development, with a close look at the Gas Natural Acu (GNA-1) project in Rio de Janeiro, Brazil, which is the largest LNG-to-power development in Latin America. For the project, the power plant's original equipment manufacturer (OEM) became a 33% equity investor. This, along with commitments from other strategic equity investors, significantly de-risked GNA-1 and played an important role in reaching final investment decision (FID).

The paper offers detailed insight into the inherent risks and challenges LNG-to-power project stakeholders encounter during development. It also discusses how these risks can be addressed and how projects can be made more attractive to institutional investors through innovative project financing structures. The ability to secure financing from a variety of equity sources with strategic interests in the project is critical, as it allows the sponsors to raise a greater amount of debt than would otherwise be possible. In doing so, sponsors are able to assume limited recourse after project start-up and in many cases, enjoy customized loan repayment profiles, which contributes to better overall project economics. Co-financing also reduces investment risk and allows for capital to be raised at a relatively low cost, which benefits all stakeholders.

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