Energy transition, shifting risk dynamics, and changing investor preferences are reshaping the infrastructure financing landscape in the UK and Europe for the second half of this decade. For issuers of project finance transactions, staying ahead of these trends will help position deals to attract investment.

1. Battery Storage Is Now a Core Infrastructure Asset:  Europe plans to double renewable capacity by 2030.¹Disclosure number, please reference additional details in the Disclosures section at the bottom of this page. But grid stability hinges on largescale battery storage. Investors will prioritise storage projects with clear cash flow strategies and strong operational partners. A mix of contracted and merchant revenue streams could increasingly shape battery deals to ensure reliability and upside potential.

2. Decarbonisation Is Reshaping UK Power Markets: The UK’s goal to fully decarbonise its power sector by 2030 ²Disclosure number, please reference additional details in the Disclosures section at the bottom of this page. signals a long-term shift in energy finance. Policy incentives, grid constraints, and hybrid funding mechanisms all play a core role in helping these new wind and solar project structures secure capital. However, multi-asset renewable portfolios can result in administrative complexity.

3. Data Centers Are Becoming a Major Infrastructure Investment: The demand for AI, cloud computing, and digital infrastructure is driving significant data center financing through project structures. Projects that combine real estate, structured debt, and renewable energy integration to enhance sustainability. We expect innovative projects that blend infrastructure financing with corporate-backed power purchase agreements (PPAs).

4. Hydrogen and Carbon Capture Require Financial Engineering: The UK’s £22 billion commitment to carbon capture and hydrogen infrastructure³Disclosure number, please reference additional details in the Disclosures section at the bottom of this page. is accelerating early-stage investment, but commercial viability remains uncertain. Deals will likely include government-backed risk-sharing to attract institutional capital. Issuers will focus on securing creditworthy offtakers to buy output and de-risking construction phases to make projects financeable.

5. Offshore Wind Growth Is Outpacing Supply Chain Capacity: Offshore wind is one of Europe’s fastest-growing energy sectors. Next-generation floating wind technology and deeper-water projects will also require new investments to scale. However, installation delays, supply chain bottlenecks, and vessel shortages may slow deployment. To manage project risk, developers combine contingency funding, flexible milestone payments, and robust Engineering, Procurement, and Construction (EPC) oversight.

6. Merchant Risk Is Reshaping Infrastructure Financing: European lenders are being asked to accept more merchant risk because many projects no longer have fixed revenue streams. With market-driven models, project sponsors balance hedging strategies, diversified revenue sources, and robust financial modeling. Portfolios mixing contracted and merchant exposure are becoming the new standard for maintaining investor confidence.

7. Bond Financing Is Expanding in Infrastructure Deals: With banks tightening balance sheets, project sponsors are increasingly tapping bond markets to diversify funding sources. Green bonds and sustainability-linked debt are gaining traction, offering new liquidity avenues for infrastructure transactions. Issuers can position these debt deals to align with institutional investor demand for ESG-linked assets.

8. Infrastructure Investors Are Favoring Simplicity and Scale: Investors are shifting toward larger, simpler, and more scalable deals over fragmented, niche projects. Highly structured or multi-phase transactions are facing pushback as lenders prioritise clear capital deployment pathways for their dry powder. Many developers emphasise straightforward risk allocation, predictable cash flows, and exit strategies to align with secondary market demand.

9. Engineering, Procurement, and Construction (EPC) Models Are Evolving: In sectors like battery storage and renewables, procurement costs now outweigh engineering and construction costs. The shift leads developers to negotiate portfolio-wide procurement agreements to lower costs. Financial structures are likely to evolve to accommodate split EPC contracts across projects while ensuring performance accountability.

10. Public-Private Partnerships Will Drive Large-Scale Investment: Government-backed initiatives like GB Energy are accelerating energy investment, but private capital remains essential. Hybrid models combining public subsidies, concessional financing, and institutional investment are becoming more common. Structuring mechanisms like revenue floors, availability payments, and credit enhancements will be crucial in making these partnerships investable.

The path forward for infrastructure projects involves shifting priorities and innovative deal structures to achieve them. Successful deals will likely be those that:

• Ensure their structure aligns with evolving investor risk thresholds, especially around market pricing of outputs
• Incorporate government-backed incentives while maintaining private-sector flexibility
• Factor in the execution challenges of supply chain risks, procurement strategies, and new financing models.
• Manage administrative challenges in complex project portfolios and structures with robust trustee and agency support

With this changing playbook for infrastructure, are your Project Finance deals structured for the next decade? Our dedicated team will work with you every step of the way to fully understand the structure, cash flows, roles, and duties in order to deliver the full suite of trust and agency services required by your specific transaction.

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To learn how Wilmington Trust can support your next transaction contact us today.⁴Disclosure number, please reference additional details in the Disclosures section at the bottom of this page.