Project Finance continues to attract meaningful capital, but the conversation is shifting from whether projects can be financed to how increasingly complex assets should be structured, financed, and administered. Across renewables, battery energy storage, conventional power, oil and gas, and digital infrastructure, sponsors and lenders are navigating a market shaped by rising electricity demand, grid constraints, energy security concerns, evolving policy support, and a broader mix of capital providers.
Recent industry discussions, including Proximo’s events in Prague and Nashville, point to six themes likely to influence transaction activity over the next 12 to 18 months. When we last wrote about Project Finance trends a year ago, several of these themes were still forming and visible mainly in the U.S. They have since become more pronounced across regions and are impacting the deals we see in our role as a trustee and agent.
1. Data centers and the power crunch
Data center electricity demand has become a driving force behind new-build power generation, up 17% in 20251. The massive power demands of hyper-scale data centers require a comprehensive approach to energy supply, well beyond any excess capacity that the grid can offer up. Some data center developers are pursuing campus-scale projects that incorporate generation in a “behind the meter” approach.
For lenders, these combined data center and power supply transactions are likely to increase the need for more detailed underwriting to understand the interaction among various moving pieces. While inside the fence power generation solves some problems, does it also create others that may be hard to predict?
Self-supply certainly raises the engineering stakes. When a developer builds generation to power a data center directly, that plant carries its own engineering, procurement, and construction (EPC) exposure, which stacks on top of the construction risk in the data center itself. Lenders may weigh a second potential mismatch as well: the servers inside a data center may turn over in 3 to 5 years, while the building and its power supply, are financed against a 20-year life. Lenders can be expected to respond by determining bankability around what they will fund and on what terms.
What we're watching: We are watching whether the market settles on a standard way to finance power supply for data centers, or whether each transaction continues to take a more customized approach. At the moment, there appear to be several possible paths, including behind-the-meter generation, dedicated power projects, contracted supply, and battery energy storage. Each one brings different considerations for lenders and investors, especially around milestones, collateral, intercreditor arrangements, and long-term administration.
2. Strong demand for conventional power and battery energy storage
Natural gas-fired generation and battery energy storage systems (BESS) have traditionally solved different problems in the power sector, but growing load demand, grid congestion, and renewable intermittency are bringing both into sharper focus. For hyperscale data centers and other large-load users, the question is increasingly less about choosing one technology over another and more about building a power strategy that can support reliability, speed to market, and long-term flexibility.
The scale of storage deployment underscores that shift. According to the International Energy Agency (IEA), battery storage was the fastest-growing power technology in 2025, with 108 GW of new capacity deployed globally, up 40% from 20241. That growth reflects storage’s increasingly important role in firming renewable output, relieving grid pressure, and helping match electricity supply with demand.
Natural gas-fired generation remains attractive in markets where large, dependable loads require dispatchable power at a scale and timeline that renewables alone may not be able to meet. At the same time, renewables continue to benefit from cost competitiveness in many markets and alignment with decarbonization goals. BESS helps bridge those priorities by firming intermittent output, shifting power delivery to higher-demand periods, and creating more optionality for projects constrained by grid availability.
As stand-alone storage assets become more common, financing structures may need to account for revenue models that are more varied than traditional long-term offtake arrangements. Depending on the market and project structure, storage revenues may include capacity payments, tolling arrangements, merchant exposure, ancillary services, energy arbitrage, or contracted offtake. That mix can increase the importance of clear documentation, defined operating covenants, and administrative processes that can adapt as revenue models evolve.
What we’re watching: We are paying attention to how sponsors and lenders are solving for power needs in markets where grid access, reliability, and speed to deployment are becoming harder to separate. Some projects may rely on independently financed gas-fired generation, while others may combine renewables, storage, tolling arrangements, or contracted supply. As these structures become more layered, the details matter: how results are reported to key stakeholders, like lenders and investors, how payments move, how covenants are tracked, and how the parties stay aligned over time.
3. The capital stack keeps layering
We continue to see a growing mix of capital sources active in global Project Finance. Traditional commercial bank lenders still play a critical role in providing flexible debt for construction financing, as well as short-to-medium term debt and letter of credit facilities. However, there is a strong supply of capital from private credit funds and infrastructure debt providers. On top of this we’re also seeing a significant and growing level of activity on the part of institutional investors.
The result is not simply more available capital, but more coordination across lenders, investors, trustees, agents, and administrative parties. As bank tenors compressed years ago, and largely remained compressed, that opened a door to new sources of capital. The very largest transactions being done have found significant liquidity in the 144a market, with long-term project debt available out to 20 years and more. Private placement investors are also providing strong liquidity in the 4(a)(2) market which is highly flexible and can come to market just as quickly as a traditional syndicated loan transaction.
All of the above require in-depth participation from trustees and agents, especially on transactions where there is no “built-in” agent among the lender group. An independent agent can provide continuity with the transaction over its entire lifespan and reliability to lenders and bond investors. This is especially true on hybrid structures that have both loan and bond tranches, requiring intercreditor provisions and greater independence on the part of its agent.
Portfolio financings and back-levered Holdco facilities have also been especially appealing to both borrowers and lenders. From the borrower perspective they provide access to financing at a scale and price that might not be available if they were to finance a number of small projects individually. They also reduce transaction cost and time, enabling a borrower to raise debt for a range of projects all at once. From the lender perspective, they can get significant risk reduction from cross-collateralizing assets and benefiting from a cashflow stream coming from a variety of projects potentially with different locations, off takers, and even technology or manufacturer.
Guarantees and insurance provided by export credit agencies (ECAs) remain a critical instrument when structuring large international projects. The cover they provide reduces risk for lenders resulting in cheaper financing for borrowers, while also supporting local manufacturing and export in their home countries. Many offshore wind projects utilize ECA cover across a portion of their financing, with the cover coming from the ECA of the countries involved in the manufacture of turbines and ancillary equipment.
What we're watching: We continue to watch how these multi-source capital stacks evolve as banks, private credit funds, institutional investors, ECAs, development finance institutions (DFIs), and bondholders all play a role in the market. More sources of capital can be a positive development for borrowers, but they also introduce more parties, more reporting needs, and more coordination requirements. As hybrid loan-and-bond structures become more common, the agent and trustee roles may become even more important in helping transactions stay organized over their full life.
4. Financing through a shifting incentive landscape
The energy transition is increasingly being viewed not only as a sustainability initiative but also as a matter of economic and operational necessity - and energy security has become a central theme globally. Ongoing geopolitical tensions have highlighted the importance of reliable and diversified energy supplies. We’ve seen disruptions to traditional oil and gas flows, which in turn have supported investment in alternative infrastructure. Particularly liquified natural gas export and import terminals, as well as domestic energy production.
Countries are rethinking their long-term infrastructure strategies. There is growing recognition that domestic renewable energy plays a role in energy security, not just decarbonization. Globally, governments and investors are accelerating the development of locally sourced energy, including wind and solar, to reduce exposure to global supply shocks.
What we're watching: We are watching how energy security priorities influence which projects attract policy support and capital across markets. Greater emphasis on domestic generation and diversified supply may create opportunities for renewables, liquified natural gas (LNG) infrastructure, and other locally sourced energy assets. The key question is how governments, sponsors, and lenders translate these priorities into financeable projects as policy frameworks, commercial arrangements, and market conditions continue to evolve.
5. Grid access remains the constraint
Completing the development of a power generation project has become even more complex post-COVID and post-Inflation Reduction Act. Tom Nelthorpe captured this sentiment in his recent column in Proximo, “project timelines are becoming more uncertain and putting together a bankable and incentives-eligible project is becoming more complex. Grid connection, permitting, equipment procurement, and policy compliance are now favoring sponsors with deep in-house development capabilities and access to flexible capital.”
One key constraint keeps recurring: interconnection queues and transmission limitations continue to set the pace of large-scale power projects. That means location, permitting status, and grid readiness can drive financing decisions as much as the underlying technology.
When a project's timeline depends on interconnection, financing structures often build in milestones and contingencies tied to grid access. Experience in administering those conditions as deals move from development to operation is an important factor in ensuring deals operate smoothly from construction through their operating phase.
What we're watching: We are watching how interconnection timelines, transmission limits, and permitting continue to shape which projects move forward and how quickly they can be financed. In many markets, grid access can affect more than a project’s completion date. It can also influence how construction debt is sized, how milestones are written, and what protections lenders expect to see. Sponsors with strong pipelines, strong development teams, and access to flexible capital may be better positioned to keep projects moving.
6. The project pipeline goes beyond power
The same forces reshaping power finance are also expanding the boundaries of the Project Finance market. Power generation has long played the lead role in the Project Finance sector, especially over the past 20-25 years as the advent of utility-scale renewable energy turned wind and solar into one of the most active areas of the market. Dispatchability, intermittency risk, extreme weather events, and changing capacity stacks have driven the need for battery energy storage systems. The Project Finance sector is now morphing again as digital infrastructure buildout creates a need for capital to finance data centers, fiber, and cell tower projects.
What we're watching: We continue to follow how Project Finance is expanding beyond traditional sectors into digital infrastructure, battery energy storage, transmission-adjacent assets, fiber, towers, and other infrastructure categories. As more capital moves into these areas, sponsors and lenders will need to get comfortable with different combinations of technology risk, construction risk, revenue risk, and collateral value. On the flip side, lenders may continue to watch for concentration risk, especially as large amounts of capital move into digital infrastructure and more debt is raised above the asset level.
Across these themes, the common thread is complexity. As power demand, infrastructure needs, and capital sources evolve, Project Finance transactions may require more flexible structures, clearer documentation, and stronger coordination across participants. For institutional market participants, the next phase of activity may be defined not only by how much capital is available, but by how effectively that capital is structured and administered.
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1. Data centre electricity use surged in 2025, even with tightening bottlenecks driving a scramble for solutions - IEA.org - April 16, 2026
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