Fortifying Power Investments

The global need for power is enormous. Today, more than one billion people lack access to electricity. Rapid industrialization coupled with the increased buying power of local citizens is further fueling the demand. Moreover, as emerging markets become locations of choice for companies in search of lower-cost operations, demand for power in these nations is skyrocketing. What this means for companies and investors in the power sector is a broad, new market. But it also means potential new risks.

MIGA guarantees are well-suited to reduce the risks associated with investments in the power sector and can play a pivotal role in helping companies attract funds for large, capital-intensive investments. MIGA’s coverage can be used on a standalone basis or in conjunction with the World Bank’s partial risk guarantees, which offer additional benefits. Partial risk guarantees include conditions that promote stable regulatory and contractual frameworks, while helping investors obtain capital market financing on better terms and secure a sovereign counter-guarantee.

More and more, MIGA guarantees are becoming important as a credit enhancement tool that can ensure a more stable, long-term partnership for energy providers and off-takers—as energy projects inevitably involve an insurable commitment from a sovereign or sub-sovereign.