Structured Finance for Energy Transition

This report by RMI proposes a structured finance scenario to retire the coal-fired Red Hills Power Plant in Mississippi seven years early and replace it with a clean energy portfolio, demonstrating how restructuring long-term contracts can benefit customers, bondholders, fuel suppliers, and workers.

• The Red Hills Power Plant in Mississippi can be retired seven years early through a restructured commercial arrangement that provides financial benefits to multiple stakeholders. These benefits, measured in net present value in 2025 US dollars, include $37 million in savings for electricity customers, $150 million for bondholders (primarily life insurance companies) via a risk-adjusted balloon payment, $255 million as an up-front termination payment to the Mississippi Lignite Mining Company, and $137 million to fund salaries for plant and mine workers during a transition period.
• Project finance, or limited-recourse finance, creates a barrier to carbon pollution mitigation because the long-term contracts used to assure creditors of debt repayment also protect fossil fuel assets from market forces that would otherwise lead to their replacement with clean energy. This issue affects dozens or hundreds of assets in the United States and thousands globally.

APA

RMI (2022). Structured Finance for Energy Transition. https://rmi.org/resources/structured-finance-for-energy/

Chicago

RMI. Structured Finance for Energy Transition. 2022. https://rmi.org/resources/structured-finance-for-energy/.

Wikipedia

{{cite report |author=RMI |title=Structured Finance for Energy Transition |date=12 May 2022 |url=https://rmi.org/resources/structured-finance-for-energy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2022structured, author = {{RMI}}, title = {{Structured Finance for Energy Transition}}, institution = {RMI}, year = {2022}, month = may, url = {https://rmi.org/resources/structured-finance-for-energy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }