Structured Finance for Energy Transition

The document argues that structured finance contracts often insulate fossil fuel assets from market forces, creating a barrier to clean energy transition. Using the Red Hills Power Plant in Mississippi as a case study, it proposes a restructuring model that provides financial benefits to electricity customers, bondholders, the coal supplier, and workers while accelerating the plant's retirement.

• Structured finance, or project finance, can hinder the mitigation of carbon pollution because the long-term contracts that assure debt repayment also protect fossil fuel facilities from market forces that would justify replacing them with clean energy.
• A proposed financial model for the Red Hills Power Plant in Mississippi suggests that retiring the plant seven years early through contract restructuring could generate specific net present value benefits in 2025 US dollars: $37 million for electricity customers, $150 million for bondholders, $255 million for the Mississippi Lignite Mining Company, and $137 million for plant and mine workers.
• There are potentially hundreds of project-financed fossil assets in the United States and thousands globally that are currently insulated from clean energy competition by long-term contracts.

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} }