Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

We study the optimal policy of the contractual arrangement in raising the debt-to-equity ratio for renewable power and coal power project finance deals. We investigate the impact of the optimal non-financial contractual relationship between counterparties on the soundness of projects, differing in plant type and country risk. Key findings are: first, the existence of off-taking contracts generally raises the debt-to-equity ratio, while off-taking sponsors do not. In deed, the finding is more prominent in the renewable power projects in countries with investment grade. Overall, patterns of the optimal structure of non-financial contract vary with project type and country risk.