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Financing Energy Projects | 11 Bonds are issued to raise the capital, the bonds are rated and then sold to pension funds and other institutional investors. "One solar and three wind-power projects were financed that way last year. While that had been done on infrastructure projects, it had not been done for power projects." The structure of raising money through bond debt is significant, as is the emergence of Asian banks, he says, because it broadens the base of potential investors. "One of the concerns that a number of us have had is that if you go mainly to the life insurance companies they may get tapped out and not be able to fund all the projects coming through at this time. So broadening the base of potential lenders is important." That is doubly true because of the questions raised by the new capital-adequacy requirements under Basel III, a global banking protocol brought in after the global financial crisis to help shore up the world's banking system. The reforms, which have been endorsed by the G20, will require banks around the world to maintain higher capital and liquidity levels, and no one knows exactly how that will impact the money they have available for investment, says Nicholas Williams of Davies Ward Phillips & Vineberg LLP in Toronto. European banks such as Deutsche Bank, Union Bank, the Norddeutsche Landesbank and Bayerische Landesbank are among those that have been quite active in infrastructure investment in Canada including transmission, generation, nuclear and renewable energy projects. "I wonder if Basel III will make it more difficult," says Williams, who practises banking as well as energy law. Canadian banks cannot be expected to step up because they will be impacted as well — and they are not traditional lenders on the long end for these kinds of projects, says Williams. They will generally finance five to seven years up front. "If you talk to Canadian banks, putting up 20-, 30- or even 40-year money [for renewable energy projects] is not economical for them; with the federal requirements and the capital they have to set aside for those loans, it just doesn't make sense — they say it's not a good use for their capital. "Certainly the European banks to date have thought differently. Whether that will change going forward remains to be seen but, in the meantime, you can certainly see the structure that uses bond offerings becoming an option companies will definitely look at." "What we're starting to see is either they're not financing or they're looking at different financing methods. There have been hardly any traditional equity financings in energy. The first half of 2013 had the lowest number of deals and deal values since the first quarter of 2008." -Shannon Gangl, Burnet Duckworth & Palmer LLP Sandra Rubin is a freelance legal affairs writer. Lexpert®Ranked Lawyers Dickson, QC, P.Eng., James M. Stewart McKelvey (902) 420-3308 jdickson@ stewartmckelvey.com As an engineer, Mr. Dickson has worked in both the construction and oil and gas industries. His law practice focuses mainly on energy and environment, and advising large public companies in the areas of mergers and acquisitions and corporate finance. Dorion, QC, AdE, Marc McCarthy Tétrault LLP (418) 521-3007 mdorion@mccarthy.ca Mr. Dorion co-heads the firm's Energy and Infrastructure groups. He advises companies and lending institutions in relation to development, financing, construction and operation of projects in the energy, infrastructure and natural resources sectors. Drance, Jonathan S. Stikeman Elliott LLP (604) 631-1361 jdrance@stikeman.com Mr. Drance's corporate finance and securities practice focuses on M&A, public financings and reorganizations involving, among others, Canfor, Bentall, Terasen and Duke Energy. He writes extensively on corporate governance and fiduciary duties. Droppo, QC, Dallas L. Blake, Cassels & Graydon LLP (403) 260-9612 dallas.droppo@ blakes.com Formerly a geologist, Mr. Droppo acts on complex securities matters, corporate reorganizations and business acquisitions in the oil and gas, pipeline and mining and other sectors. He also advises entrepreneurs and venture capital investors. Dunberry, Éric Norton Rose Fulbright Canada LLP (514) 847-4492 eric.dunberry@ nortonrosefulbright.com Mr. Dunberry specializes in contentious and commercial energy matters. He represents electricity, oil and gas producers and distributors before judicial and regulatory tribunals, and is retained to advise on laws governing the energy sector. Dunsky, Ilan Heenan Blaikie LLP (514) 846-4763 idunsky@heenan.ca Mr. Dunsky is cochair of Heenan Blaikie's Infrastructure and P3 group. His infrastructure, P3 and project finance practice covers the energy, transportation and health sectors, extending through Canada, the US, Latin America, the Caribbean and Africa.

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