With support from MIT Sloan Sustainability Initiative and Sloan Career Development Office, we were able to provide 30 students from various Sloan programs (MBA, MFin, Sloan Fellows, and EMBA) and MIT departments (TPP, Mechanical Engineering, Chemical Engineering) the opportunity to learn about how renewable energy projects are developed and financed. Students also practiced financial modeling and other business skills to prepare for a future career in the renewable energy sector.
Project finance is the funding of long-term infrastructure, industrial projects, and public services using a non-recourse or limited recourse financial structure. In this case, lenders loan money for the development of a project solely based on the specific project’s risks and future cash flows. As such, project finance is a method of financing in which the lenders to a project have either no recourse or only limited recourse to the parent company that develops or “sponsors” the project.
Over the past decades, project finance has emerged as a leading way to finance renewable energy projects that might otherwise be too expensive or risky for traditional lenders and investors. Spurred by wind and solar sector growth, investment in America’s renewable energy industry exceeded $40 billion in 2017 according to Bloomberg New Energy Finance. U.S. renewable energy projects will continue to increase in attractiveness compared to other asset classes, and cumulative U.S. private investment in renewable energy could reach up to $1 trillion between 2018 and 2030. These forecasts indicate an increasing need for talent in the renewable energy sector, particularly people with experience in project finance.
As someone with prior familiarity and strong interest in energy, but no finance background, this is a very good workshop to round-out my knowledge in project finance. I found it to be extremely helpful in preparing for my post-MBA career.
In the membership survey we sent out at the beginning of the year to all Sloan Energy Club members, project finance was ranked as #1 topic students are interested in learning about at while Sloan. Many students have been asked during recent job interviews about their experience building project finance models for renewable energy assets. However, course 15.498 Project Finance was last offered in Fall 2017 at Sloan, and there is no existing curriculum that covers the same topic. Neither is project finance covered by any Wall Street Prep modules or existing online resources provided to students.
During the fall semester, we invited Mr. Mike Reynolds (Sloan MBA ‘14) to introduce the fundamentals of project finance at a Sloan Energy Club lunch & learn event. Over 100 students joined, and we received very positive feedback. Many attendees requested additional programs focused on the technical and financial aspects of project finance transactions. Therefore, we decided to take the initiative and host a technical training program customized for Sloan/MIT students interested in project finance.
The Corality PF training provided valuable hands-on experience guided by an industry professional. Not only did we learn modeling best practices from someone who audits financial models for a living, but we got a behind-the-scenes look at the type of deal structures that are common when financing sustainable infrastructure.
The Sloan Energy Club will continue to provide educational programs focused on project finance and introduce networking opportunities with alumni and industry professionals. We hope through technical and financial training, students at Sloan are better prepared for interviews and post-MBA career in the renewable energy sector.
Lydia Li & Matt Berchtold
Co-President, Sloan Energy Club
April 21, 2019