The Growing Importance of Energy Investment Banking

Everyone is familiar with the investment banking business that plays such an indispensable role in the smooth functioning of the world economy, but the concept of banks that concentrate on financing the exploration and exploitation of energy resources is less familiar to those outside the world of high finance.

Energy investment banking is a specialty area of commercial banking that concentrates on funding the development of a variety of energy forms including the well-known coal, oil and nuclear fuel options as well as the rapidly growing field of alternative energy. Included in the latter category are the promising new or rediscovered technologies of solar, wind and wave power.

Increasing public sensitivity to environmental issues and the rise to prominence of “green” (or pro-environment) political parties within the European Union and other developed countries have given additional impetus to the search for new and cleaner forms of energy to power our industries and for domestic consumption.

Bankers have demonstrated their awareness of public concerns in this area and they have also realized the profit potential inherent in alternative energy production.

Whether they are involved in investments in the traditional or alternative and renewable energy industries, the energy investment banking houses provide a similar range of services to private and state sector clientele. Whether you are planning to build or extend a coal-fired power station or build a new barrier across an estuary to harness the power of the tides, a considerable capital investment is required.

The energy investment bankers put a great deal of effort into researching the technological and economic aspects of various energy generation possibilities. They are able to assist energy providers by offering engineering and financial surveys to assess the viability of particular projects and suggest the different options available for their successful implementation.

The energy investment banking business also can contribute a great deal to project design and to the financing of plant construction. Once construction of the power station is completed, the bankers continue to provide support through financing operating and maintenance expenses.

The appeal of this specialist sector of banking to the investors is enhanced by the huge dividends to be made through discovering new oil and gas fields, or the successful launching and distribution of energy from alternative sources.

The recent application of the British government to the United Nations for sovereignty over a large area of ocean around the disputed Falkland Islands is based on estimations of extensive energy resources under those seas. This is only one of many areas of the world where the financiers of the energy industry are going to be keeping a close eye on developments in eager anticipation of rich opportunities in the pipeline.