The energy industry is capital intensive. Small changes in the cost of capital can be significant, not only when defining revenue streams in a rate case, but also when analyzing the return of a portfolio of investments. We help energy players to appropriately incorporate risk into cost of capital calculations, using a bottom-up approach.  Our innovative methodologies incorporate the risks presented by changing industry conditions by adjusting established traditional models. The cost of capital is based on the specific risks of a particular project going forward, not on the historical risks of large, integrated players pursuing a spectrum of regulated and deregulated strategies.

Our deep knowledge of the financial industry, combined with our valuation and risk expertise, allows us to help utilities with the IPO or privatization process. These options are particularly attractive for municipalities in parts of Europe where privatization may be the best response to deregulation.

Our experience in corporate finance and investment financing include:

• Developed methods to quantify and price the risk of POLR obligations for distribution companies in partially deregulated markets.
• Worked with a large European municipal utility to develop and evaluate privatization options.
• Currently developing cutting-edge methodologies to calculate the cost of capital in a bottom-up fashion using risk-adjusted DCF and RAROC based methods.