KBRA releases its 2025 European project finance and infrastructure (PF&I) Sector Outlook, examining themes that will likely take centre stage in 2025 as well as developments and ratings trends from 2024.
KBRA expects a generally more favourable environment for European PF&I credit quality in 2025, characterised by a supportive policy environment, slightly improved economic conditions with a relative softening in commodity prices (despite continued volatility), and ongoing reliance on PF&I as a funding tool to support the energy transition and digital sector. KBRA affirmed the majority (91%) of its European PF&I credits over the year. For next year, we anticipate continued ratings stability in the sector and further significant investment in energy transition-related asset classes, including traditional renewables such as onshore wind and solar as well as sectors such as offshore wind. This Outlook also considers the notable investment growth in newer PF&I asset classes, such as data centres, battery storage, and electric vehicle charging, which are supported by significant private and public funding sources.
While European governments have supported the energy transition and digital transformation with significant funding and policy measures, national and European Union (EU) targets are unlikely to be met without greater private capital involvement. Looking ahead, EU bodies may focus on setting clear and stable guidelines and streamlining permitting. Similarly, market participants may innovate in response to credit risks-including technology, merchant, recontracting, and refinancing risk.
Key Takeaways
- We expect the macroeconomic environment to improve slightly in 2025, supporting European PF&I, with more benign financing conditions, a relative softening in commodity prices (despite continued volatility), and power prices underpinned by healthy gas storage levels and an increasing steady supply of renewable energy.
- Renewable energy and artificial intelligence (AI)-driven development of data centres will benefit from a supportive policy environment, providing additional momentum for growth.
- Despite the broadly benign environment, three important risks from 2024 remain in focus that will likely impact PF&I growth and performance in 2025: merchant and recontracting risk, regulatory and geopolitical risk, and climate change-related risks.
- KBRA's European PF&I portfolio has demonstrated resilience, with 94% of credits maintaining a Stable Outlook and the majority of credits affirmed in the past year, reflecting a broadly supportive macro backdrop.
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Related Publications
- European Corporates: Muted Impact of Geopolitical Tensions on Energy, so Far
- Offshore Wind: Opportunities and Challenges to Irish Development
- Data Centers: Intersection With Project Finance
About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA's ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
Doc ID: 1007401
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Contacts:
Karim Nassif, Senior Director
+353 1 588 1245
karim.nassif@kbra.com
Garret Tynan, Managing Director, European Head Project Finance and Infrastructure
+353 1 588 1235
garret.tynan@kbra.com
John Hogan, Co-Head of Europe, Ratings General
+353 1 588 1191
john.hogan@kbra.com
Andrew Giudici, Global Head of Corporate, Project, and Infrastructure Finance
+1 646-731-2372
andrew.giudici@kbra.com
John Sage, Senior Director
+1 646-731-1452
john.sage@kbra.com
Media Contact
Adam Tempkin, Director of Communications
+1 646-731-1347
adam.tempkin@kbra.com
Business Development Contact
Mauricio Noé, Co-Head of Europe
+44 20 8148 1010
mauricio.noe@kbra.com
