Project Investment Company Introduction

Most of what we will discuss in this lesson comes under the umbrella of corporate finance, even though our attention is primarily on individual energy projects, not necessarily the corporations that conduct those projects. However, there are a number of parallels and many concepts of how companies should finance their various activities are immediately relevant to the analysis of individual projects. After all, unlike organizations as a whole, individual ventures have resources, manpower, and other expenses that must somehow be met. And often a organization can be seen as simply a portfolio of project activities.In the same way, an individual project can be seen as equivalent to a corporation with a single operation. (After deregulation in the 1990s, a number of major energy projects, such as power plants, were actually set up as individual corporate entities under a larger ‘holding company.’) Much of the emphasis in corporate finance is on how companies should finance their various activities. (For example, readings and external sources include a lot of sources to ‘target’ financial structures.) That’s not really our focus-we are more concerned with understanding the different options that may be available to fund project activities.

At the end of the day, the “right” portfolio of funding is up to individuals or businesses making project investment company decisions on those projects.

The funding options for projects are various and often labyrinthine. You will not be shocked that lawyers play an important and essential role (sometimes the most active role) in structuring financial portfolios for a project or even for a business as a whole. While individual financial instruments cover a range of complexities, the basics are not that difficult. Let’s go back to the basic accounting concept for an overview: