Project Finance 2026

An Overview of Developments in Project Finance Around the World

In recent years, the number of participants in global project finance markets has increased notably, as a wider range of lenders and sponsors – located in various parts of the world – have become active players.

The capacity to fund large-scale projects, coupled with historical experience in cross-border transactions, has led commercial banks to act as a traditional source of financing. However, the financial crisis and the changes in the financial regulatory framework (eg, the Basel III standards) have limited the availability of credit. Together, this has brought multi-sourced financing for commercial banks into the main structure, filling the funding gap worldwide.

This means that large-scale projects are now financed using more sophisticated and complex financial and legal instruments, provided by a diverse set of public and private institutions. In recent years, the diversity of market participants has risen, encompassing capital markets investors, export credit agencies (ECAs), multilateral development finance institutions and government lending institutions.

Notwithstanding this increased complexity, a combination of local market expertise, sound commercial structures (and relationships), due diligence and robust security packages has helped to ensure that the new structures are used effectively.

Moreover, global economic growth and the consequent increased demand for energy have become major drivers for capital investment, especially in fast-growing countries. In emerging markets, despite the political uncertainty and tighter fiscal policies, the flows from developed financial markets have driven the search for yields.

In 2025, solar power continued to outpace wind in new capacity additions. Solar PV surpassed 600 GW of new installations for the first time, while wind capacity additions reached approximately 160 GW, with solar PV accounting for more than three-quarters of all new renewable capacity added worldwide. Solar PV also became the single largest contributor to growth in global energy supply in 2025, accounting for more than 25% of the total increase. This marked the first time on record that a modern renewable energy source led global primary energy supply growth. With cumulative installed solar PV capacity reaching approximately 2,800 GW, making it the world’s largest power generation technology by installed capacity, solar power is now firmly established as a central pillar of the energy transition and a key focus of project finance activity worldwide.

Digital infrastructure has continued to attract strong interest from project finance players of late, reflecting the sector’s growing importance in the global economy. Data centres, in particular, have emerged as a prominent asset class, supported by rising demand for AI and cloud computing services. The project finance market has responded with innovative structures and a broader range of debt investors, including those willing to take on construction risk. As digital infrastructure remains a key enabler of technological advancement, it is expected to remain a focal point for project finance activity, with ongoing attention to market dynamics and credit fundamentals.

Required investments and results

The need for remarkable projects and innovative deals worldwide has dominated the headlines in recent years. By way of example, the Asian Development Bank estimated that investment in infrastructure in Asia must add up to approximately USD1.7 trillion per year by 2030 in order to maintain growth momentum, tackle poverty and respond to the issue of climate change.

In 2017, the McKinsey Global Institute released a report assessing the worldwide demand for increased infrastructure investment. This report estimated that, from 2017 to 2035, the world must invest USD3.7 trillion a year in economic infrastructure (such as transportation, power, water and telecommunications systems) in order to support rates of growth. The report further estimates that emerging economies will demand approximately 63% of that amount.

IJGlobal data shows that global project finance loans reached USD1.174 trillion in 2025, up 37.37% from 2024. Renewables and telecoms led this growth, in line with ongoing investments in energy transition and digital infrastructure.

The climate bond financing market continued to demonstrate strong growth in 2025. Annual aligned GSS+ issuance surpassed USD1 trillion for the third consecutive year, reaching USD1.03 trillion. Green bonds led the market, totalling USD653.5 billion, representing the second highest annual volume on record. Cumulative aligned GSS+ issuance reached USD6.8 trillion by year-end, with more than 400 new issuers entering the market. Deals were priced across 109 countries, confirming the global presence of these instruments.

Outlook

Although it is difficult to predict how the markets will react, particularly given concerns about political events and their impact on the global economy, the demand for infrastructure projects is as high as ever. As such, the growth of major project financing is likely to continue.

It is clear that structuring project finance that includes multiple funding sources is becoming more complex every year. It is therefore key for market participants (including lawyers) to be fully familiar with market trends and the diverse pool of businesses and risks associated with projects.

Despite all recent results and developments, project finance has frequently proved to be a resilient way to fund infrastructure projects. Therefore, it remains one of the main sources of funds worldwide and there is no reason to believe that this will cease to be the case in the near future.