Negotiation Strategy in Energy Project Finance

Negotiation outcomes significantly influence project structures, risk allocations, and long-term viability in energy project finance. This paper provides a structured two-part negotiation strategy—Formulation and Implementation—using the innovative SPIR Matrix (Stakes, Power, Interests, Relationships) to analyze negotiation climates. It combines proven negotiation concepts (BATNA, anchoring, ZOPA) with practical tools to guide negotiators through high-stakes scenarios, ensuring sustainable and mutually beneficial outcomes.

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Three Key Takeaways:

1. Understand the Negotiation Climate with the SPIR Matrix

• Evaluate negotiation based on Stakes, Power, Interests, and Relationships.

• Customize your negotiation style and tactics based on SPIR Analysis. For example, e.g., High Stakes and Power but low Interests & Relationships -- may characterize a negotiation where behaviors have high initial demands, minimal concessions, rigidity and time pressure.

  
  

2. Strategically Navigate Negotiation Stages and Styles

• Match negotiation styles (Push vs. Pull) to specific negotiation stages.

• Push: Assertive, persuasive communication for clarity.

• Pull: Collaborative, empathetic approach for deeper engagement.

3. Overall Negotiation Framework

• 2-stages for Negotiation Strategy: (1) Formulation and then (2) Implementation.

• As part of (1) Strategy Formulation utilize SPIR and clearly define success upfront through Goals / solutions matrix

• As part of (2) Strategy Implementation establish the environment to negotiate, switch styles to match the stage, and re-assess strategy.

  
  

Negotation Strategy For Energy Project Finance (Lee, Mathur).pdf

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Authors and Collaborators

About GPFAC

Global Project Finance Advisory Council ("GPFAC"​) is a leading-edge provider of advisory and consulting services in project finance, financial modeling, and training for power, renewable energy, oil & gas, and infrastructure projects worldwide. GPFAC has principals across 5 continents with experience closing over $300 billion in project finance transactions worldwide.

Alok Mathur, President, GPFAC

Alok has more than 30 years of experience in project finance in the US, India and Switzerland. Was head of ABB Financial Services India (equity, debt underwriting, advisory) and a member of ABB’s Country Management Committee; member of the management team at ABB’s HQ’s in Zurich that grew ABB’s financial advisory business to 140 professionals in 18 countries, closing $5 billion/year; and a member of ABB’s Management Committee responsible for approving equity investments worldwide. Alok has a BS in Chemical Engineering with Honors, (IIT, India); MS Chemical Engineering (SUNY/Buffalo); and MBA with Distinction (New York University). Speaks English, Hindi (mother tongue), some German, and several Indian languages.

Dan Lee, Managing Partner, Simcore Dan is a Managing Partner at Simcore, specializing in Energy Project Finance & Development. He is based in the Washington, DC area and has over a decade of experience developing, financing and investing in US energy infrastructure. Prior to founding Simcore, Dan held lead roles at the U.S. Department of Energy Loan Programs Office and most recently as Head of U.S. Low Carbon at Bechtel Enterprises, the investment and development arm of Bechtel Corporation. Earlier, Dan held roles at Morgan Stanley’s Project Commodity and Infrastructure Finance group and GE Ventures (energy venture division). He began his career as an analyst at Houlihan Lokey in San Francisco. Dan has an MPA in Energy Policy from the Kennedy School of Government at Harvard University, an MBA from the Wharton School at the University of Pennsylvania, and a BA in Economics from the University of California, Berkeley.