For developing countries, a stable and secure supply of electricity is crucialfor development, and for their populations' well-being. Since the early 1990s,the main mechanism for constructing power generation facilities in developingcountries has been the independent power project (IPP) model, where a foreigninvestor enters into long term investment contracts with the national utility.This model has succeeded in attracting investment, but raises complexregulatory and contractual challenges in addition to public concerns.This book - drawing on project contracts, the author's interview sources, caselaw and literature - analyzes in detail the legal investment protection usedby IPP investors to ensure sufficient returns and protect their contractedrevenue stream. The author examines how the model's corporate / financialstructure interlocks with strong contractual rights and with a number ofmeasures used to improve the host country's creditworthiness in the short andlong term (including investment guarantees).The second part of the bookidentifies that the IPP model normally leads to six main consequences for thehost developing country:The IPP model has led to private investment, which has increases reliability,modernization and introduced private standards;It contains an intrinsic structural weakness in times of economic downturns;It has shown a tendency to lead to overinvestment in generation capacity;It has shown a tendency to lead to expensive and suboptimal solutionsregarding choice of design and technology;The model (and its institutional surroundings) contains insufficientdisincentives against moral hazard and exploitative behavior (includingcorruption); andThe IPP model does not facilitate a further development of the host country'spower sector.The author argues that these consequences for development can be improvedwithout detrimentally compromising the private sector's willingness tocontinue to invest. While pursuing this analysis, the author also exploressuch issues as the following: ;the web of parties and contracts constituting the IPP model, including themodel's risk allocation;an analysis of political risk, including to what extent foreign investors alsoare protected against commercial and credit risks;the competing needs of predictability and flexibility in long term contracts;how investment arbitration tribunals have reacted both to the change inmacroeconomic circumstances caused by the East Asian Crisis of 1997-98, and tonumerable and credible allegations of corruption during procurementidentification of factors reducing, or increasing, the IPP model's tendency tofail during severe economic recessions.