This paper argues that it is necessary to raise the eyes from the current focus on independent power projects, buttressed by guarantees, to the longer horizon of electric power financing in open markets. Transitional strategies will need to move beyond the commonly seen IPP activity that occurs without fundamental sector reform, and demand-side incentives that introduce further market distortions. These efforts will have to focus on macroeconomic stabilization, removal of price distortions, as well as sector and corporate reform. Mobilization of domestic capital will be essential for sustainable sector financing. Although guarantees to encourage power sector investment can be designed to selectively cover risks, their elimination through fundamental sector reform should be the ultimate goal. Over the longer-term traditional corporate finance should become a more common financing strategy than project finance. Innovations in performance risk management and consumer credit will be crucial to the financing of energy efficiency.