Assessing Project Risks
Identifying, quantifying, and mitigating the complex risks inherent in renewable energy investments
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Section 3 of 5Risk Assessment Framework
Risk assessment in renewable project finance involves identifying, quantifying, and mitigating the various uncertainties that can impact project viability and returns. Unlike traditional investments, renewable projects face unique technical, regulatory, and market risks that require specialized analysis.
Effective risk management involves layering multiple mitigation strategies: insurance products, contractual protections, diversified revenue streams, and conservative financial assumptions. The goal is to create bankable projects that can attract financing at competitive rates.
Key Risk Categories
Interactive Risk Assessment Matrix
Technology Risk
Performance degradation, technology obsolescence
Resource Risk
Wind/solar resource variability, interconnection constraints
Regulatory Risk
Policy changes, permitting delays, subsidy reductions
Market Risk
Power price volatility, demand uncertainty
Construction Risk
Delays, cost overruns, quality issues
Operational Risk
Maintenance costs, downtime, efficiency losses
Financial Risk
Interest rate changes, currency fluctuations
Counterparty Risk
PPA default, equipment supplier failure