Mitigating Hydrological Risk with Energy Derivatives

A Systematic Review on Investment Risks in Hydropower to Developing Sustainable Renewable Energy Systems

“…However, (Aly et al, 2019;Fernandes et al, 2019;Gupta et al, 2020;Pedrini et al, 2020) propose fundamental financial risk hedging techniques such as energy contracts, hedging with thermal plants, the Collar-Derivative approach, and financial risk mitigation through MOEA, respectively. (Mosquera-López et al, 2018) finds exogenous shocks in the energy market as key investment risks which arise due to supply-side issues in the energy market resulting in price fluctuations and welfare loss of consumers.…”

“…According to the analysis by (Akcay, 2021), the most significant risk cluster is stakeholders, and legal risk is a prominent risk component (in the context of investment in the PPP model). In the case of multipurpose water systems, (Denaro et al, 2018) find financial hedging technology to be an efficient, low-cost solution, whereas (Fernandes et al, 2019) demonstrates that the CBD model is more effective than the hedged mechanism. Furthermore, (Hamilton et al, 2020) show a fundamental trade-off between cash flows and debt levels.…”

“…This study is a Systematic Review of Investment risks in hydropower, where 34 full-text studies were conducted to develop (Abadie et al, 2020;Fernandes et al, 2019;Hamilton et al, 2020;Wessel et al, 2020) Literature review (Akcay, 2021;Dash and Singh, 2020;Denaro et al, 2018;Shaktawat and Vadhera, 2021;Wyrwoll and Grafton, 2021) Fuzzy-Logic (Dincer and Yuksel, 2019;Hashemizadeh et al, 2021;Karatop et al, 2021;Roy and Roy, 2020;Wu et al, 2020;Yu et (Dincer and Yuksel, 2019) Colar by Difference (CBD) (Fernandes et al, 2019) Multiobjective evolutionary algorithms (MOEA) (Gupta et al, 2020;Hamilton et al, 2020) The open source energy MOdelling SYStem (OSeMOSYS) (Howells et al, 2021) Risk-averse planning (Inzunza et al, 2021) Cost-benefit approach (Udayakumara and Gunawardena, 2018)…”