Risk-based analysis and policy implications for renewable energy investments in Greece

Abstract

Significant renewable energy (RE) investments have to be realized in order to achieve the ambitious RE targets set in the EU for 2020 and beyond. Moreover, a great amount of capital has to be leveraged, as these projects are followed by high investment and financing costs. Main aim of this paper is the provision of a comprehensive assessment of the existing risk elements of RE investments in relation to the respective policies and the evaluation of their impact on the weighted average cost of capital (WACC) in Greece. A significant consultation with key national energy stakeholders took also place, including policy makers, project developers, investors, equity providers, bankers and energy analysts in the Greek RE market, in order to provide a validation of the respective results. It has been concluded that the policy design risk represents the risk element with the greatest impact on the cost of capital and, thus, the level of RE investments' deployment. Moreover, based on the cost of capital valuation process followed, the WACC was estimated to reach approximately 12% for onshore wind and little lower values for solar PV projects in Greece.

Willingness of farmers to establish a renewable energy (solar and wind) cooperative in NW Turkey

“…Renewable energy investments are costly and must involve solidarity with key national energy stakeholders, including policymakers, project developers, investors, equity providers, bankers, and energy analysts. The three most important components of RE investments are policy design, financing, and social acceptance (Angelopoulos et al 2017 ). In this context, farmers are willing in terms of the social acceptance component.…”

“…Therefore, it is important for farmers to benefit from renewable energy through cooperatives in the climate–agriculture–environment–energy axis. Investments in renewable energy are initially costly (Angelopoulos et al 2017 ). But with the rapid costs decreasing in the wind and solar energy, renewable electricity has become the preferred source of power generation over the past few years (Motyka et al 2018 ).…”

A TODIM-Based Investment Decision Framework for Commercial Distributed PV Projects under the Energy Performance Contracting (EPC) Business Model: A Case in East-Central China

“…In recent years, researches on PV investment have mainly focused on the following aspects: (1) Risk analysis of PV power generation projects: analysis of risk factors and establishment of risk assessment models, application of risk models to provide decision-making information for investment decision-makers (DMs) [4][5][6]. Markov, et al [7] considered that the physical limitations of the transmission network would pose risks for PV investment.…”

“…Markov, et al [7] considered that the physical limitations of the transmission network would pose risks for PV investment. Li et al [6] considered extremes natural factors have adverse effects on PV power generation projects; (2) Impact of policies on the deployment and investment construction of DPV power generation projects [2,4,8]; (3) Economic analysis of PV power generation projects, including revenue, cost, net present value (NPV), and internal rate of return (IRR) [2,9]. Garcia et al [10] proposed a compromise model (CP) model that simulates the agreement between the government that pursues as high a political price (guaranteed price) as possible and the project sponsor who hopes to receive revenue (random cash flow) as high as possible.…”

Risk Analysis in Renewable Energy System (RES) Investment for a Developing Country: A Case Study in Pakistan

“…Kim, Park, and Kim (2017) suggested a framework of real options analysis as a tool for evaluation of RES investments in developing countries, focusing on cash flow through the project life cycle. Angelopoulos, Doukas, Psarras, and Stamtsis (2017) used a static approach to assess risk elements with regard to existing political situation for better provision and to highlight the impact on the weighted average cost of capital. Many other types of research on risk evaluation methodologies deal with risk analysis process from an investor’s point of view (Ford et al, 2004).…”