Author : Konstantina Karatzoudi
Recently, there is increasing focus on sustainable communities and its sustainable development. One aspect of this development is the achievement of continued power production and for this reason, there a remarkable turn from conventional methods of power production, such as fossil fuels, to more unconventional methods such as those offered by using renewable energy sources. Renewable energy sources are globally becoming a significant source of power, such as wind, solar and biomass which turned to be the majority of new power capacity.
It appears that this renewable type of energy is dynamically entering now the market at a scale relevant in industry terms and at a very competitive price. This impressive change and interest in clean energy has spread all over the world, promising a strong economic future, particularly in developing world. The future of renewable energy is both desirable and essential. For this reason, organizations operating in this field should secure a sustainable development by managing risks that the industry and its renewable energy projects are exposed to.
Renewable Energy Industry and Risks – A ”bitter” friend….
As investments in renewable energy is continuously growing, so do the risks related to building and operating such plants. The first step towards a successful risk management is the identification of risks that the renewable energy industry is mostly exposed to and has to deal with. The global investment in renewable energy projects is exposed to various risks and should take seriously into considerations.
Those risks include operational risk which can be risk of unplanned plant closure or unavailability of resources caused by a supply chain disruption, financial risk, the risk of insufficient access to funding and capital or fluctuations in prices, political and regulatory risk caused by the continuously changing public policies and regulations, weather related risks which can directly impact the volume of electricity produced. Furthermore, the industry can be exposed to market risk, for example the risk of increase in inputs’ prices or decrease in price of electricity, environmental risk, as there is always the risk that the power plant can damage the environment, business and strategic risk, such as the risk of technological obsolesce as well as building and testing risks caused by property damage during testing new plants.
The wide range of risks that renewable energy industry is exposed to, makes the creation of risk management plan not only necessary but also vital for a sustainable development and business resiliency.
Can you think of other risks?
”More brains, better predictions”
Future's Management 
I like the topic.
It is a professional focus of mine also. The world is focused on financial and governance when the real risks are found in the operational, strategic and reputation aspects of risk.
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Nice to hear that you have the same focus on this topic. Renewable energy is gaining more and more ground in our days. I totally agree with your observation, that strategic and reputation aspect of risks are often overlooked by the organizations and this results in huge losses at the end.
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Great topic which I’m so happy is gaining more and more traction worldwide. I really appreciated the insights into related risks as we move away from fossil fuels and to cleaner more environmentally sound renewable energy. We must foresee the risks and take action to mitigate them ensuring a more smooth transition.
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Hello Elisabeth! Thank you for your feedback 🙂 As you mentioned, foreseeing the related risks and taking action to mitigate them can ensure a smoother transition. It is an industry that is exposed to various risks and this make the implementation of riks management plans a necessity. Having a plan can ensure sustainability which is the “synonym” of renewable energy.
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