FINANCIAL RISKS OF RENEWABLE ENERGY: CURRENT SITUATION AND IMPLICATIONS FOR DEVELOPING COUNTRIES
https://doi.org/10.21686/2410-7395-2023-2-100-112
Abstract
The study of the current state of the renewable energy sources (RES) sector as an important area for reducing harmful emissions into the atmosphere makes it possible to identify a circle of subjects – participants in the RES electricity market. The financial risks they take largely determine the present and future of this innovative market in terms of investment, financing, lending, insurance, regulation, and incentives. The renewable energy market is of particular interest to investors, financial institutions, the state setting the rules of the game and stimulating its development. The financial risks of market participants as the probability of monetary losses and losses are manifested at all stages of the development and implementation of renewable energy projects, from the development of technologies to public procurement of generated electricity. The analysis made it possible to identify the features of financing renewable energy projects, in particular, high initial financial costs, long payback periods for projects requiring long-term lending, sensitivity to regulatory and legal changes on the part of the state in terms of purchase prices for electricity, subsidies and incentive benefits for its producers and financial institutions – participants. Based on specific examples of renewable energy projects, the risks of banks, insurers in Vietnam and a number of developing countries in South Asia that provide green loans and green insurance products to companies implementing renewable energy projects, as well as households producing electricity from solar systems, are considered. Recommendations were formulated for national financial regulators, banking institutions, insurance companies to ensure acceptable financial conditions for renewable energy projects and adequately assess their own financial risks.
About the Author
Nguyen Huu Duc
Plekhanov Russian University of Economics
Russian Federation
Russian Federation
Post-Graduate Student
Department of Global Financial Markets and Fintech
117997
36 Stremyanny Lane
Moscow
References
1. Bruni C. Reasons for the Failure of Renewable Energy Companies. 2012. – URL: https://www.renewableenergyworld.com/baseload/reasons-for-the-failure-of-renewable-energy-companies/#gref
2. Dincer I., Bicer Y. Integrated Energy Systems for Multigeneration // Elsevier Science. – 2019. – September. – P. 287–402. – doi: 10.1016/B978-0-12-809943-8.00006-6
3. Ikejemba C. E. X., Schuur P., Mpuan P. B., Hillegersberg Jos van. The Empirical Reality & Sustainable Management Failures of Renewable Energy Projects in Sub-Saharan Africa (part 1 of 2) // Renewable Energy. – 2017. – Vol. 102. – Part A. – P. 234–240. – doi: 10.1016/j.renene.2016.10.037
4. Khalid Khan, Chi-Wei Su. Does Policy Uncertainty Threaten Renewable Energy? Evidence from G7 Countries // Environmental Science and Pollution Research. – 2022. – Vol. 29. – P. 34813–34829. – doi: 10.1007/ s11356-021-16713-1
5. Richter B., Steingrímsson B., Ólafsson M, Karlsdótti R. Geothermal Exploration and Associated Cost in Iceland, 2014. – URL: https://orkustofnun.is/gogn/unu-gtp-sc/UNU-GTP-SC-18-32.pdf.
6. Van Khanh Triet Nguyen, Dung Viet Nguyen, Long Phi Hoang, Nguyen Le Duy. Future Projections of Flood Dynamics in the Vietnamese Mekong Delta // Science of the Total Environment. – 2020. – Vol. 742. – doi: 10.1016/j.scitotenv.2020.140596
7. Xiao Yan Zhou, Caldecott B, Hoepner A. G. F., Yao Wang. Bank Green Lending and Credit Risk: an Empirical Analysis of China's Green Credit Policy // Business Strategy and the Environment. – 2022. – Vol. 31. – Issue 4. – P. 1623–1640. – doi: 10.1002/bse.2973
8. Yucesan M., Kahraman G. Risk Evaluation and Prevention in Hydropower Plant Operations: a Model Based on Pythagorean Fuzzy AHP // Energy Policy. – 2019. – Vol. 126. – P. 343–351. – doi: 10.1016/ j.enpol.2018.11.039
Review
For citations:
Duc N.H. FINANCIAL RISKS OF RENEWABLE ENERGY: CURRENT SITUATION AND IMPLICATIONS FOR DEVELOPING COUNTRIES. International Trade and Trade Policy. 2023;9(2):100-112. (In Russ.) https://doi.org/10.21686/2410-7395-2023-2-100-112
Views:
415
Email this article 
