Nephila Capital Advisors Discuss The Risks Exclusive To Green Energy And How They Can Be Managed

June 12, 2012 - PRLog -- (June 12, 2012) LONDON – In a recent interview with Barney Schauble of Nephila Capital Advisors, we discuss the risks exclusive to green energy and how they can best be managed.  With insights into the role of the ideal Chief Risk Officer, and how risk transfer will help ensure your project receives the finance it needs, his perspective is well worth reading.

How much risk is common to all large industrial projects and which are specific to renewables?

There is a well-known set of risks that are common to all industrial projects – those are well understood, and there are a range of potential strategies to manage those internally (mitigation, structuring) and externally (financing and/or transfer).  However, renewables projects also share new risks which are not typical of previous industrial experience, and fall into two clear categories: policy risks (changes in political / legislative elements which can impact project economics) and functional risks (exposure to technology and weather each behaving in a way which can be very different than expected).  These risks which are unique to renewables projects do not benefit from existing internal and external solution sets from decades of industrial experience, and therefore require new approaches.

Is there a need at utilities and developers for a chief risk officer? If so, what are the three most important skills this leader would have?  

A chief risk officer is seen as an increasingly important role in all industries, as the focal point for analysis and action of risk to the enterprise, internally and for outside stakeholders.  Given the new risks that emerge for utilities and developers in the renewable space, there is even more for a need for such a CRO position.  Ideally that leader would have a broad enough base of operational and financial experience to be comfortable with a spectrum of issues, be sufficiently quantitative to consider the tradeoffs in how best to manager risks individually and in the aggregate, and be a critical thinker to be able to make decisions and to articulate the rationale for those decisions to all constituencies over time.

How does cover help to get deals financed? How prolific is cover? Where do you feel there might be gaps?

Financing terms will always be a function of perceived risk for a deal.  To that end, coverage that transfers real risk for a project, and provides a lower bound for performance and/or increases the confidence of the financier that cash flows will be received, will help the project to achieve better financing terms.  In today’s market there are real gaps in coverage: there are scenarios which can easily result in impaired cash flow if the volume of the desired resource (wind, riverflow, sunlight) is less than expected.  Coverage which ensures that the financier will receive cash flows throughout a period of natural volatility (and even more in extreme adverse outcomes) will allow them to offer less expensive and/or larger lines of finance for the project.  
Many thanks Barney for your opinions on these important issues, we look forward to seeing you at the Renewable Energy Risk Management conference in London later this month.

To join the conference as part of the delegate audience there are 3 easy ways to register your place:
Call: +44 (0)20 7099 0600 / Email: samantha.coleman@greenpowerconferences.com
Or book online at www.greenpowerconferences.com/riskmanagement

As well as a full length presentation and discussions session with Mr Schauble we’ll hear from senior level speakers at Swiss Re Corporate Solutions, EnBW, GDF Suez, Nordbank, Vestas among many others. The only conference in the market to offer 2 days of debate exclusively focussed on renewable energy risk, this is a must attend event.

More information on the forthcoming conference and the discussions to be held there is available at www.greenpowerconferences.com/riskmanagement, by following @greenpowermc on Twitter, or by joining the Renewable Energy Risk Management LinkedIn group.

Note to Editors
Green Power Conferences are pleased to welcome journalists to attend the Renewable Energy Risk Management UK 2012 Congress free of charge. To request a press pass please email michael.chaplin@greenpowerconferences.com

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Media Contacts
Michael Chaplin
Renewable Energy Risk Management Marketing Manager
Green Power Conferences
michael.chaplin@greenpowerconferences.com, +44 (0)20 33848870