De-risking portfolios

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Adam Barber
April 23, 2012
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De-risking portfolios

Within the wider wind markets, one area of discussion that is cropping up with increasing frequency is the challenge of de-risking existing energy portfolios.

In fact, it was a subject of much discussion in Copenhagen last week, where a number of parties were keen to outline the various ways in which they can alleviate the problem and help.

And what’s interesting from the outset is the sheer variety and spread of companies and industry sectors that are already looking to get in on the act.

Quite aside from their own intentions and ambitions, it’s one of the clearest signs yet that as the European market develops, and moves one step closer to grid parity, the issues that cause the greatest concern are already beginning to shift.

Of course, the specifics of what de-risking a project actually entails varies greatly from one individual to the next. However, most key players are broadly in acceptance that the ability to de-risk any given project is centred around three core areas.

First, that the wider challenges of wind energy – and indeed the energy markets as a whole – are focused on the fundamental issue of supply and demand. A factor that means that energy per se, remains a broadly a domestic commodity that is not frequently exported.

Second, that as emerging markets continue to come online and offer significant potential for future opportunity and growth, they’re all too often hampered by local challenges associated with cultures, currency and costs.

A particularly thorny issue that, if not sufficiently understood, can significantly impact on the long-term viability of a project.

And third, that local political and regulatory risk remains an ongoing concern for investors, developers, manufacturers and support services businesses, alike.

Concerns that while often associated with the emerging markets, can all too often become just as big an issue within established territories as well – as the ongoing wrangling associated with the PTC in the US and with UK’s commitment to Feed in Tariffs and renewable obligation certificates, have made especially clear.

So what does all this mean for the pipeline of existing deals and developments?

Well, with European clean energy investment noticeably down in the first quarter of 2012, it’s clear that nervousness remains. A nervousness that directly correlates to, and impacts upon, a future ability to de-risk.

Thankfully, deals continue to be pushed through by some of the more active participants and individuals within the market. However, it’ll only ever be through working together, and ensuring that the right deals land in the right hands, that we’ll truly be able to mitigate the longer-term risk.

Within the wider wind markets, one area of discussion that is cropping up with increasing frequency is the challenge of de-risking existing energy portfolios.

In fact, it was a subject of much discussion in Copenhagen last week, where a number of parties were keen to outline the various ways in which they can alleviate the problem and help.

And what’s interesting from the outset is the sheer variety and spread of companies and industry sectors that are already looking to get in on the act.

Quite aside from their own intentions and ambitions, it’s one of the clearest signs yet that as the European market develops, and moves one step closer to grid parity, the issues that cause the greatest concern are already beginning to shift.

Of course, the specifics of what de-risking a project actually entails varies greatly from one individual to the next. However, most key players are broadly in acceptance that the ability to de-risk any given project is centred around three core areas.

First, that the wider challenges of wind energy – and indeed the energy markets as a whole – are focused on the fundamental issue of supply and demand. A factor that means that energy per se, remains a broadly a domestic commodity that is not frequently exported.

Second, that as emerging markets continue to come online and offer significant potential for future opportunity and growth, they’re all too often hampered by local challenges associated with cultures, currency and costs.

A particularly thorny issue that, if not sufficiently understood, can significantly impact on the long-term viability of a project.

And third, that local political and regulatory risk remains an ongoing concern for investors, developers, manufacturers and support services businesses, alike.

Concerns that while often associated with the emerging markets, can all too often become just as big an issue within established territories as well – as the ongoing wrangling associated with the PTC in the US and with UK’s commitment to Feed in Tariffs and renewable obligation certificates, have made especially clear.

So what does all this mean for the pipeline of existing deals and developments?

Well, with European clean energy investment noticeably down in the first quarter of 2012, it’s clear that nervousness remains. A nervousness that directly correlates to, and impacts upon, a future ability to de-risk.

Thankfully, deals continue to be pushed through by some of the more active participants and individuals within the market. However, it’ll only ever be through working together, and ensuring that the right deals land in the right hands, that we’ll truly be able to mitigate the longer-term risk.

Within the wider wind markets, one area of discussion that is cropping up with increasing frequency is the challenge of de-risking existing energy portfolios.

In fact, it was a subject of much discussion in Copenhagen last week, where a number of parties were keen to outline the various ways in which they can alleviate the problem and help.

And what’s interesting from the outset is the sheer variety and spread of companies and industry sectors that are already looking to get in on the act.

Quite aside from their own intentions and ambitions, it’s one of the clearest signs yet that as the European market develops, and moves one step closer to grid parity, the issues that cause the greatest concern are already beginning to shift.

Of course, the specifics of what de-risking a project actually entails varies greatly from one individual to the next. However, most key players are broadly in acceptance that the ability to de-risk any given project is centred around three core areas.

First, that the wider challenges of wind energy – and indeed the energy markets as a whole – are focused on the fundamental issue of supply and demand. A factor that means that energy per se, remains a broadly a domestic commodity that is not frequently exported.

Second, that as emerging markets continue to come online and offer significant potential for future opportunity and growth, they’re all too often hampered by local challenges associated with cultures, currency and costs.

A particularly thorny issue that, if not sufficiently understood, can significantly impact on the long-term viability of a project.

And third, that local political and regulatory risk remains an ongoing concern for investors, developers, manufacturers and support services businesses, alike.

Concerns that while often associated with the emerging markets, can all too often become just as big an issue within established territories as well – as the ongoing wrangling associated with the PTC in the US and with UK’s commitment to Feed in Tariffs and renewable obligation certificates, have made especially clear.

So what does all this mean for the pipeline of existing deals and developments?

Well, with European clean energy investment noticeably down in the first quarter of 2012, it’s clear that nervousness remains. A nervousness that directly correlates to, and impacts upon, a future ability to de-risk.

Thankfully, deals continue to be pushed through by some of the more active participants and individuals within the market. However, it’ll only ever be through working together, and ensuring that the right deals land in the right hands, that we’ll truly be able to mitigate the longer-term risk.

Within the wider wind markets, one area of discussion that is cropping up with increasing frequency is the challenge of de-risking existing energy portfolios.

In fact, it was a subject of much discussion in Copenhagen last week, where a number of parties were keen to outline the various ways in which they can alleviate the problem and help.

And what’s interesting from the outset is the sheer variety and spread of companies and industry sectors that are already looking to get in on the act.

Quite aside from their own intentions and ambitions, it’s one of the clearest signs yet that as the European market develops, and moves one step closer to grid parity, the issues that cause the greatest concern are already beginning to shift.

Of course, the specifics of what de-risking a project actually entails varies greatly from one individual to the next. However, most key players are broadly in acceptance that the ability to de-risk any given project is centred around three core areas.

First, that the wider challenges of wind energy – and indeed the energy markets as a whole – are focused on the fundamental issue of supply and demand. A factor that means that energy per se, remains a broadly a domestic commodity that is not frequently exported.

Second, that as emerging markets continue to come online and offer significant potential for future opportunity and growth, they’re all too often hampered by local challenges associated with cultures, currency and costs.

A particularly thorny issue that, if not sufficiently understood, can significantly impact on the long-term viability of a project.

And third, that local political and regulatory risk remains an ongoing concern for investors, developers, manufacturers and support services businesses, alike.

Concerns that while often associated with the emerging markets, can all too often become just as big an issue within established territories as well – as the ongoing wrangling associated with the PTC in the US and with UK’s commitment to Feed in Tariffs and renewable obligation certificates, have made especially clear.

So what does all this mean for the pipeline of existing deals and developments?

Well, with European clean energy investment noticeably down in the first quarter of 2012, it’s clear that nervousness remains. A nervousness that directly correlates to, and impacts upon, a future ability to de-risk.

Thankfully, deals continue to be pushed through by some of the more active participants and individuals within the market. However, it’ll only ever be through working together, and ensuring that the right deals land in the right hands, that we’ll truly be able to mitigate the longer-term risk.

Within the wider wind markets, one area of discussion that is cropping up with increasing frequency is the challenge of de-risking existing energy portfolios.

In fact, it was a subject of much discussion in Copenhagen last week, where a number of parties were keen to outline the various ways in which they can alleviate the problem and help.

And what’s interesting from the outset is the sheer variety and spread of companies and industry sectors that are already looking to get in on the act.

Quite aside from their own intentions and ambitions, it’s one of the clearest signs yet that as the European market develops, and moves one step closer to grid parity, the issues that cause the greatest concern are already beginning to shift.

Of course, the specifics of what de-risking a project actually entails varies greatly from one individual to the next. However, most key players are broadly in acceptance that the ability to de-risk any given project is centred around three core areas.

First, that the wider challenges of wind energy – and indeed the energy markets as a whole – are focused on the fundamental issue of supply and demand. A factor that means that energy per se, remains a broadly a domestic commodity that is not frequently exported.

Second, that as emerging markets continue to come online and offer significant potential for future opportunity and growth, they’re all too often hampered by local challenges associated with cultures, currency and costs.

A particularly thorny issue that, if not sufficiently understood, can significantly impact on the long-term viability of a project.

And third, that local political and regulatory risk remains an ongoing concern for investors, developers, manufacturers and support services businesses, alike.

Concerns that while often associated with the emerging markets, can all too often become just as big an issue within established territories as well – as the ongoing wrangling associated with the PTC in the US and with UK’s commitment to Feed in Tariffs and renewable obligation certificates, have made especially clear.

So what does all this mean for the pipeline of existing deals and developments?

Well, with European clean energy investment noticeably down in the first quarter of 2012, it’s clear that nervousness remains. A nervousness that directly correlates to, and impacts upon, a future ability to de-risk.

Thankfully, deals continue to be pushed through by some of the more active participants and individuals within the market. However, it’ll only ever be through working together, and ensuring that the right deals land in the right hands, that we’ll truly be able to mitigate the longer-term risk.

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