green energy risks

8/8/2019 Green Energy Risks

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Renewable and Alternative Energy

Green Energy has its Risks

Scott W. Reynolds

Vice President

Jenkins Energy Group Leader

(925) 822-9003

License # 0648659


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Agenda

Alternative and Renewable Energy Businesses

Risk Management Case Studies Solar

Wind

Biofuels

Q & A


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Alternative Energy Businesses

Jenkins Energy Practice Specialties

Solar

Wind

Biofuels

Hydrogen

Solar

Wind

Geothermal

Biofuels

Hydro Power Wave & Tidal

Biomass Fuel Cell


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Factors Influencing the Growth ofRenewable Energy

Economic Technology Regulatory Social Pressure Environ-mental

Increasing

demand forpower

Financialmandates

RPS/PTC/RECS

Costs ofcarbon

Need forgrowth

High cost ofoil & gas

New and

expanded

methods Decliningcosts

Drive for

energy

independence

Advanced

EnergyInitiative (U.S.)

State andRegional

Initiatives

KyotoProtocol

Moral Pressure

Image

Goodwill Public Relations

Climatechange/

Globalwarming

Desire for acleaner

Environment


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Renewable Energy Risks

Attractive Financing

Catastrophic Capacity (Earthquake / Hurricanes)

Corporate Governance

Disallowance of Tax Credits

Investment Return

Investors/Joint Venture Partners Lack of Sun/Wind

Limited Balance Sheet

Performance/Warranty Guarantee

Rating Agencies

Risk Assumption Capability Supply Chain

Environmental Risks


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Solar


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Solar Risks

Economic Price competitiveness relative to other energy sources

Cost overrun equipment and labor cost escalation

Investment Tax Credits

Technology risks

Efficacy Financing

Warranty

Supply Chain

Silicon

Mirrors Glass breakage during transportation

Lack of sun / irradiation


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Solar Technology:Risk Mitigation Strategies

Efficacy Coverage

Performance and Warranty Protection

Power Price Protection

ITC Regulatory Protection

Enterprise Risk Management

Determines risk ownership among all stakeholders Improved access to favorable financing


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Wind


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Wind Risks

Supply chain capability Availability of turbines and construction equipment

Technology risk

Lightning damage adequate protection?

Ground and soil conditions, environmental issues

Construction site access Developments in remote or mountainous areas

require careful preparation of roadways

Start-up delays

Substations and power delivery

Damage to equipment while in transit

Installation damage

Contractor experience


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Wind Risk Mitigation Solution:Supply Chain Insurance

Traditional property/cargo insurance coverage

Must be triggered by physical damage

2nd and 3rd tier suppliers usually not covered

Global Supply Chain Insurance

Coverage applies to a disruption or delay from a named

supplier

Coverage trigger includes terrorism, theft, natural

catastrophe, labor strikes, political risk, or delay from

virtually any cause

Suppliers of suppliers covered

Agreed loss value


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Biofuels


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Biofuels Risks

Technology Failure to Perform / Efficacy

Risks

Mechanical Breakdown

Equipment Availability

Financial Commodity Price Risk

Tax Credit Risks

Price compared to other energycosts

Fuel Cost Risk Cost of Construction/ Steel

Project Financing

Contract Risk Technology Provider

Contractor Experience

GC/EPC

Financier requirements

Natural Disaster Flood

Hurricane

Drought


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Biofuels Risk Mitigation Strategy:Biofuel Producer with Construction Project Start-up

Risk Issues

System start-up

Performance guarantee

Financial market comfort

Objective:

Provide appropriate performance guarantee coverage

Solution:

Systems Performance Insurance covers start up failure


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Being Green Has Its Risks andIts Solutions

Risks Attractive Financing

Earthquake, Hurricanes

Corporate Governance

Disallowance of Tax Credits

Investment Return Investors/Joint Venture Partners

Lack of Sun/Wind

Limited Balance Sheet

Rating Agencies

Risk Assumption Capability Supply Chain

Environmental Risks

Solutions Irradiation/Lack of Wind Insurance

Performance Guarantee

Power Price Protection

Risk Mitigation

Supply Chain Analysis andInsurance

Tax Protection

Warranty Protection

Weather & Energy Products

Traditional Insurance Products


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Questions?


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