Objective: To understand the relation between
risks,
required profits and
project feasibility
as seen and judged from the perspective of different stakeholders involved in the decision making process for new investments. These understandings will be translated for the dynamic market model into rules and approaches
to promote the growth of renewable energy,
to provide stable market conditions and
to take into account the position of various stakeholders.
Duration: December 2002 – February 2004
Leader: KEMA
Participants: IT-Power, RISOE, CSIC, Wienstrom, EGL, EREC
Deliverable: D6 – Public Report “Decision making by stakeholders”
In more detail, the following subtasks occur:
Objective:
Identification of risks with respect to investments in RES for typical technologies. These risk sources will be classified in 4 categories (technological, operational, market, political) and an estimation of typical values of uncertainty will be provided for each risk source.
Development of a financial model which incorporates the impact of uncertainties on the financial performance of an investment. The model will measure these impacts in terms of profit-at-risk and value-at-risk. Calculations will be made using Monte Carlo simulations, probability functions for uncertain parameters and different risk profiles and discount factors for various stakeholders.
Development and analysis of a number of real-world cases for typical investments.
Objective: Consultation of representatives important stakeholders in a number of EU countries and testing of their reactions in response to the proposed investment cases and risk profiles. In these interviews the following will be asked:
their risk assessment and analysis,
their decision making process,
their strategies and instruments used to handle investment and portfolio risks.
Objective: Analysis of:
various decision making processes used by stakeholders
the risk management strategies they follow
the instruments they use
The results are used to modify and improve the financial risk model and
the real-world cases.
Objective: Derivation of rules and approaches which can be implemented in the dynamic market model. These rules and approaches address:
impact of uncertainties on the price of renewable energy and on cost development in the future,
impact of long-term and futures contracts on the price of renewable energy,
influence of uncertainties on the behaviour of sellers and buyers and
the strategic impact of banking and borrowing of tradable certificates.
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