Definitions
De-risking according to the Oxford dictionary is used more often in the business context to take steps to make (something) less risky or less likely to involve a financial loss. In global banking, the concept of de-risking is an option for financial institutions to mitigate risk in banking by restricting its services to certain types of clients or customers.
De-risking refers to the practice whereby financial institutions exit relationships with and closing the accounts of clients perceived to be high risk. Adopting the concept in the power sector will require risk assessment for a better market design. Exploring how risk (for example, financing risk) can be managed by addressing the fundamental causes and distributing the residual risk evenly among all parties involved in the project. This is made possible through thorough investigation and development of risk analysis methods using project finance theory to manage risk peculiar to power projects.
Introduction
The...
References
Allen F, Carletti E, Goldstein I, Leonello A (2017) Government guarantees and financial stability. European Central Bank working paper series. European Central Bank (ECB), Frankfurt a. M.
Bielenberg A, Kerlin M, Oppenheim J, Roberts M (2016) Financing change: how to mobilize private-sector financing for sustainable infrastructure. McKinsey Center for Business and environment
Dixit AK, Pindyck RS (1994) Investment under uncertainty. Princeton University Press, Princeton
Felder FA (1996) Integrating financial theory and methods in electricity resource planning. Energy Policy 24(2 SPEC):149–154. https://doi.org/10.1016/0301-4215(96)00096-1
Frisari G, Micale V (2015) Risk mitigation instruments for renewable energy in developing countries: a case study on hydropower in Africa. San Giorgio Group Report
Gordon H (1996) Economic integration, intraindustry trade and frontier regions. Eur Econ Rev 40(3–5):941–949
Guo X, Beskos A, Siddiqui A (2014) The natural hedge of a gas-fired power plant. Comput Manag Sci. https://doi.org/10.1007/s10287-014-0222-x
Honohan P (2010) Partial credit guarantees: principles and practice. J Financ Stab 6:1–9. https://doi.org/10.1016/j.jfs.2009.05.008
Hossein R (1996) Financing oil and gas projects in developing countries. Financ Dev 33(2). http://www.worldbank.org/en/programs/guarantees-program/brief/worldbank-guarantees-new-project-briefs
IRENA (2016) Unlocking renewable energy investment: the role of risk mitigation and structured finance. IRENA, Abu Dhabi
Kinloch S (2012) Partial risk guarantees and insurance products panel on the initiative for risk mitigation in Africa. African Development Bank. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Stewart%20Kinloch%20Presentation.pdf
Klasen A (2014) Export credit guarantees and the demand for insurance. CESifo Forum, Ifo Institute – Leibniz Institute for Economic Research at the University of Munich 15(3):26–33
Knight FH (1921) Risk, uncertainty and profit. Hart, Schaffner & Marx; Houghton Mifflin Company, Boston
Omer AM (2010) Environmental and socio-economic aspects of possible development in renewable energy use. J Agric Ext Rural Dev 2(1):001–021. http://www.academicjournals.org/jaerd
Oyedepo S, Fagbenle Richard, Adefila S, Adavbiele S (2014) Performance evaluation and economic analysis of a gas turbine power plant in Nigeria. Energy Conversion and Management 79:431–440. https://doi.org/10.1016/j.enconman.2013.12.034.
Roques FA, Nuttall WJ, Newbery D (2006) Using probabilistic analysis to value power generation investments under uncertainty. https://doi.org/10.17863/CAM.4961
Scannella E (2012) Project finance in the energy industry: new debt-based financing models. Int Bus Res 5(2): 83–93
Trigeorgis L (1998) Managerial flexibility and strategy in resource allocation. MIT Press, Cambridge, UK
Vithayasrichareon P, MacGill I, Wen F (2015) Electricity generation portfolio analysis for coal, gas and nuclear plant under future uncertainties. The 4th IASTED Asian conference on power and energy systems, AsiaPES
Wilson RB (2002) Architecture of power markets. Econometrica 70(4):1299–1340
Wynant L (1980) Essential elements of project financing. Harvard Bus Rev 58(3):165–173
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Section Editor information
Rights and permissions
Copyright information
© 2020 Springer Nature Switzerland AG
About this entry
Cite this entry
Alabi Ayotomiwa, O., Nwobi Lucy, D. (2020). De-risking Investment in Power Projects. In: Leal Filho, W., Azul, A., Brandli, L., Özuyar, P., Wall, T. (eds) Affordable and Clean Energy. Encyclopedia of the UN Sustainable Development Goals. Springer, Cham. https://doi.org/10.1007/978-3-319-71057-0_27-1
Download citation
DOI: https://doi.org/10.1007/978-3-319-71057-0_27-1
Received:
Accepted:
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-71057-0
Online ISBN: 978-3-319-71057-0
eBook Packages: Springer Reference Earth and Environm. ScienceReference Module Physical and Materials ScienceReference Module Earth and Environmental Sciences