Modelling of 'Green' Investments Risks

The practical lack of methods for quantitative assessment of capital-intensive renewable energy projects taking into account the present uncertainty leads to an increase in the riskiness and reduce the amount of 'green' investment in the economy. It resolves the urgency of the developing approaches to the renewable energy projects assessment. The article presents the diagnostics of specific risks and assessment of limiting the investor market share in the renewable energy projects with the optimal risk level. The proposed authors' approach to risks formalization of renewable energy deals is based on the introduction of dummy-variable, evaluation of coefficients' significance, tendency and strength of relation of risks indicators. This approach yields an indicative assessment of the deals' riskiness taking into account sectoral specifics. The developed method to limiting the investor market share is based on the principles of the economic capital theory. It allows for consolidating the current states of investor, project and economy. Research veracity is confirmed by the practical implementation. The results of the study can be used by the management of energy companies, investors and analysts in making financial decisions.

Keywords

renewable energy; 'green' investment; modelling; indicator; risks' formalization; limiting investor market share; risk-capital.

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