Design and Establish a Risk Mitigation Mechanism in India

Background

India has enormous potential for renewable energy development, but only a small part of this potential has thus far been exploited. Despite the adoption of encouraging renewable energy policies by the government, the sector is still viewed as a risky by investors, due to the unpredictability of the weather on which many of the technologies depend. This project aimed to design and establish a risk mitigation mechanism to allow for better risk mapping, management and mitigation and to promote investment in the Indian renewable energy sector.

The project also included a pilot product scheme to test and evaluate the effectiveness of the newly designed risk mitigation options, raised awareness of risk issues and promoted the initiative through workshops, seminars, a project blog and more.

Outcomes

In order to map out the risks associated with investments in RE in India, the project carried out a risk assessment study as well as a survey of project developers and financial institutions. This study was followed by an assessment and analysis of existing risk mitigation options available in India. The results of the study were discussed with various stakeholders in a national level workshop. At this workshop the stakeholders also offered useful insights and recommendations for the work in progress regarding the risk mitigation measures framework.

A hydrological risk mitigation product was developed for a small hydropower project, which is expected to be easily adaptable to address weather-related risks connected to solar and wind projects, too.

The project faced severe delays due to the global financial crisis, which caused distractions at and slowed down response times of financial institutions and insurance companies. The project was completed successfully, though due to the crisis it resulted in a lower than expected level of traction.

The project was successful in bringing together a team of stakeholders (project developers, weather risk insurance brokers, insurance companies and financing institutions) to carry on the efforts beyond the duration of the project itself. The project also successfully mapped and summarised risk factors and demonstrated risk mitigation measures. It was found, however, that the measures were appropriate mainly for projects expecting to generate high returns, as stakeholders tend to be unwilling to pay extra for insurance for projects which have low returns.

Programme sector: 

RE & EE (Business&Finance)

Stage of project: 

Completed

Duration: 

2007 - 2010

Budget: 

€ 100,000

Implementing agency: 

PricewaterhouseCoopers Pvt Ltd

REEEP grant funded by:

United Kingdom

Norway