green energy risks
TRANSCRIPT
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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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