An investigation into the effects of risks and risk management of bioenergy projects

Abstract

Risk is an important component in project management and plays a key role in securing project finance in renewable energy sector. As the amount of companies making investment in renewables grow, so do the inherent risks in the different stages of the projects. This study seeks to obtain information, which will help examine the risks associated with bioenergy projects and the methods used to identify, manage and reduce them. The study is conducted in the form of a survey with data being gathered using questionnaires. The results of this study shows that although when taken as a whole, policy and regulatory risk is the most significant risk associated with renewable energy projects, financial and environmental risks are the most important risks related to bioenergy projects. These suggest that financing, which is one of the key elements in maintaining, building and operating bioenergy plants faces substantial obstacles in managing it risks. Moreover, the study shows that insurance coverage and company-based risk management functions are the most important risk management tools for managing financial and environmental risks respectively. It is recommended that governments should strive to include bioenergy stakeholders in their policy development in order to integrate industry's perspective into the process.