Renewable energy can be said to be the current star of the show, given its role at the heart of the energy transformation. Every system, from how we grow our food, transport goods, build our cities and power our lives, is in transition and so electrification has become the key driver of the energy industry.
However, the conflict in Ukraine, global supply shortages, and the COVID-19 pandemic have led to an evolving energy and food security crisis. Surging inflation and the resultant costs of living increases add further instability. As a response to the energy crisis, powering up the transition away from fossil fuels has never had quite so much momentum.
The market is responding. The global energy crisis is propelling renewable power installations, with the world set to as add as much renewable power in the next 5 years as it did in the past 20, according to a report published in December 2022 by the International Energy Agency (IEA)1.
The macro events and trends that are impacting the renewable energy industry – ranging from geopolitical events to the war in Ukraine, grid challenges, changes to how goods and services move across borders, along with capital pressures and data – make the current business environment a challenging one for risk managers.
So with the renewable energy market in choppy waters, how does a renewable energy risk manager navigate this sea of volatility? There are landmarks to examine, including developments in environmental, social, and corporate governance (ESG) that will impact business operations.
This article is designed for renewable energy risk managers. What do they need to consider over the next six to twelve months? Essentially, a trilemma of energy, money and supply.
|Risk management & ESG: the key issues for the renewable energy industry