Wind Project Risk Assessment

Risk management is critically important in a wind project. A systematic method is required to identify risk factors, quantify the risk factors, compute the impact of risk factors on project performance and mitigate the risk.

Download Wind Project Risk Assessment whitepaper for details. In it a framework is presented for: Categorizing risk, quantifying risk and assessing impact of risk on the project. In addition, strategies for mitigating risk are described.

Risk is categorized based on phases of a wind project:

• Planning/installation risk is related to factors during the pre-energy production stage that impact the cost of and timeframe for implementation of a project.
  
• Operational risk factors are those that lead to uncertainty in revenue and cost after the implementation, which is during the energy production phase of the project.
  
• Systemic risk factors are those that impact both implementation and operations.

Planning/Installation Risk	Operational Risk	Systemic Risk
Prospecting risk: Cost and time of finding the most suitable parcel of land for wind farm	Wind resource: Uncertainty in energy production due to wind speed, shear, turbulence, air density and others	Interest rate risk
Land lease risk: Cost and time of signing a land lease agreement	Turbine and plant performance: Uncertainty in energy production due to power curve, losses	Currency risk
Permitting risk: Cost and time of state/local government permits, environmental and transmission permits	Grid access: Energy cannot be delivered due to grid outage	Locale risk

In the framework risk is quantified along three parameters:

• What does this risk factor impact? Choose one or more.
  
  • Revenue
    
  • Cost
    
  • Time
    
• What is the amount of uncertainty?
  
• What is the impact of risk factor on Revenue, Cost and Time? And how does the impact change over time?

The impact of risk is estimated based on the P84, P90 and more generically Pn estimates, where n is any number greater than 50 and less than 100. In the whitepaper the concept is explained through examples.

Article written by Pramod Jain

Visit Wind Energy Consulting and Contracting Inc.