The impact of regulation, risk, and resource on returns within renewable energy projects

  • John Daly

    Student thesis: Doctoral Thesis


    Renewable Energy (RE) is about more than reducing our environmental impact on the planet and the opportunity to develop RE for the UK is one of economic and social benefit as well as environmental. Furthermore, the UK is legally bound to deliver 15% of total energy supply from renewable sources by 2020 and beyond. This equates to approximately 30% of UK electricity generation but there exists significant technological and commercial barriers to the development, financing and implementation of renewable energy projects. The aim of this dissertation is to assess the current challenges and barriers to investment in the UK’s RE sector. This is done by analysing various stakeholders’ perspectives of the key factors, namely Regulation, Risk Resourcing (financing), and Return, in developing a model which will serve as a decision support framework for the investors in the RE space. The research develops an interpretive understanding through a mixed methods approach, using the implicit and explicit knowledge from energy industry experts and senior practitioners currently involved in energy companies and consortia who sponsor, develop, finance and manage RE schemes and projects. To support delivery of this research aim, the following research question is addressed: “What is the impact of Regulation, Risk and Resourcing on Return on investment in developing renewable energy projects in the UK?” This study investigated and examined the key factors that influence investment decisions in the UK’s RE sector and has focused on the aspects of Regulation and Risk in both at the macro and project levels. The research strategy used qualitative data derived from questionnaires and interviews with leading industry stakeholders and practitioners, including senior executives at prominent financial institutions, technical consultants, project developers and regulatory experts to validate a model of decision making support for investors. The study validated an R4 model that considers the impact of Regulation (R1), Risk (R2), Resourcing (financing) (R3) and Return (R4) in supporting investment decisions. The regulatory regime was found to be the primary Risk driver when Resourcing the finance of RE projects. The impact of these key parameters is not linear and varies through the three main project phases; namely i) during Project Inception, Development and Mandate to proceed, ii) during Engineering, Procurement and Construction (EPC), and lastly iii) the Operation and Maintenance and revenue generating phase. It is concluded that the influence of R1, R2, and R3 on Return on investment (R4) is shown to be a crucial output of the final, income generating phase of renewable energy projects. The findings have been already disseminated and presented at prestigious energy conferences in Oman, 2010; Milan, 2011; London, 2012; Cologne, 2012 & 2014; Vienna, 2013; and accepted for presentation at Powergen Europe conference in June 2015 in Amsterdam. Additionally, a journal paper is being submitted to the Energy Policy Journal for publication in 2015. Furthermore, the study has added to the epistemological approach in this research area and supports the business case for promoting the development of an Energy Centre at the University of Portsmouth.
    Date of AwardDec 2014
    Original languageEnglish
    Awarding Institution
    • University of Portsmouth
    SupervisorAshraf Labib (Supervisor) & Azad Camyab (Supervisor)

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