The intent of the Risk Mitigation Reference Guide for New Energy Financing is to help educate the lending community about green energy projects and associated risk exposures. Uncertainties exist for alternative energy and energy efficiency around the performance of technologies and the security of future energy savings or production, leading to a conservative lending environment Further education is necessary to overcome the barriers that prevent wide-scale lending and project development. The market has shown that for these technologies and industries to reach scale, banks require enhanced underwriting practices where future project performance can be analyzed. In order to fully capitalize on industry opportunities, lenders must develop standardized underwriting guidelines that incorporate the projected future energy savings or production. To do this they must understand risk exposures that may affect project economics.
Insurance and Risk Management
A key component of new and advanced underwriting is the value of insurance in mitigating project risks and inherent uncertainties. Insurance plays a critical role by providing financial protection to various project types throughout construction and operational phases. Similar to other construction or energy markets, adequate insurance protection is crucial to guard against risk exposures, ensure proper project performance and protect the financial interests of all parties involved. Application of adequate risk protections through insurance will further encourage the continued success and growth of the clean energy and energy efficiency markets.
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