Renewable Energy and Policy Risk

South African government policy and Eskom lethargy have long posed a risk to independent power providers and particularly renewable energy project developers. The rules change, policy documents take forever to be released, and ultimately the economics of the subsidies can be quite different from envisaged.

FT has an OpEd on virtually the exact same issue in the UK, albeit in a far more developed market for renewable energy. The article actually throws the net wider and talks to traditional fossil-fuel based companies also having to deal with tax and regulatory uncertainty.

I suppose the message here for South African Independent Power Producers and Renewable Energy initiatives is that, get used to it, uncertainty around public policy in the energy space is here to stay.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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