Lauren Mills reflects on EDHECinfra’s latest report where the authors, Laurence Monnier (Director of 1PlanetInfra, Advisory Board member of EDHECinfra) , Frédéric Blanc-Brude( Director of EDHECinfa and CEO of Sientificinfra) and Leonard Lum (Data Analyst in EDHECinfra), examine the impact on the risk profile of wind and solar power investments of the increasing dominance of renewables. Lauren highlighted the facts provided in the report:

“…a raft of challenges brought about by the growing share of intermittent renewable energy in the generation mix:

• Rising development and construction costs;
• Higher volume volatility;
• Increased market price volatility as rising exposure to intermittent wind sources adds to the variance of power prices, particularly at peak times;
• Cannibalisation in the form of the average price captured by renewable installations becoming lower than the average wholesale price over the year;
• Renewables are intermittent and so it is more difficult and costly to balance the electric grid, creating grid instability.

EDHECinfra also concluded that, because greater renewable energy production leads to more volatile energy systems, the option value of gas must increase.”

“In effect, regulatory support in the form of price stabilisation for renewable and energy storage could benefit both investors and consumers.”

Read the full story here.