Perception of risks in renewable energy projects: The case of concentrated solar power in North Africa

The world needs to reduce greenhouse gas emissions to prevent climate change, while meeting the energy needs of developed and developing economies. Recent studies suggest that generation of electricity from concentrated solar power in North African countries and its transmission to Europe could provide European and North African partners with low-carbon electricity. The private capital will be likely required to achieve the scale of new investment and yet the North African region experience difficulties with sustaining high levels of foreign direct investment from the private sector. The literature identifies a number of risks as barriers to investment, and we examine these in the particular context of renewable energy development. We conducted three stages of interviews with stakeholders to learn their perceptions of the risks most likely to affect renewable energy projects. Three class of risks regulatory, political, and force majeure (which includes terrorism) stand out as being of high concern. Of these, regulatory risks are perceived as being the most consequential, and the most likely to occur. This suggests that attention to building the capacities of North African countries to develop, implement, and enforce sound regulations in a transparent manner could be an important step in promoting renewable energy cooperation with Europe. (C) 2009 Elsevier Ltd. All rights reserved.