A Review of Risk Management in Renewable Energy Projects

Article DOI: https://doi.org/10.57017/ajelg.v1.i1(1).05

Author(s):

Obanor I. ENOUCH 1Department of Management Technology, Bells University of Technology, Nigeria

Abstract:

The transition to renewable energy is accelerating globally due to climate imperatives and the need for sustainable energy systems. However, renewable energy projects face complex and multidimensional risks that can impede their viability and success. This review explores key risk categories which include financial, environmental, social, legal, and project management, affecting renewable energy projects, particularly in emerging economies. The study highlights established and emerging risk assessment methodologies, including qualitative tools such as the strengths, weaknesses, opportunities, threats (SWOT) analysis and risk matrices, and quantitative techniques like Monte Carlo simulation and Failure Mode and Effect Analysis (FMEA). Risk mitigation strategies are also categorised across technical, financial, legal, environmental, and managerial dimensions. Innovations such as artificial intelligence, IoT, blockchain, digital twins, and Environmental, Social, and Governance (ESG) linked financing are transforming the risk landscape by enhancing monitoring, prediction, and stakeholder confidence. The integration of climate resilience and adaptive planning into renewable energy development is identified as a key trend for improving long-term project sustainability. The review concludes by identifying gaps in data-driven and context-specific risk models, proposing a more integrated and technology-enabled approach to risk governance in renewable energy systems.

© The Author(s) 2025. Published by RITHA Publishing. This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited maintaining attribution to the author(s) and the title of the work, journal citation and URL DOI.

How to cite:

Enouch, I. O. et al. (2025). A Review of Risk Management in Renewable Energy Projects. Applied Journal of Economics, Law and Governance, Volume I, Issue 1(1), 87-100. https://doi.org/10.57017/ajelg.v1.i1(1).05

References:

Abba, Z. Y. I., Balta-Ozkan, N., & Hart, P. (2022). A holistic risk management framework for renewable energy investments. Renewable and Sustainable Energy Reviews, 160, 112305.

Aboagye, B., Gyamfi, S., Ofosu, E. A., & Djordjevic, S. (2022). Investigation into the impacts of design, installation, operation and maintenance issues on performance and degradation of installed solar photovoltaic (PV) systems. Energy for Sustainable Development, 66, 165-176.

Aich, S., Thakur, A., Nanda, D., Tripathy, S., & Kim, H. C. (2021). Factors affecting ESG towards impact on investment: A structural approach. Sustainability, 13(19), 10868.

Akhigbe, E. E., Egbuhuzor, N. S., Ajayi, A. J., & Agbede, O. O. (2024). Designing risk assessment models for large-scale renewable energy investment and financing projects. International Journal of Multidisciplinary Research and Growth Evaluation, 5(1), 1293-1308.

Akula, S. K., & Salehfar, H. (2021, November). Risk-based classical failure mode and effect analysis (FMEA) of microgrid cyber-physical energy systems. In 2021 North American Power Symposium (NAPS) (pp. 1-6). IEEE.

Alzoubi, H. M. (2022). BIM as a tool to optimize and manage project risk management. International Journal of Mechanical Engineering, 7(1).

Bassey, K. E., Aigbovbiaso, J. A., & Agupugo, C. P. (2024). Risk management strategies in renewable energy investment. Zenodo. https://doi.org/10.5281/zenodo.13311076:contentReference[oaicite:44]{index=44}:contentReference[oaicite:45]{index=45}

Changsheng, L. O. U., Hua, M. A. O., Honglin, X. I. E., & Wenzhe, T. A. N. G. (2025). Risk management of clean energy projects from the dual perspectives of digitalization and partnering. Journal of Tsinghua University (Science and Technology), 65(1), 92-103.

Chebotareva, G., Strielkowski, W., & Streimikiene, D. (2020). Risk assessment in renewable energy projects: A case of Russia. Journal of Cleaner Production, 269(1), 122110.

Cox, C. O., & Pasaei, H. (2025). Managing project intangible risk: socio-technical implications in a “projectified” world. International Journal of Industrial Engineering and Operations Management, 7(1), 23-43.

Czipf, C. (2025). The impact of changing energy prices, interest rates, and investment costs on the net present value and internal rate of return for alternative energy projects. Discover Sustainability, 6(1), 161.

Di Zio, S., Bolzan, M., Marozzi, M., & Scioni, M. (2024). Delphi-based scenarios and risk management: A parallelism between paths destined to meet. Socio-Economic Planning Sciences, 92, 101832.

Dim, C. C., Mbachu, C. O., Enebe, N. O., Kassy, W. C., Nnagbo, J. E., Obi, I. E., ... & Onodugo, O. D. (2025). Strategic SWOT analysis of the University of Nigeria Teaching Hospital using Modified Delphi Technique: implications for strengthening national and regional health systems. BMC Health Services Research, 25(1), 1-11.

Dobermann, T., Malik, S. F., Hayat, F., & Khan, Z. (2025). Sustainable Pakistan: Addressing climate-driven demands and fiscal challenges for electricity.

Donohue, R. (2013). A study of the methodologies used in risk management standards for dealing with risk attitude in decision making (Doctoral dissertation, University of Limerick).

Ebrahimifar, S., Naji-Azimi, Z., & Rahimnia, F. (2020). Combination of SWOT Analysis, Analytic Hierarchy Process, and Monte Carlo Simulation to Identify the Strategic Positioning of Crisis Management at the Ferdowsi University of Mashhad, Iran. Quarterly Scientific Journal of Rescue and Relief, 12(2), 93-101.

Egli, F. (2020). Renewable energy investment risk: An investigation of changes over time and the underlying drivers. Energy Policy, 140, 111428.

Ekechukwu, D. E., & Simpa, P. (2024). A comprehensive review of renewable energy integration for climate resilience. Engineering Science & Technology Journal, 5(6), 1884-1908.

Eltawil, M. A., & Zhao, Z. (2010). Grid-connected photovoltaic power systems: Technical and potential problems—A review. Renewable and sustainable energy reviews, 14(1), 112-129.

Formica, T. J., Khan, H. A., & Pecht, M. G. (2017). The effect of inverter failures on the return on investment of solar photovoltaic systems. IEEE Access, 5, 21336-21343.

Gatzert, N., & Kosub, T. (2016). Risks and risk management of renewable energy projects: The case of onshore and offshore wind parks. Renewable and Sustainable Energy Reviews, 60, 982-998.

Gui, Y., Jiang, S., Bai, L., Xue, Y., Wang, H., Reidt, J., ... & Schoenwald, D. A. (2024). Review of challenges and research opportunities for control of transmission grids. IEEE Access.

Guo, Z. (2024). Overview of wind turbines and the effects of aging on performance.

Hamed, T. A., & Alshare, A. (2022). Environmental impact of solar and wind energy-a review. Journal of Sustainable Development of Energy, Water and Environment Systems, 10(2), 1-23.

Hurley, L. (2025, May 19). Investment risk for energy infrastructure construction is highest for nuclear power plants, lowest for solar. Institute for Global Sustainability, Boston University. Retrieved from https://www.bu.edu/igs/2025/05/19/investment-risk-for-energy-infrastructure-construction-is-highest-for-nuclear-power-plants-lowest-for-solar

Ilbahar, E., Kahraman, C., & Cebi, S. (2022). Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP. Energy, 239, 121907.

IRENA (2023), Renewable capacity statistics 2023, International Renewable Energy Agency, Abu Dhabi. https://www.irena.org//media/Files/IRENA/Agency/Publication/2023/Mar/IRENA_RE_Capacity_Statistics_2023.

Jensen, R. C., Bird, R. L., & Nichols, B. W. (2022). Risk assessment matrices for workplace hazards: Design for usability. International journal of environmental research and public health, 19(5), 2763.

Kapral, K. (2023). Off-site PPA as a tool to protect against electricity price spikes: Developing a framework for risk assessment and mitigation (Master's thesis, Universitat Politècnica de Catalunya).

Kapral, K., Soetaert, K., & Castro, R. (2024). An off-site power purchase agreement (PPA) as a tool to protect against electricity price spikes: Developing a framework for risk assessment and mitigation. Energies, 17(9), 2161.

Keshavadasu, S. R. (2023). Regulatory and policy risks: Analyzing the uncertainties related to changes in government policies, regulations, and incentives affecting solar power project development and operations in Kenya. Energy Policy, 182, 113760.

Khan, A. A., Laghari, A. A., Rashid, M., Li, H., Javed, A. R., & Gadekallu, T. R. (2023). Artificial intelligence and blockchain technology for secure smart grid and power distribution Automation: A State-of-the-Art Review. Sustainable Energy Technologies and Assessments, 57, 103282.

Khunger, A. (2022). DEEP Learning for financial stress testing: A data-driven approach to risk management. International Journal of Innovation Studies.

Kirichenko, E., Kirichenko, K., & Kirichenko, A. (2024). List of Issues That Require Legal Regulation as Part of the Renewable Energy Regulation in Component States of Federation. Energies, 17(3), 747.

Koo, B. (2017). Examining the impacts of Feed-in-Tariff and the Clean Development Mechanism on Korea's renewable energy projects through comparative investment analysis. Energy Policy, 104, 144-154.

Kramarz, T., Park, S., & Johnson, C. (2021). Governing the dark side of renewable energy: A typology of global displacements. Energy Research & Social Science, 74, 101902.

Kumar, A., & Praveenakumar, S. G. (2025). Research methodology. Authors Click Publishing.

Kusuma, Y. F., Fuadi, A. P., Al Hakim, B., Sasmito, C., Nugroho, A. C. P. T., Khoirudin, M. H., ... & Prabowo, A. R. (2024). Navigating challenges on the path to net zero emissions: a comprehensive review of wind turbine technology for implementation in Indonesia. Results in Engineering, 102008.

Kyeremeh, A. (2025). Project Management Perspectives On The Failures Of Government Housing Projects In Ghana (Doctoral dissertation, University of Sunderland).

le Maitre, J. (2024). Price or public participation? Community benefits for onshore wind in Ireland, Denmark, Germany and the United Kingdom. Energy Research & Social Science, 114, 103605.

Lengyel, D. M., Mazzuchi, T. A., & Vesely, W. E. (2023). Establishing risk matrix standard criteria for use in the continuous risk management process. Journal of Space Safety Engineering, 10(3), 276-283.

Li, X. (2025). Physical climate change exposure and firms' adaptation strategy. Strategic Management Journal, 46(3), 750-789.

Liu, Y., & Tang, Y. (2022). Managing uncertainty of expert’s assessment in FMEA with the belief divergence measure. Scientific Reports, 12(1), 6812.

Mupa, M. N., Pamful, E. E., Nnaji, J. C., & Adu-Boahen, J. O. A. N. N. A. (2024). Integrating ESG factors in investment decision-making for renewable energy projects. IRE Journals, 8(2), 273-293.

Murtaza, G., & Luqman, M. (2025). Environmental banking, renewable energy projects, and private investments crowd out. In Renewable Energy Projects and Investments (pp. 177-200). Elsevier.

Mutereko, S., Shava, E., Musazura, W., Ndebele, N., & Odindo, A. (2023). The Role of the Local Government Sector in Promoting Renewable Energy and the Implications on Skills Development.

Nik, V. M., Perera, A. T. D., & Chen, D. (2021). Towards climate resilient urban energy systems: a review. National Science Review, 8(3), nwaa134.

Nnaji, U. O., Benjamin, L. B., Eyo-Udo, N. L., & Etukudoh, E. A. (2024). Advanced risk management models for supply chain finance. World Journal of Advanced Research and Reviews, 22(2), 612-618.

Notton, G., Nivet, M. L., Voyant, C., Paoli, C., Darras, C., Motte, F., & Fouilloy, A. (2018). Intermittent and stochastic character of renewable energy sources: Consequences, cost of intermittence and benefit of forecasting. Renewable and sustainable energy reviews, 87, 96-105.

Nur, S., Burton, B., & Bergmann, A. (2022). Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3991872:contentReference[oaicite:49]{index=49}

Obanor, E. I., Dirisu, J. O., Kilanko, O. O., Salawu, E. Y., & Ajayi, O. O. (2024). Progress in green hydrogen adoption in the African context. Frontiers in Energy Research, 12, 1429118.

Pomerantz, A. (2023). A comparative analysis of security risk management in Norwegian oil and gas and renewable energy companies (Master's thesis, uis).

Šarūnienė, I., Martišauskas, L., Krikštolaitis, R., Augutis, J., & Setola, R. (2024). Risk assessment of critical infrastructures: a methodology based on criticality of infrastructure elements. Reliability Engineering & System Safety, 243, 109797.

Sayed, E. T., Wilberforce, T., Elsaid, K., Rabaia, M. K. H., Abdelkareem, M. A., Chae, K. J., & Olabi, A. G. (2021). A critical review on environmental impacts of renewable energy systems and mitigation strategies: Wind, hydro, biomass and geothermal. Science of the total environment, 766, 144505.

Senova, A., Tobisova, A., & Rozenberg, R. (2023). New approaches to project risk assessment utilizing the Monte Carlo method. Sustainability, 15(2), 1006.

Shahnazi, R. (2025). Investigating risks and opportunities related to investing in renewable energy. In Renewable Energy Projects and Investments (pp. 21-42). Elsevier.

Singh, C. D. (2026). Green Energy Technologies. Digitization and Manufacturing Performance: An Environmental Perspective, 1-49.

Sokka, L., Sinkko, T., Holma, A., Manninen, K., Pasanen, K., Rantala, M., & Leskinen, P. (2016). Environmental impacts of the national renewable energy targets–A case study from Finland. Renewable and Sustainable Energy Reviews, 59, 1599-1610.

Solangi, Y. A., Kul, O., & Zhang, L. (2020). Assessing the renewable energy investment risk factors for sustainable development in Turkey. Journal of Cleaner Production, 276, 124164.

Sovacool, B. K., & Ryu, H. (2025). Learning from cost overruns and schedule delays in energy infrastructure projects. Energy Research & Social Science.

Spasenic, Z., Makajic-Nikolic, D., & Benkovic, S. (2022). Risk assessment of financing renewable energy projects: A case study of a small hydropower plant project in Serbia. Energy Reports, 8, 8437–8450.

Steffen, B. (2018). The importance of project finance for renewable energy projects. Energy Economics, 69, 280-294.

Steffen, B. (2020). Estimating the cost of capital for renewable energy projects. Energy Economics, 88, 104783.

Thekdi, S., & Aven, T. (2024). A classification system for characterizing the integrity and quality of evidence in risk studies. Risk Analysis, 44(1), 264-280.

Uhanto, U., Yandri, E., Hilmi, E., Saiful, R., & Hamja, N. (2024). Predictive maintenance with machine learning: A comparative analysis of wind turbines and PV power plants. Heca Journal of Applied Sciences, 2(2), 87-98.

Verma, S., Kameswari, Y. L., & Kumar, S. (2024). A Review on Environmental Parameters Monitoring Systems for Power Generation Estimation from Renewable Energy Systems. BioNanoScience, 14(4), 3864-3888.

Wang, L., & Zhang, X. (2018). Bayesian analytics for estimating risk probability in PPP waste-to-energy projects. Journal of Management in Engineering, 34(6), 04018047.

Yar, F. G. M., & Yasouri, M. (2024). Rural Development Challenges in Addition to Effective Solutions to Overcome Obstacles. Zhongguo Kuangye Daxue Xuebao, 29(3), 79-90.

Zais, C. M., Aspelund, K., Gerum, M. P. C. L., & Uberoi, M. N. (2021). The Basics of Big Data Modeling. Big Data for Generals… and Everyone Else over 40, 33.

Zatonatska, T., Soboliev, O., Zatonatskiy, D., Dluhopolska, T., Rutkowski, M., & Rak, N. (2024). A comprehensive analysis of the best practices in applying environmental, social, and governance criteria within the energy sector. Energies, 17(12), 2950.

Zhai, X., Ji, Q., & Wu, F. (2024). Measuring climate risks and impacts. In Climate Finance: Supporting a Sustainable Energy Transition (pp. 137-188). Singapore: Springer Nature Singapore.

Zhang, J. (2021). Modern Monte Carlo methods for efficient uncertainty quantification and propagation: A survey. Wiley Interdisciplinary Reviews: Computational Statistics, 13(5), e1539.