The biggest risk management challenges in the renewable industry

For example, the number of wind farm projects is dramatically increasing in recent years but most of them (e.g. turbines) haven’t experienced the maintenance phase and upgrade or disposal phase, since the life span of wind turbines is 20-25 years. If any extreme weather (e.g. typhoon, tornado, etc.) happens, what are the consequences? Can you evaluate the risk of these scenarios? Even if we only consider the daily work process, still, there are plenty of uncertain factors and changes, which lead to inaccurate risk scenarios.

Continuous improvement of risk scenarios along with the changes of business processes can be critical in renewable energy risk management. Thus, the risk inventory will be gradually completed, and the risk scenarios will be more pragmatic in the future.

3 – Rapid control changes

As renewable energy businesses are relatively new and risk scenarios also involve many uncertain issues, risk controls and corresponding regulations are still under development. Companies or industrial institutes of traditional industries always create their control (barrier) library and corresponding procedures. Then, it’s convenient for operational people to implement them. In renewable energy sectors, controls and their functions are not assured in many newly built risk scenarios. When the daily work process changes, the risk controls may change accordingly. Therefore, it is difficult for EHS risk managers and operational workers to maintain operations and controls.

Besides, in these new fields, many processes are not standardized yet. Thus, the functions of many existing controls still need to be tested and standardized. In academia and industries, new methods, experiments and guidance are strongly needed for risk controls. For example, if you build several wind farms in an area, will they change the marine risk, and will the marine environment affect the wind farm? Can the designed controls be sufficient and function well? You probably need lots of control tests and then develop standardized guidance.

Creating proper controls is based on the risk identification and technologies of renewable energy sectors. If you can ensure the processes and risks, we believe that your library of controls in renewables will be gradually developed. Industrial authorities will also gain benefits from these controls.

4 – Other types of risk that impact operational risk management

Renewable energy also has many other types of high risk rather than operational risk. Because of the unstable renewable energy policy in many countries, political risk or financial risk can fall into the account of projects in these sectors. For example, a decrease in the allowance for wind energy greatly affects the investment of wind energy businesses. Renewable energy also has high risks when it comes to contractor management. A project sometimes has several layers of contractors for specific technology and services. Since there are few common ways to manage these renewable energy projects, contractors from multiple regions can cause major risks if they only complete their part of work in silos.

Different types of risks are interactive and can impact each other. If financial or contractor management risks are high, the operational risk management also won’t perform well. Financial risk can cause a shortage of controls and related resources; contractor risk can cause insufficient safety communication and commitment.

How you can take on these challenges?

According to the current situation of risk management in renewable energy sectors, risk managers will have to take on the above four challenges. The data, criteria, and the pragmatic approach of risk management in renewable energies are still in the exploration and development phase.

In the next session of the renewable energy risk management blog, we will look into risk management methods and tips that help you to tackle the challenges of this industry.