79 BUSINESS REVIEWS | YINSON RENEWABLES RISKS AND OPPORTUNITIES External environment Risks Opportunities Yinson Renewables’ response Short to medium-term (1 to 5 years) Higher interest rate market. • Tighter access to capital. • Slower build-out of existing pipeline. • Impact on new project equity returns. • Seek alternative equity capital sources. • Market conditions (PPAs) will adapt over time to deliver higher returns, but there may be a time lag. • Pursue alternative external sources of equity capital. • Optimise pace of development to match current available capital. Increasing pressure and volatile pricing on supply chains. • Supply chain constraints leading to increased costs and delayed deliveries. • Rationalisation, consolidation and new market entrants within the supply chain. • Market conditions (PPA pricing) adapting to increased costs. • Manage supplier costs through robust procurement processes. • Strong supplier relationships. • Ensure projects continue to give robust returns by securing attractive PPA terms. Grid uncertainties affecting operational and potential new projects. • Lack of grid infrastructure to enable timely connections. • Curtailment of generation. • Higher costs to renewables developers, investors and consumers. • Participate with grid operators, regulatory authorities and industry trade bodies to accelerate grid infrastructure development. • We adhere closely to our Investment Policy which evaluates market fundamentals and ensures our selected projects meet rigorous criteria including regulatory, political and operational standpoints. Long-term (6 to 10 years) Increased renewable energy targets globally. • Unable to meet targets due to permitting delays and infrastructure limitations. • Policy and regulatory uncertainties. • Higher costs of capital. • Policy-led incentives for renewable energy players. • Demand for renewable energy from corporate offtakers. • Security of supply concerns in changing geopolitical landscapes creates greater demand for projects. • Yinson Renewables is well positioned in terms of pipeline, expertise and resources to capitalise on the growing opportunities in the renewable energy space. Rapid technological developments. • Failure of non-mature technologies. • Integration of different technologies into projects, increasing opportunities. • Experienced team is able to keep abreast of technological developments and integrate them into our projects. • We adopt proven technologies. Strong investor expectations. • Inability to meet expectations in a challenging economic climate, leading to reputational impacts. • Investors favour companies with a strong track record of delivery with demonstrated capability to manage renewables value chain risks. • Our involvement in the full value chain allows us to use our experience and expertise to manage early-phase risks, offering investors de-risked investment opportunities with stable returns.
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