Sample interview questions: How do you assess the potential risks and returns of investing in renewable energy infrastructure?
Sample answer:
Assessing Potential Risks and Returns of Renewable Energy Infrastructure Investments
Risks:
- Technology Risk: Investments in renewable energy infrastructure are exposed to technological advancements and unforeseen challenges that may affect project viability.
- Resource Risk: Dependent on natural resources (e.g., wind, solar), fluctuations in availability or resource quality can impact project performance and returns.
- Policy and Regulatory Risk: Government policies and regulations can influence project economics and investment attractiveness.
- Construction and Operational Risk: Infrastructure projects face potential cost overruns, delays, and unforeseen operational issues.
Returns:
- Stable Income Potential: Renewable energy projects generate predictable cash flows through long-term contracts or government subsidies.
- Tax Incentives: Many jurisdictions offer tax incentives and credits for investments in renewable energy.
- Environmental, Social, and Governance (ESG) Alignment: Investors increasingly seek investments that align with ESG goals and contribute to sustainability objectives.
- Inflationary Protection: Renewable energy assets provide a natural hedge against inflationary pressures, particularly where electricity prices are linked to inflation indices.
Assessment Process:
- Due Diligence: … Read full answer