Financial risks in hydropower investments in Southeast Asia - identification, analysis and mitigation | |
| Author | Bieri, Martin Peter |
| Call Number | AIT RSPR no.SM-19-37 |
| Subject(s) | Water-power--Southeast Asia Financial risk management--Southeast Asia |
| Note | A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration |
| Publisher | Asian Institute of Technology |
| Abstract | Hydropower is a renewable, sustainable and flexible energy source. in Southeast Asia The energy demand is estimated to grow by more than 60% over the next 20 years, and hydropower is predicted an important role in this development, especially in Southeast Asia. As other businesses, the hydropower sector is driven by the idea of maximizing the return on investments and minimizing the cost of capital for investors by minimizing/optimizing project related risks for sponsors and lenders. In the framework of the Master Project, five Case Studies in Southeast Asia (two existing assets and three assets under development) have been selected to assess the financial risks in medium to large size hydropower investments. For each of them a discounted cash-flow model has been developed, and the economic/financial performance parameters for sponsors and lenders have been defined. Then, a project-specific risk register with initial impact assessment as well as potential mitigation measures has been established. Risk-adjusted economic/financial performance parameters for sponsors and lenders for the corresponding risk and mitigation scenario have been defined accordingly. The Master Project illustrates the leverage effect of debt on a project. Borrowing minimizes cost of capital and maximizes return on investments. However, the risk profile of a project needs to be kept as low as possible to assure lenders to borrow under attractive conditions. The Master Project illustrates how to identify, analyze and mitigate hydropower specific risks to allow for informed decision-making by sponsors and lenders. |
| Year | 2019 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Venkatesh, Sundar; |
| Examination Committee(s) | Badir, Yuosre F.M.;Zimmermann, Willi; |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2019 |