Project Finance Risk Analysis on Offshore Wind Farm

Nowadays the wind power has developed very fast, and the introduction of project finance into the industry will greatly promote its advance. In sprite of the advantage of project finance, the mode such as BOT may be so risky for private and public sectors. Besides, there is a big gap between China and the developed countries both in technique and management field. Therefore, the current exploitation of wind power, especially of offshore wind power, will be full of numbers of risks, and the relevant risk study is so important in the finance process. This paper identifies, evaluates and allocates the core risks in the offshore wind project finance. Based on the comprehension of various types of risks for different participants, the paper identifies some of the most important risk factors. Then it uses some effective criteria and attributes assigned for risk evaluating in project finance approach. Afterwards all the risk-return preference factors are quantified by the membership degree of project risks from the participants' aspects, and then the game theory is adopted to analyze how to allocate the risks. Through a case study used to illustrate the procedure of project finance risk management, two pieces of suggestion are finally brought up. One is that the identification and choice of risk indicators should be independent, objective and scientific. The other is that the participant, who is able to most effectively control the risks and attains the greatest overall benefit in the project, should be allocated the corresponding risk.