Investment in renewable energy: accounting for climate change

The harnessing of renewable energy sources is key to constraining the extent of climate change. Unfortunately, the very fact that such sources are derived from climatic conditions may leave them vulnerable to changes in climate. In particular, their economic performance may be adversely affecting making them a less attractive prospect to investors. The potential for such changes is examined using hydropower as an example. A methodology is introduced that enables quantification of changes in investment performance following from changes in climate. Results of its use on a planned scheme indicate that investment measures show significant sensitivity to changes in rainfall, implying that, hydropower could become less competitive. Other technologies may show similar impacts and the investigation of them should now be a matter of importance.