Regulatory uncertainty in renewable energy project finance: An attribution procedure

Abstract

Aim/purpose – This methodological-conceptual research note proposes and illustrates a formalized attribution procedure for translating regulatory uncertainty into explicit en- tries in renewable energy (RE) project financial models. It addresses the gap between qualitative regulatory-risk identification in due diligence and quantitative impact assess- ment in project appraisal. Design/methodology/approach – The note develops a five-step procedure grounded in project finance and applies it to an illustrative hybrid RE installation with a battery energy storage system (BESS). The case is used only to illustrate potential applicability and struc- tural feasibility; no calibrated numerical data or empirical validation are provided. Findings – The procedure links a regulatory or regulatory-market mechanism to a model representation, a usage point, a cash-flow channel, and a project metric. It clarifies which decisions are rule-governed and which require professional judgment, and it creates an audit trail for subsequent scenario, sensitivity, stochastic, or real-options analysis. Research implications/limitations – The note may improve transparency, traceability, and comparability in project appraisal, but it does not test forecast accuracy, robustness, or inter-analyst consistency. Originality/value/contribution – The contribution is a structured intermediate step be- tween risk identification and model implementation, rather than a new valuation tech- nique or an empirically validated model. Keywords: Regulatory uncertainty; project finance; financial model; renewable energy; energy storage. JEL Classification: G31, Q42, L94. Article type: Research note.