Unknown development of energy prices
Energy prices can hardly be forecasted. Profound forecasts of renowned institutions have proved to be wrong.
Cost-benefit analyses often find that the payback period is extremely sensitive to changes in energy prices that fluctuate a lot. Energy markets are global markets and are subject to many distortions, which may result in drastic and long-term price changes.
Energy market risks are a crucial uncertainty, which negatively influence especially those projects with a payback period close to its allowed limits.
High investment costs vs. low savings
The basis for any economic calculation is the balance between the benefits achieved by a project and the associated costs. For some projects, investment costs or running costs are too high or associated benefits are too low.
The ratio of benefits and costs is the starting point of many investment decisions.
Low savings can be achieved when conventional energy sources are cheap. Often, costs caused by environmental damage and climate effects are not well or not at all reflected by market prices.
In this sense, joint energy efficiency investments and cooperation are held back, although they would make sense from an economy perspective.
Lock-in effects
When innovative technologies are used to gain higher energy efficiency, lock-in effects can occur due to missing competitors and alternatives of the used technology. Such dependencies are usually avoided by enterprises.
Lock-in effects occur when a consumer depends fully on one supplier, because the products, such as innovative energy efficient technology, are not available from other suppliers or the costs of changing to another (similar) technology are very high.
Lock-in effects are not only a risk but a market related issue. Contractual agreements must intend to avoid such potentially negative effects.
Risks and Uncertainties
Many assessments showed that risks and uncertainties are essential barriers to energy technology improvements in general and, even more important, for energy cooperation.
Risk insurances for innovative projects in the renewable energy and energy cooperation sector are hardly offered as own research by the authors shows.
