Risk Analysis in Renewable Energy System (RES) Investment for a Developing Country: A Case Study in Pakistan

Izzet Alp Gul, Gülgün Kayakutlu, M. Özgür Kayalica*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


Technological improvements allow changing a significant part of the electricity generation investments to renewable energies. Especially in emerging markets and energy import-dependent countries, shift to renewable energy generation became more important to break the links of dependency. Pakistan relies on imported fossil fuels; however, the country’s experience and ambition about the renewable energy transition gain prominence in recent years. Considering the long-term life cycle of energy infrastructure investments, possible risk factors and their dynamic nature must be analysed before the financial decisions are taken. This article aims to propose a system dynamics model for the risk analysis of investment life cycle. In this study, possible risk factors are detected and discussed in different categories. The casual loop diagram of possible risk factors and risk assessment model are designed, and the impacts are analysed. Case study of the proposed model in Pakistan highlighted the importance of commercial risks. The results achieved through this study will guide investors, sector participants and policymakers to develop stable strategies for promoting renewable energy in the country. JEL: Q42, P48, O13.

Original languageEnglish
Pages (from-to)204-223
Number of pages20
JournalArthaniti: Journal of Economic Theory and Practice
Issue number2
Publication statusPublished - Dec 2020

Bibliographical note

Publisher Copyright:
© 2020 University of Calcutta.


  • energy investment
  • Pakistan
  • Renewable energy system
  • risk analysis
  • system dynamics


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