Risk management

Risk management is a continuous process running through the lifetime of a programme, where risks are identified and categorised, and measures introduced to reduce or eliminate the risks. For more information and detail on the risk matrix and methodology adopted for categorising risks for he GET FiT Programme, please refer to earlier GET FiT reports.
 
The semi-annual monitoring undertaken by GET FiT measures progress on key indicators for the Programme. Effectively, this contributes to identifying and addressing risks as it helps the ERA, KfW, development partners, and other stakeholders to keep track of progress and see periodical development. However, the day-to-day management of the Programme is the primary source for risk identification and follow up. Close communication with project developers and power sector institutions and stakeholders, access to key ERA staff via the GET FiT secretariat (which is hosted by the ERA), active participation in joint power sector planning by KfW and the secretariat and engagement of development partners are all key arenas that enable GET FiT to continuously identify and assess risks to Programme implementation. This approach has proved vital to achieve progress, as it has allowed the Programme to proactively address and mitigate risks across a wide range of issues and areas of the sector. These include both financial, legal and regulatory risks. However, this close interaction and follow-up has also contributed to increased management costs by KfW and need for additional consultant support. 
 
In terms of the ability to follow up on project specific technical, environmental and social risks, the supervision of construction is the key tool, focusing on pro-active and flexible support and follow up of all projects until they reach commercial operation.
 

Key risks and ongoing GET FiT efforts
Based on the overall developments throughout 2017, GET FiT risk management efforts are currently largely focused within the following main areas of concern:
 
Grid connection remains the key risk and barrier to reaping the full benefits and impacts of the GET FiT portfolio. Despite comprehensive efforts undertaken by GET FiT over the past 2-3 years in the form of i) infrastructure finance, ii) technical assistance, iii) studies on deemed energy implications and iv) efforts to facilitate improved sector coordination, the risk remains high in 2017. The risk of failure to achieve GET FiT targets due to lack of timely grid connection remains with high probability and high consequence in 2017, and requires continued follow up.  More details on this risk and associated efforts are found in the chapter on Connecting to the Grid.
 
Project construction delays is the other main risk towards achieving GET FiT capacity targets in a timely manner. While some developers have shown dedicated efforts and impressive progress on outstanding issues (E&S or technical), others have failed to address key issues and meet deadlines tied to the GET FiT support. As highlighted throughout this report, GET FiT has introduced additional construction supervision at developer cost, and other penalty mechanisms to limit further delays. Certain projects are still at risk of losing their GET FiT support. The risk of further delays occurring in 2018 is rated with high probability and high consequence for the overall portfolio output. The latter high rating is due to remaining projects under construction representing a high share (more than 60 percent) of total portfolio capacity in MW.
 

Health, safety and environment (HSE) risks across the portfolio have become increasingly real over the past year, with all projects now under construction. Despite projects being pushed on maintaining timelines, it is absolutely crucial that this does not compromise HSE in any way. GET FiT is not positioned to supervise or control the quality of developer’s HSE work on daily basis, and these risks are therefore not formally part of the GET FiT risk control framework. Nonetheless, GET FiT supervision visits focus on monitoring general HSE performance to the extent possible, discussing HSE with developers and creating awareness around potential risks.