Any project in renewable energy must first begin with implementations and feedback for economics, social, and environmental policies as these are the driving forces behind sustainable development. The key elements towards successful funding and ongoing operations are analyzing the risks, costs, evaluations, and monitoring guidelines. The risks of renewable energy come with any business venture for if the objectives, costs, and effectiveness are overvalued or undervalued the system can be a failure to the bottom line. As we know, renewable energy projects must make sense to the bottom line for the opportunity cost of investments are high. “Will this project help my business more than, let’s say additional capital, technology, etc.?” Therefore, it is extremely important that the funder knows what the business is up against in terms of risk and potential costs associated with the installations and operations. In addition to understanding and evaluating the costs and risks, it should be established that continuous monitoring and evaluations are carried out and reported to compare to the primary targets. Evaluations of renewable energy systems could be as simple as keeping track of the energy base load that is collected and comparing it to the initial targets agreed to by the project funder. This would ensure the funder that the system is operating at expected targets and is operating at peak efficiency. The key elements of any large investments are understanding the costs, evaluating risks, and comparing the expected outcomes with the real outcomes to gain a complete analysis of the project.

The key elements of finance-based procedures that ensure success are evaluating and understanding the system’s return on investment, weight average cost of capital and net present value. Although, there are other cost analysis procedures that can be performed, these three should be largely used to gain strategic results reliant on the investment. First, the return on the investment (ROI) is simply the total of gain of the investment minus the cost of the investment divided by the cost of the investment. The return of the investment gives the institution a measure of efficiency to analysis or compare to other investments. Second, the evaluation of the weighted average cost of capital (WACC) displays the firm’s capital proportional weighted value which validates the risk according to the rate of return. Third, the net present value (NPV) should be calculated to determine the value and profitability of an investment. The calculation can be derived from the results of the WACC by taking the present values of the cash flows discounted at WACC. Overall, these three procedures would provide the firm to analyze the future profitability and costs of the investment.

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