Risk management

Risks are inherent to any business activity. Through constant monitoring, data collection, analysis and reporting, a structured risk management approach is applied with the aim of reducing risks to an acceptable level.
Through geographical diversification with operations in currently 3 countries and diversification within 2 different technologies, Athena seeks to manage the overall and particular risks in order to reduce the uncertainty related to any potential issue in a specific market or technology.
Through the changes in its business model and the exit from the development activities, Athena has significantly reduced uncertainties and risks.
The overall risk categories related to Athena’s business activities are presented in the table aside.
The list is not exhaustive and categories are not presented in order of priority or significance:
Operating risks

  • Weather conditions
  • Mechanical operation
  • Credit related to the off-taker
  • Regulatory
  • Variation in energy price
Acquisition risks

  • Access to and possibility of information verification
  • Regulatory requirements
  • Possibility of transfer of rights/financing
  • Determination of acquisition price and price structure
  • Expenses incurred for acquisition activities
General risks

  • Human capital
  • Interest rate evolution
  • Exchange rate evolution
  • Insurance
  • Project financing
Weather conditions
Athena’s operational activities are, inevitably, exposed to variations in weather conditions, which may impact the production and ultimately the earnings of each plant. Athena’s presence in different regions and within different technologies reduces this risk.
In addition, in order to minimise the risks related to weather conditions, Athena only applies a realistic approach in terms of wind conditions and irradiation when forecasting the production.
Retrospectively, over the past few years, Athena has been exposed to a number of regulatory changes regarding subsidies and settlement terms of renewable energy projects in the Company’s primary markets: Italy and Spain. With retroactive replacement of the support scheme applicable to renewable energy generation, tax measures, elimination of minimum guaranteed prices and changes in feed-intariffs, Athena’s profitability has been negatively impacted by a number of factors with limited possibilities of counteracting.
To mitigate the negative consequences of the changes, Athena has started two arbitration procedures under the Energy Charter Treaty against respectively the Republic of Italy and the Kingdom of Spain.
Potential further regulatory changes or variations in settlement terms or prices in Athena’s markets may affect the Company’s existing or future projects.
Variation in energy price
In addition to regulatory changes of the support regime settlement, the evolution of the market price of energy may affect the Company’s revenue. In 2016, electricity prices were generally at a significantly lower level than expected in Italy and Spain and also previous years have demonstrated declining trends.
Athena carefully monitors the price trend and acquires qualified forecasts on a regular basis in order to anticipate any fluctuation.
Project financing
The production of energy is a capital intense business requiring financing provided largely by credit institutions. Therefore, the optimisation of the capital structure of the Company is a key element of the overall performance of the business.
For each project, the Company makes an assessment of the maximum leverage to obtain from the credit institutions subject to the performance of the project.
The higher the leverage, the higher the internal rate of return of each project.
But an excessive leverage could also lead to a breach of covenants or a reduced cash flow to the shareholder when the performance of the project is affected by operating risks such as poor weather conditions or a decrease in energy price.
Athena has a number of existing material financing contracts which could impact the transferability in the event of a takeover. A change in ownership and control on the project Companies could impact the current financing agreements.
A potential new owner should be accepted by the financing parties in order to avoid the anticipated reimbursement of the outstanding debt. Should the potential owner neither be accepted by the current financing parties nor be able to find new financing parties, the ownership of the assets would be transferred to the current financing parties.
For further disclosure on Risk Management, please refer to Note 3 of the Financial Statements.