Demand risk

Power transmission Power transmission

Description (What is the Risk)

Market participant demand for the transmission facility capacity.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The default position for transmission projects is for the Contracting Authority to retain all demand risk.

Mitigation Measures (What can be done to minimize the risk)

As it will be absorbing this demand risk, the Contracting Authority should do a full assessment of demand risks.

Government Support Arrangements (What other government measures may be needed to be taken)

As the Contracting Authority will be retaining demand risk, it will need to ensure that it is comfortable (both politically and economically) with demand forecasts.

Comparison with Developed Market

It may be difficult for Contracting Authorities to develop realistic demand and load forecasts, as there is likely to be a lack of relevant comparative market data to begin with.

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Description (What is the Risk)

Market participant demand for the transmission facility capacity.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The default position for transmission projects is for the Contracting Authority to retain all demand risk.

Mitigation Measures (What can be done to minimize the risk)

As it will be absorbing this demand risk, the Contracting Authority should do a full assessment of demand risks.

Government Support Arrangements (What other government measures may be needed to be taken)

As the Contracting Authority will be retaining demand risk, it will need to ensure that it is comfortable (both politically and economically) with demand forecasts.

Comparison with Developed Market

In developed markets, the Contracting Authority should have access to various data sources to develop realistic demand and load forecasts.

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