There is little denying that renewable energy is enjoying a prolonged period of industry growth and increased market penetration. According to recent numbers by the US Energy Information Administration, the United States (by no means the forerunner in renewable development) will see an increase of 10.5 percent in 2016. Globally, our current period of renewable expansion can be largely tied to a burst of utility scale solar development. This solar boom can, in turn, be linked with plummeting prices for solar development.

As falling costs are paramount to the spread of renewables, many industry headlines are charged with metrics associated with project returns. We read about internal return on investment (IRR), Levelized Cost of Energy (LCOE), and net present value (NPV). However, despite high project return numbers, most renewable projects have low probabilities of success — the reason: an industry underbelly of project risks that every developer must be prepared to hurdle.

Renewable energy projects frequently fail for reasons that have nothing to do with project return metrics. Many falter before construction has even begun but, much to the chagrin of developers, not before they have chewed up significant development capital. So what are these less-discussed project development risks? There are many, but they can broadly be broken into two categories: the tangible and intangible.

Intangibles are the more common development risk, leading to “failures to launch”, so to speak, during the development phase. Much of this risk can lie with the company itself; new technology brings new businesses, eager to stake their claim in the renewable gold-rush. These companies may not have the personnel required to bring a project to fruition or, more likely, cannot raise the funds during small windows of project viability and get left in the dust of someone who can.

On the other end of the intangible spectrum is political and regulatory risk. Again, new technology brings new uncertainties when it comes to taxes and regulation, not to mention public option. All of these can change with the wind until finally settling into predictability. A great example is the offshore wind industry in the US which, while proven in Europe, has struggled under less developed American regulation and surprising backlash from even the most liberal NIMBYs.

Tangible risks more often arise during construction and operations. Construction risks includes surprises in the field, such as the absence of expected bedrock, or the presence of an unexpected endangered owl habitat. Operational can also include risks associated with new technologies, themselves — as we’ve seen with the once-promising concentrated solar technology that has failed to deliver for California’s Ivanpah project.

Uncertainties in project development risks make investing in renewable project more complicated than simply relying on project return metrics. Much like with investing in stocks, a sound business plan does not mean that an investment is fool proof.

Similar to stocks, the best portfolios are diverse and contain projects with varying degrees of risk. If risks are properly managed, the chances of higher returns are greater. Having a proper asset investment management system in place helps renewable developers and financiers to better identify and mitigate risks in their project pipelines, thanks to easy access to transparent data and consolidated portfolio information. Having this added visibility and insight ensures that you are not overexposed to any specific type of risk, and maintains the overall health of your portfolio, ensuring that all your investments meet stakeholder demands.