68 YINSON HOLDINGS BERHAD BUSINESS REVIEW RISKS AND OPPORTUNITIES (1 TO 10-YEAR TIME HORIZON) External environment Risks Opportunities Yinson Renewables’ response Global trade tariff changes • Negative impact on certain supply chains, causing higher costs and delayed deliveries. • Positive impact on certain supply chains, causing lower costs and accelerated deliveries. • Direct impact is limited due to locations of current projects and suppliers. Primary impact likely to be the overall effect on the global economy. • Continuously monitor impact and adjust supplier strategies accordingly. Interest rates and lending market volatility • Delays in expected rate reductions, leading to higher project financing costs. • Increased expense or selectivity of equity capital. • Slower pipeline build-out. • Temporary impact on equity returns for new projects. • Seek alternative capital sources. • Maximise and accelerate returns though strategic capital allocation from Yinson Group. • Adaptive market conditions (PPAs) to deliver expected returns. • Asset repricing, unlocking M&A opportunities as current owners optimise portfolios. • Diversify equity and debt capital sources, including private debt markets. • Maintain pace of growth through selective, timely M&A activities, targeting cash generating assets. Volatile pricing in supply chains • Short-term pricing pressures due to rationalisation of wind turbine supplier market. • Removal of subsidies in China may reduce mainland demand, creating oversupply and cheaper prices. • PV module oversupply may drive further price reductions. • Manage supplier costs through robust procurement processes. • Establish long-term strategic partnerships with key suppliers. • Capitalise on oversupply to optimise CAPEX. Grid and consenting uncertainties affecting new potential projects • Insufficient grid infrastructure, delaying timely connections. • Higher costs to developers, investors and consumers. • Consenting delays. • Collaborate with grid operators, regulatory authorities and industry trade bodies to accelerate grid infrastructure development. • Careful market selection to minimise grid and consenting uncertainties. • Acquire ready-to-construct projects to mitigate unavoidable grid and consenting delays. • Stay up-to-date on evolving consenting authority practices. Grid uncertainties or market constraints affecting operational projects • Curtailment of generation. • Market price cannibalisation related to specific generation sources. • Higher spot prices for excess generation beyond PPA contracted capacity. • Utilisation of storage technologies. • Strategic project selection. • Close coordination with system and market operators. • Continuous monitoring to capitalise on high spot market prices. Cutbacks on renewable energy in some geographies and segments • Reduced support for renewables projects in certain geographies, especially the offshore wind segment. • Impact on project pipeline. • Renewable generation onshore remains the lowest cost source of new energy. • Strategic market selection in Latin America, Asia Pacific and Europe. • Focus on onshore renewables where this risk is low. • Strong position in terms of pipeline, expertise and resources. Strong investor expectations • Failure to meet expectations in a challenging economic environment, leading to reputational impacts. • Investors favour companies with proven track records in managing renewables value chain risks. • Risk-adjusted equity returns remain attractive in an otherwise volatile capital market, supported by predictable cash flows. • Offer investors opportunities that have been de-risked through experience and expertise in managing early-stage risks and participation in the full value chain. Short-term Long-term Time horizon
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