Projects & Solutions

Investment case

The quality of an investment decision depends not only on the value projected, but on how uncertainty is quantified and managed throughout development.

Energy project development is a sequence of decisions under uncertainty. Market prices, grid access, permitting, offtake and execution can materially affect both the probability of reaching Ready-to-Build (RtB) and the value ultimately realised.

Yet development decisions are often framed around a single NPV, IRR or headline valuation. A robust investment case must assess both downside exposure and upside potential across a range of plausible outcomes. This requires a structured, probability-based approach:

1. Scenario-based valuation. Translate material risks and opportunities into coherent scenarios, with explicit probability estimates and transparent assumptions.

2. Expected value. Quantify probability-weighted outcomes to compare development opportunities on a consistent basis.

3. Downside exposure. Use an appropriately defined measure, such as Value at Risk (VaR), to assess potential losses at a specified confidence level and time horizon.

4. Upside potential. Identify the market conditions, commercial opportunities and development milestones that could unlock additional value.

5. Dynamic risk management. Update scenarios, probabilities and valuations as new evidence emerges. Adapt budgets, resource allocation and execution priorities accordingly.

The objective is not to predict a single future. It is to make informed decisions as uncertainty evolves: where to invest, which risks to resolve first, when to accelerate, and when to hold, re-scope or stop.

Analysis quantifies the opportunity. Dynamic risk management connects that analysis to execution.

MBV · Miguel Benavides de la Vega · Madrid, España · mb-venture.com