P50 Risk Solutions

This fact sheet describes P50 Risk Solutions, an insurance product developed by the India Innovation Lab for Green Finance to mitigate weather variability risks in the wind energy sector. The product guarantees a minimum revenue level to reduce volatility and lower the cost of capital, but analysis indicates it is not commercially viable on its own and fails to significantly attract new investment sources in the current Indian market.

• P50 Risk Solutions is an insurance product designed to guarantee a minimum level of revenue for wind energy projects against an annual premium. It aims to provide customers with a 90% probability of achieving a minimum revenue, thereby reducing revenue volatility and increasing the availability and reducing the cost of long-term debt.
• Analysis using a case study project across six scenarios (three hypothetical scenarios for P50 and P75 generation levels) found that the reduction in financing costs did not offset the cost of the insurance. Consequently, the product is not commercially viable solely based on reducing the cost of capital and would require donor capital for implementation.
• The product is unlikely to attract new institutional or bond market investors even with donor support. This is because investors currently perceive wind variability as a second-order risk compared to the primary concern of off-taker payment default risk in the Indian renewables sector.
• The insurance is structured using a domestic insurer as a front-end to meet IRDA regulatory requirements, who then signs a reinsurance treaty with an underwriter. The underwriter prices the insurance based on the project's Wind Resource Assessment, and the insurance hedges the ideal energy generating potential (wind speed applied to the turbine power curve, excluding losses) up to a predetermined maximum cap.

APA

Climate Policy Initiative (n.d.). P50 Risk Solutions. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/12/P50-Risk-Solutions_overview.pdf

Chicago

Climate Policy Initiative. P50 Risk Solutions. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/12/P50-Risk-Solutions_overview.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=P50 Risk Solutions |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2016/12/P50-Risk-Solutions_overview.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendp50, author = {{Climate Policy Initiative}}, title = {{P50 Risk Solutions}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2016/12/P50-Risk-Solutions_overview.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }