Tripoli University

Engineering Management

Risk Analysis for Darnah Wind Farm Phase II

Name: EL-BAHLUL MOSBAH

Student # : 22 15 603

Course: Risk Management EM 695

Date: 15 / 01 / 2016

Fall 2016

Dr: Saber Elmabrouk

1. Report Summary
1
 This risk analysis for Darnah wind power project phase II, that owned to
REAOL; according to right situation in Libya, the project will face multi risks
threat it.
This report define and analyze the risks in three phases planning, construction,
O&M, and how to solve or reduce that risks?

2. Definition of Renewable Energy Authority of Libya (REAOL):

REAoL is the executive organization of renewable energies and one of the institutions
of the Ministry of Electricity and Renewable Energies was established in 2007.

2.1 Mission

Work toward integrating the locally available Renewable energy Resources (Solar &
Wind) with the National Energy System. Increase the share of RE in the National
Energy Mix.

2.2 Vision

Our vision is to become a leading company with its achievements and success by
having positive impact on the social and economic development programs of Libya
through the optimal use of renewable energies.

2.3 The main objectives of REAoL are:

A comprehensive mapping of renewable energy sources in Libya and implement
the studies to determine the current and future market.
Implement of renewable energy projects in various forms.
Increase the contribution of RE in the national energy mix.
Encourage and support the industries related to renewable energy.
Propose the legislation needed to support renewable energy.
Implementation of the programs related to the energy efficiency.

2
 Fig1: Organizational Structure of Renewable Energy Authority of Libya

3. Darnah wind farm project:

Darnah is one of the districts of Libya. It is in the northeast of the country in Green
Mountain, the total population in the region was 157,747 in the census of 2012.

Fig2 Map of Libya with Derna district highlighted

3.1 The project in brief:

Investment: governmental.
Darnah wind farm Phase 2 - 60 MW.
The average wind speed is 7m/s.
The average wind speed needed for wind generation 6.1 m/s.
The capacity factor is around 40 %.
The project consists of 37 wind turbines, with capacity 1.65MW per unit.
The total installed capacity is 60 MW.

3
 The expected annual electricity generation 215 GWh
The expected GHG emission reduction is 188,000 tCO2/year for overall
project.
The project life is 20 years.

3.2 The main objectives of the project:

Maximizing revenues from energy consumption.

Decreasing the internal consumption of domestic fossil fuel resources.
Improving energy security and stabilization of the energy system.
Developing competitive local RE industries.

4. Risk analysis

The methodology of risk analysis has been titled as below:

Identification and definition of risks.
Assessment of risks.
Risk management.

In the three main stages of the project Planning, Construction and M&O, at each
of the three stages, the project is exposed to risks, which are in the following defined
as (A) Planning risks, (B) Construction risks and (C) Operation risks. Fig3 illustrate
project flow.

4.1 Identification and definition of risks

note: {this report has been taken from Multi-criteria risk analysis for large-scale photovoltaic power
plants in Libya, Wuppertal/Berlin, February 2014 with some modifications and additions}.

While the project stages (Planning, Construction and M&O) determine the risks
in their temporal dimension, there is also the causal risk dimension; a set of 6 main
risk categories was identified:
Management Risks (I)
Engineering Risks (II)
Regulatory Risks (III)
Social acceptance Risks (IV)
Security and safety Risks (V)
Natural Hazards (VI)

4
 Fig3 project flow

The above-outlined concept of categorization allows an arrangement of the risks in

an array of two dimensions (see Fig. 4): The temporal dimension provided by the
different project stages (planning, construction, operation), and a causal dimension
related to the different risk sources (management, regulatory, social acceptance, )

5
 Fig. 4. Temporal (project phases) and causal (source) dimensions of risks
Following, give a more detailed of the risk categories for each project phase.

4.1.1 Planning risks (A)

The goal of the planning phase is to successfully perform a public, international

tendering in order to find a high-quality EPC contractor for the construction works,
at international level requires experience (knowledge of tender procedures),
management skills and some preparatory engineering (site visits, collection of data,
feasibility studies, defining technical specifications, etc.) as well as administrative
and communication efforts (obtaining authorizations, securing land and construction
permits, informing the population/public stakeholders about the project).

(I) Management

The lacking qualification or experience of the management staff in charge of

planning and drafting the tender can entail the following risks:

Insufficient quality of tender documents: Power plant specifications are

incomplete or incoherent. In consequence, bidding companies might
misinterpret the specifications and submit technical proposals that actually
do not match the intentions of REAoL; bids become difficult to evaluate and
to compare; eventually low quality bids could pass the evaluation because of
the weakness of technical specifications.
Higher costs: First, they increase the internal costs of the management
authority itself (increased friction, suboptimal allocation of resources,
duplication of work); second, flaws in drafting the tender documents could
also increases the overall costs of the wind power plant, e.g. if there is low
competition in the tendering process.
Project delays: Due to amendments or even cancellations of the tender is also
a likely consequence of a not properly managed tender document
preparation.
Contested tender: Lacking experience of the project management team with
international tenders / disrespect of international rules in tendering could
impair the reputation of the tendering organization (REAoL) and even lead to
legal actions of competitors against the tender process.
Logistical issues: wind turbine consists of huge parts, all upload, unload and
transportation must go well without/solve obstacles like bridges, trees and
power wires etc.
Land property: REAoL must take into consideration the ownership of the
land and find a solution with the owners to avoid a legal contest in the future,
threatening the project. Darnah wind farm phase I is example.

(II) Engineering

6
 Site visits, collection of meteorological data, grid connection studies as well as
feasibility/basic design studies have to be undertaken by REAoL. Engineering
mistakes or shortcomings in this phase are the source of the following two risks:

Improper plant design: For instance, fail to respect the local conditions
because of lacking or incomplete information about soil conditions or
meteorological data and location selected must has terrain proper to wind
turbine requirements and noise, landscape pollution, wildlife must be taken in
environmental study. An insufficient assessment of the grid connection
(missing grid study, poor definition of the connection interfaces with the
GECOL grid equipment) is also a source of design errors.
Poor plant components: Improper engineering could lead to component
specifications that do not reflect the conditions and needs of the project.

(III) Regulatory /Administration

Wind farms need to comply with national laws and must obtain authorizations. The
needed authorizations to be obtained for wind power plant projects, missing
regulatory framework for power plants in Libya, as well also a missing technical grid
code for the connection of renewable power plants to the GECOL grid. A further
obstacle from the administration side might be budget issues, e.g. if the tendering
authority is not able to secure the budget foreseen for the project.

Authorization constraints: This risk concerns all approval / authorization

problems that might occur in the planning phase for the wind project. For
example, no progress in Imsallatah wind farm project because, according to
Libyan law, environmental impact assessment must get approval by
environment studies center.
Budget cuts: Difficulties to secure the financing for the wind project.

(IV) Social acceptance

Problems for the social acceptance of wind power plant projects in Libya could
arise from lacking transparency and low public communication about the project.
Also general misunderstandings or misperceptions of the wind technology among the
concerned population could be a source for social acceptance problems. A
consequence of lacking acceptance would be a higher risk for an organized resistance
against the project.

Resistance against the project: Resistance could take place on local level, e.g.
from the concerned population that has learned about the project through
media or announcements; another possibility for resistance would be legal
claims or lobbying by Libyan industry associations.

(V) Security and safety issues

7
 Generally, in the planning phase, there is no possibility for direct security threats
against the wind power plant itself.

Cancellation of the project: The risk that the government is not able / willing
to continue the roll-out of the wind power plant project because of external
conditions (widespread civil unrest, tampering cases, stealing, etc).
Buffer zone: must be respect safety standards and take buffer zone in
considerations for buildings, roads and seasonal agriculture in collapse or
burning wind turbine probability, and buffer zone for hunting and runways.

(VI) Natural hazards

Obviously in the planning phase, natural hazards are no issue endangering wind
power plant projects.

4.1.2 Construction risks (B)

To ensure the successful implementation of the wind power plant. This requires a
careful supervision of the construction works of the EPC contractor. REAoL must
verify that the contractor respects the stipulations of the EPC contract. This concerns
the technical requirements (usually verified by stepwise acceptance of construction
milestones) but also the respect of social and environmental norms. Risks during
construction of the plant can result particularly from an insufficient supervision of
construction which might lead to failed milestones, project delays or, at the worst,
that the plant is not fully functional.

(I) Management
The construction of the wind power plant requires a comprehensive management of
the supervision by REAoL. However, missing experience of REAoLs members as well
as insufficient supervision of the construction progress might directly influence the
success of the project. That can be triggered, for example, due to the underestimation
of logistical efforts or according to a lack of qualified staff to supervise the
construction at the project site. The following two risks could be the consequence:

Poor execution quality: It is below technical standards, if, for example,

negligence of the construction company is not discovered by the supervisor.
Construction and completion delays: An insufficient project management can
also result in construction and completion delays, for example due to delayed
acceptance and commissioning of the power plant.

(II) Engineering
Engineering risks in the construction phase are the result of an insufficient
preliminary definition of commissioning procedures or a lack of correct specifications
(e.g. missing soil studies, specifications of the grid connection, etc.). These

8
procedures and specifications must be defined by REAoL engineers in order to avoid
the following risks:

Increased construction costs: Unexpected site conditions or unclear

definitions/specifications of interfaces can create circumstances that make
additional work necessary. As these additional costs are not the responsibility
of the EPC contractor, they must be incurred by REAoL.
Commissioning delays: Due to poor commission procedures or acceptance
problems of the plant by REAoL or GECOL, commission delays might occur
and disputes with the contractor could be the consequence. Finally,
commissioning fails or has to be repeated.

(III) Regulatory / Administration

Regulation and administrative procedures needed to construct (and connect) wind

power plants in Libya are nearly not available or are currently being established. It is
therefore highly likely, that a number of potential authorization issues remain
undetected. In addition, budget problems, might delay the construction progress since
payment obligations can not served on time. Also legal issues can influence the
success of the construction since no rule and experience from comparable projects
exists.

Construction interruptions: Custom problems or other authorization issues

might lead to the interruption of the power plant construction.
Non-fulfillment of payment obligations: Reasons for non-fulfillment of
payment obligations lead to difficulties of the project office (REAoL) to ensure
timely disbursements of milestone payments to the contractor.
Legal conflict with contractor: Disputes and legal conflicts with the
contractor can be the consequence of a low EPC contract quality or if
contradictions in the EPC contract exist.

(IV) Social acceptance

Has to be considered carefully during the construction phase of wind power plants.
Previous experience of Derna wind farm project (phase I) has shown that if local
participation and benefits for local population (land rights, compensation) are not
visible, resistance against the project during construction could emerge.

Resistance against the project: Lacking consideration of social acceptance

aspects could lead to resistance of the local population against the project.
Resistance could also be the consequence of tribal issues or participation
claims of the local population, or if benefits for the local private sector
(Libyan companies) are low. A further trigger for local resistance might be
negative environmental impacts (wastes) during the construction phase.
(V) Security issues

9
These are some security issues may exist in the project area as the following:

Vandalism / Theft: If no security plan exists and resistance of local

population against the project increases, vandalism and theft cannot be
excluded during construction.

(VI) Natural hazards

During the short construction phase, the natural hazards are generally not very
high. Nevertheless, a certain risk cannot be fully excluded:

Damages due to natural hazards: Also during the construction period of the
wind power plant project damages due to flooding, lighting and heavy wind
loads have to be considered. However, the likelihood of such damages is low.

4.1.3 Operation risks (C)

O&M risks of the wind power plant are becoming particularly important after the
two-year warranty period. By using an external O&M service company, operation
risks can be minimized. But also in this case REAoL is still responsible for monitoring
the performance of the wind plant as well as the administration of the power off-take
agreement with GECOL:

(I) Management

Management risks of the wind power plant operation process result in particular
from a potentially insufficient plant monitoring and from neglected maintenance
supervision. Current missing experience of the maintenance and O&M teams are
additional reasons for management risks:

Low quality of maintenance: REAoL fails to properly manage the plant

maintenance. Such factors include a missing supervision of the maintenance
team as well as a missing handling of plant equipment warranty cases.
Reduced plant availability: Due to an insufficient O&M management of the
wind power plant, off-times of the plant increase, consequently reducing the
plant availability and power output.
Increased O&M costs: Insufficient experience of O&M teams / O&M
supervision can increase O&M costs.

(II) Engineering

Unclear specifications and misjudgments of local conditions can lead to improperly

engineered, low-standard maintenance programs that are not adapted to local
conditions and lead to an increased wearing material and equipment. Errors in yield
estimation and inaccurate wind speed data sets are further challenges for the proper
functioning of the power plant.

10
 Increased plant degradation: The degradation of the wind power plant
increases over the lifetime since maintenance programs are not adapted to
local conditions (dust, wearing of material and equipment due to the hot
climate...)
Reduced power output: The power output of the plant is lower than expected
due to errors in the yield estimation or inaccurate wind speed data.

(III) Regulatory / Administration

Also in the operation phase, the power plant might suffer from regulatory and
administrative uncertainty. Examples are the currently unclear ownership status of
the plant after the warranty period and also the not yet answered question concerning
the coverage of the maintenance costs. In addition, at the moment no regulatory law
exists in Libya which regulates the power off-take with GECOL. It is therefore
strongly indicated to consider the following two risks in the operation phase:

Lack of funds for maintenance: Unclear responsibilities (e.g. ownership of

the plant) result in a lack of funds for plant maintenance.
Power off-take jeopardized: No regulatory rule and law exists in Libya which
guarantees that GECOL accepts wind electricity feed-in over 20 years.

(IV) Social acceptance

Similar to construction, due to the long-term project character of more than 20

years and high uncertainty about the future security situation in Libya, security risks
during operation have to be considered with great care:

Interrupted O&M services: O&M services are interrupted since the O&M
service team is unable to continue work at the plant as consequence of
unknown security threats in future.
Increased security costs: Costs to ensure security increases (e.g. permanent
guard, armed security staff, electronic surveillance systems) with a
deteriorating security situation.
Vandalism / Theft: If no security plan exists and resistance of local
population against the project increases, vandalism and theft cannot be
excluded during operation.

(VI) Natural hazards

Natural hazards during operation of the wind power plant cannot be excluded due
to the long-term project character of more than 20 years and local weather
conditions:

Damages due to natural hazards: Damages due to flooding, lighting, heavy

wind loads as well as local weather conditions can significantly jeopardize the
power plant.

11
 4.2 Methodology

Strategies for minimizing risks can be classified into strategies to prevent and to
response to risks. The initial strategy, risk prevention, is used in this study to develop
an analytical framework which helps to identify and assess risk as well as to make
decision makers in governmental organization aware about risks in an early stage of
project development. To analyze risks of large-scale wind power plants in Libya, by
applied the risk matrix concept, as one of the main objectives of this study is to make
decision makers in governmental institutions aware about existing risks. The
following five categories define the consequences (potential damage) used in this
study in decreasing order of importance:

Catastrophic: power plant project completely failed/wind plant fully

damaged; no repair possibilities, power plant completely off-line (no power
production) dur-ing operation.
Major: power plant has major flaws, project heavily delayed, power plant can
be established/repaired but only under high efforts and substantial additional
costs, electricity production of the plant endangered/very low level.
Moderate: functional but low quality power plant with possibility to remedy at
additional costs, significant output losses.
Minor: reduced but acceptable power plant quality. Project encounters minor
problems and delays; additional project costs remain moderate. Output losses
stay within acceptable limits.
Negligible: power plant has only negligible flaws, minor delays, power plant
performance (power output) meet the expectations.

These five categories are put into relation with the likelihood of risks. Also
likelihood is identified in a qualitative way and subdivided into five categories
ranging from high to low (almost certain, likely, possible, unlikely, rare). According to
the relation of likelihood and consequences of risks within the matrix, risk
combinations are classified into high, medium and low. An overview of this risk
matrix is provided in Table 1.

12
 In a second step, the qualitative risk matrix is translated into a numerical scheme
which is particularly useful to overcome the still limited value of the qualitative
matrix and to provide a more in detail assessment of risk likelihood/consequence
ratios. Both, likelihood and consequence categories, are rated from 1-5. By
multiplying the damage rating with the corresponding likelihood, the final risk matrix
is calculated (Table 2).

Color codes, categorizing the resulting risks into four levels, make the classification
more comprehensive (Table 3):

13
 The different categories shall serve as a guidance for the planners and decision
makers: Highest risk (more the 18 points in the rating) requires urgent action for
risk mitigation; high risk (between 12 and 18 points) likewise indicates that high
mitigation efforts must be dedicated to this risk group. Less attention can be paid to
the yellow, low risk category, while the negligible risk category is not connected
with any particular priority.

4.3 Risk evaluation

The risk evaluation was carried out individually for each risk identified in the
different project phases and risk categories (see section 4.1). Thereby, each of the 38
singular risks (spread over the 3 project phases and 6 risk categories) received an
individual rating for probability and damage - both on a scale from 1 to 5. The
multiplication of these two numbers resulted in the final score.
The details of this rating is shown in Table 4 for the planning phase, Table 5 for the
construction phase, and Table 6 for the operation and maintenance phase.
Table 7, finally, aggregates the scores of the individual risks to average scores
(arithmetic average) of the 6 risk categories: management, engineering,
administration/regulation, social acceptance, security threats and natural hazards.
This allows an inter-temporal comparison of the risks according to the different
project phases: for example, it could be observed whether the importance of
management risks would increase if the project shifts from the planning to the
construction phase.
4.3.1 Evaluation of risks during planning / tendering phase

14
Table 4: Risk evaluation of the planning phase

Category Source Risk Details Likelihood Consequence Risk

Management 1- Insufficient Insufficient Tender documents and

(REAoL) qualification profile of quality of tender specifications are incomplete/ 4 5
document incoherent
management staff
(team building,
communication, )
2-Institutional / Higher costs Overall planning process more cost
organizational intensive, higher costs of bids due to 5 4
low competition
shortcomings
3-Underestimation of
management efforts Project delays Delays in the planning/tender 5 3
4-Lack of experience process due to cancellation /
with international PV amendments of tender
power plant tenders
5-Disregard of Contested Fairness of the tender is contested.
regulatory and tender Companies take legal actions 4 5
authorization against the tendering institution
processes
6-Disregard of best-
Logistical issues upload, unload and transportation
practice rules in tender
parts must go well without/solve
design. obstacles like bridges, trees and 2 2
7-Poor document power wires etc.
management
8-Poor tender Land property Legal conflict with ownership of the
evaluation procedures land
4 5
9-Time pressure

15
Engineering 1-Lack of engineering
(REAoL) competence of selected
contractors
2- technically ambiguous
description of specifica-
tions and interfaces in
the tender documents
3- Lack of availability of
information about
meteorological situation
(meteo data sets, soil
study, grid study)
4- Insufficient site visits
5- Insufficient pre-tender
feasibility studies
Regulatory / 1-Missing regulatory
Administration framework for PV power
plants in Libya
2-Missing grid code
(GECOL)
3- Unclear authorization
and approval processes
4- Budget allocation (e.g.
due to state budget
problems)
Improper plant Shortcomings in the quality of the
design plant design . Plant risks to be not 4 4
adopted to the local conditions,
technical interfaces ; sub-optimal
PR; sub-optimal yield.
Poor plant Components not suitable for site
components conditions (ambient temperatures,
sand storms, soil conditions
4 4
Authorization Project encounters authorization
constraints and approval problems, e.g.
3 5
authorization of GECOL grid
connection not obtained.
Budget cuts Project office encounters
difficulties to secure the financing
for the wind project.
3 5
16
Social 1-Low communication
acceptance about the project in the
planning phase
2- Misperception of the
project
3- Insufficient
participation of the
private sector in Libya
Resistance On local level: resistance of the
against the local population.
project On national level: domestic industry
associations oppose against the 2 3
project on political level.

Security Cancellation Government is not able / willing to 2 5

issues of the project continue the roll-out of the wind
Safety & instability in the power plant project.
country take buffer zone in
Buffer zone considerations for buildings,
roads and seasonal agriculture
in collapse or burning wind 2 5
turbine probability, and buffer
zone for hunting and runways.

Natural No danger in project Impact of

hazards planning phase (plant not natural 1 1
yet built) hazards

17
4.3.2 Evaluation of risks during construction phase

18
4.3.3 Evaluation of risks during operation phase

19
20
4.3.4. Summary table: note: in planning phase & management source, neglect risk value of logistic issue 4 from average its very small in
front of others values of risk.

21
4.3.5 Discussion

As can be observed, the significance of the risk categories depends on the actual project
phase:

Risks due to management shortcomings are significant in all project phases, but are
highest in the planning phase. Although the risk level decreases slightly in the
construction and operation phase, the proper project management remains the
concern for the success of the wind projects.
Engineering risks are high during the planning and construction phase; but are less
significant in the operation phase, where basically only maintenance works must be
carried out.
Regulatory risks are very important in the initial planning phase (when, for in-stance,
the authorizations must be obtained), but become less important once the
construction of the plant has started.
Social acceptance problems are expected to reach a peak at the beginning of the
construction phase when the local population is actually experiencing/realizing the
execution of the project. During the planning phase, and during the 20-year operation
period, social acceptance risks are generally low.
Security issues remain at a constant, medium risk during all project phases.
Natural hazard risks are negligible in the planning and construction phase, but
slightly increase in the operation phase.

These findings already give first indications about the most essential risk mitigation
strategies for the different project phases:

In the planning phase, particular attention must be paid to management, engineering and
regulatory aspects; in the construction phase, management and engineering likewise play an
important role, but more emphasis should also be given to social acceptance issues. The
operation phase likewise requires strong management efforts.

4.4. Risk mitigation strategies

A detailed overview of the risk mitigation strategies - broken down to the different project
phases and risk categories - is given in Table 8. The various mitigation strategies can be
summarized in the following seven main recommendations to REAoL.

4.4.1. Improve the organizational capacities at REAoL

REAoLs internal capacities to manage wind power plants must be significantly improved in
order to mitigate management and engineering risks. First and foremost, REAoL must
develop clear procedures describing in detail how the wind power plant projects shall be
carried out and which steps must be undertaken by REAoLs staff members in order to
successfully perform each project phase:

22
 Development of an internal project manual describing all processes needed at
REAoL in order to carry out the project. The manual shall include flow diagrams and
manning schedules for all project phases in order to allow an assessment for the need
of human resources and in order to detect potential bottlenecks where the skills of
REAoL are currently not sufficient and external support is necessary.
Definition and description of all tasks and engineering procedures that must be
carried by REAoL in each project phase:
Planning phase: site selection, collection of the necessary authorizations,
feasibility studies, grid studies, soil study, and definition of technical ToR,
tender evaluation procedures, norms and standards. as we know this
technology is first time to come in country and REAoL have n't any experience
in wind power project so we advice to divide 60 MW into 3 phases with 3
years and 20 MW for each one up to get skills and experiences
"starting small to reduce risk but time triple extension"
Construction phase: procedures for construction supervision and
commissioning procedures.
Operation phase: procedures for operation supervision, definition of
maintenance programs, monitoring.
Set-up of an internal document management system at REAoL
Acquisition of the necessary tools, such as software and equipments for testing and
commissioning.

The definition of the procedures in the project manual shall also help to assess REAoLs
needs in terms of human resources:

Definition of the skills needed for managing the wind power plant program.
Drafting an organization chart defining the responsibilities of the involved personnel.
If required: hiring of new staff members.

4.4.2. Hiring of external experts

It is common practice on worldwide level, that large engineering projects in the power sector
are accompanied by external/international consultants. This also concerns renewable
technologies - in particular if it is the first time for a country to build these power plants and
the experience with such projects is generally low. At least for the first tender projects, it is
therefore recommended that REAoL hires external experts for:

assistance in the drafting of tender documents

tender evaluation, contract award
owners engineering (OE) services during the plant construction phase including
commissioning
Supervising the quality of the O&M services during the guarantee period.

Moreover, external experts shall provide trainings to REAoL staff members, in order to make
the agency fit for carrying out future wind projects on its own.

23
4.4.3. Management of regulatory issues and authorizations

The unclear situation in terms of regulatory and administrative procedures (permits,

authorizations) is a substantial issue for the wind power plant projects. It should be
proactively faced by REAoL:

REAoL should start with an assessment of all authorizations / regulatory provisions

being potentially relevant for wind power plant projects. External legal advisors, if
needed, could carry out this evaluation.
REAoL should - on political level - advocate a clear legal framework for renew-able
power projects in the country.
Vis--vis of GECOL, REAoL should advocate for a grid codes that defines clear
conditions for the technical connection of the renewable power plant to the national
electricity grid. Moreover, REAoL should enter a legal agreement (contract) with
GECOL defining the conditions for the off-take of the produced electricity and the
dispatching of the wind power plant.

In addition to that, REAoL should likewise undertake efforts to ease the customs procedures
for the contractor to import wind power equipment.

4.4.4. Proactive attitude to increase social acceptance

If social acceptance issues are not appropriately considered, they can substantially obstruct
the smooth roll-out of the projects. REAoL can act at different levels to avoid potential
resistance against the projects:

Increase the communication about the project: inform the concerned population at
early stage about the impact and consequences of the project.
Carry out stakeholder workshops, involve local authorities, tribes leaders, industry
and decision makers.
Ensure that the construction company behaves properly during the construction
phase, e.g. by minimizing environmental impact and waste.
Develop strategies how the value generation for the Libyan industry, including the
creation of jobs could be increased (e.g. local content provisions in tender design).

4.4.5. Security and safety concept

Certain measures can be undertaken to limit the risk of personal injuries and property
damage during the power plants construction and operation phase. For each project, an
individual security concept should be developed - in close cooperation with the EPC
contractor, the local authorities and security bodies. It is mentioned that currently many
international companies require such security concepts before they are able to send out their
engineers or other personnel to Libya.

For the operation phase, the security concept should foresee technical measures (camera
surveillance, protected fence, ) as well as services of professional security companies

24
local people must hired, in order to avoid theft and vandalism and strong communications
should have built with tribes leaders.

4.4.6. Financial planning

In order to avoid that budget problems lead to project interruptions, a concise financial plan
for the project has to be established, considering the financing internal structures at REAoL,
as well as the project costs (e.g. payment schedules for the construction works of the
contractor). A binding financing commitment has to be obtained by the public (or private)
financiers. REAoL should take two points below in consideration:

REAoL must prepare itself to submit financial budget to the government between
March & June when discussion annual budget approval, to avoid waiting up to next
year.
from the beginning, the contract with supplier should include spare parts price to
avoid more negotiation and wasting time with the government to approve budget
again when need spare parts for maintenance in O&M phase "in this case may be
need warehouse".

4.4.7. Insurance concept

Sufficient insurance provisions - against natural hazards, against theft and vandalism -
should be foreseen for the construction and the operation phase.

25
26
5. Summary

The analysis reveals that particularly shortcomings of project management and

engineering capacities of REAoL could endanger the success of the wind projects. Other
important risks are emerging from unclear regulatory and administrative procedures, for
example due to a missing grid code for the connection of renewable power plants to the
electricity network. Likewise noteworthy are social acceptance risks and the difficult security
situation in the country. The risk that natural hazards could substantially endanger the wind
power plant projects is considered low.

Having analyzed and quantified the different risks, the study concludes with the following
recommendations for risk mitigation (listed in descending order of importance):

The organizational capacities of REAoL must be improved.

External expertise is required to provide REAoL with guidance for successfully
carrying out international wind tenders.
The status of Libyan wind plant projects with regards to national authorizations and
regulations must be assessed and improved.
REAoL should proactively work to improve social acceptance for the wind projects
A security concept must be developed to enhance trust of international contractors to
participate in the projects.
A concise financial planning in order to ensure the availability of the project budget
and to avoid project interruptions due to lacking funds
An insurance concept shall be developed.

By respecting these recommendations the overall risk for severe project failures should be
significantly minimized. It is noted that the recommendations are also valid for other
renewable power projects in Libya - and could therefore principally also be applied to PV or
CSP projects.

27
References:

REAoLs papers.
Multi-criteria risk analysis for large-scale photovoltaic power plants in Libya,
Wuppertal/Berlin, February 2014.
Wikibidya website.

28