Financial Risk Modeling for Hybrid Renewable Energy Portfolios Under Evolving U. S. Regulatory and Tax Equity Structures


Authors : Mosunmola Omowunmi Ilesanmi; Onum Friday Okoh; Onuh Matthew Ijiga

Volume/Issue : Volume 10 - 2025, Issue 10 - October


Google Scholar : https://tinyurl.com/39jmtmwz

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DOI : https://doi.org/10.38124/ijisrt/25oct1443

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Abstract : This study explores financial risk modeling for hybrid renewable energy portfolios in the context of evolving U.S. regulatory and tax equity structures. As renewable integration intensifies, investors face mounting uncertainties stemming from fluctuating policy incentives, dynamic market conditions, and variable generation outputs from solar, wind, and battery storage assets. The paper examines how shifts in federal tax credits, state-level renewable standards, and decarbonization mandates reshape the financial viability and capital structuring of hybrid portfolios. Findings indicate that regulatory volatility significantly alters project cash flows, risk-return profiles, and the attractiveness of tax equity partnerships, especially under changing Investment Tax Credit (ITC) and Production Tax Credit (PTC) regimes. The study further reveals that portfolios optimized for diversification between intermittent and dispatchable assets exhibit improved financial resilience against market and policy shocks. Investors who integrate adaptive financial risk modeling and scenario- based performance analytics demonstrate higher expected EBITDA stability and enhanced asset valuation. Overall, the research underscores the importance of aligning financial strategies with evolving regulatory landscapes to safeguard long- term investment performance. It recommends that policymakers maintain consistency in tax equity provisions to foster investor confidence and accelerate the U.S. energy transition toward a low-carbon economy.

Keywords : Financial Risk Modeling, Hybrid Renewable Energy, Tax Equity, Regulatory Policy, Investment Resilience.

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This study explores financial risk modeling for hybrid renewable energy portfolios in the context of evolving U.S. regulatory and tax equity structures. As renewable integration intensifies, investors face mounting uncertainties stemming from fluctuating policy incentives, dynamic market conditions, and variable generation outputs from solar, wind, and battery storage assets. The paper examines how shifts in federal tax credits, state-level renewable standards, and decarbonization mandates reshape the financial viability and capital structuring of hybrid portfolios. Findings indicate that regulatory volatility significantly alters project cash flows, risk-return profiles, and the attractiveness of tax equity partnerships, especially under changing Investment Tax Credit (ITC) and Production Tax Credit (PTC) regimes. The study further reveals that portfolios optimized for diversification between intermittent and dispatchable assets exhibit improved financial resilience against market and policy shocks. Investors who integrate adaptive financial risk modeling and scenario- based performance analytics demonstrate higher expected EBITDA stability and enhanced asset valuation. Overall, the research underscores the importance of aligning financial strategies with evolving regulatory landscapes to safeguard long- term investment performance. It recommends that policymakers maintain consistency in tax equity provisions to foster investor confidence and accelerate the U.S. energy transition toward a low-carbon economy.

Keywords : Financial Risk Modeling, Hybrid Renewable Energy, Tax Equity, Regulatory Policy, Investment Resilience.

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