CONCEPTUAL MODEL OF INVESTMENT AND ENTREPRENEURIAL RISKS OF START-UPS IN THE GREEN ENERGY SECTOR

Abstract

The global energy transition, driven by the commitments of national governments to decarbonisation and by the substantial reconfiguration of international capital flows, has transformed the green energy sector into a strategic priority for both public and private investment. Within this transformation, start-ups in renewable energy, energy storage, smart-grid technologies and related areas play a distinctive role as agents of technological innovation, new business models and entrepreneurial initiative, combining flexibility and innovativeness in ways that larger incumbents cannot easily replicate. However, the activity of green energy start-ups is characterised by a particularly complex risk profile, which combines the capital intensity of energy projects, long payback horizons, high regulatory sensitivity, technological maturity issues, dependence on ESG compatibility and vulnerability to geopolitical shocks, supply chain disruptions and climate-policy volatility. The specificity of this risk profile is not fully captured by either the traditional risk taxonomy of renewable energy projects or the general risk analysis of innovative start-ups, which necessitates the development of an integrated analytical framework that simultaneously accounts for the sectoral context of green energy and the entrepreneurial specificity of young innovative firms. The article addresses the problem of conceptualising investment and entrepreneurial risks of green energy start-ups as a multi-level, multi-dimensional and dynamic system. It explores the rationale for classifying risks by their level of origin as a complement to the traditional classification by risk nature, discusses the interplay between the investment dimension of risk (related to capital attraction and servicing) and the entrepreneurial dimension (related to business creation and scaling), and examines the role of the start-up life cycle in reshaping the relative weight of risk levels at different stages of venture development – from the idea and prototype stages, where internal micro-level risks dominate, to the commercialisation and scaling stages, where macro-level institutional factors become decisive. Particular attention is paid to the zone of mutual reinforcement between risk dimensions, where the strongest cumulative threats to green energy start-ups are formed through cascade mechanisms that link the investment and entrepreneurial spheres of venture activity. The article outlines practical implications of the proposed analytical perspective for start-up teams building adaptive risk-management strategies, for investors seeking a more comprehensive due-diligence approach to green energy ventures, and for policy-makers designing coordinated support measures for the development of the green entrepreneurial ecosystem.