As the largest global company operating exclusively in the renewable space, Acciona Energy is a key player determining how the world’s energy demand is met . It is active in both development and generation across five major technologies: wind, solar photovoltaic, solar thermal, hydroelectricity and biomass. Its assets span the globe, with a strong presence in Spain, Australia, Mexico, South Africa and the USA. Acciona is now seemingly well placed to succeed given its alignment with global sustainability goals, favourable policies and improvements in renewable technologies. Has Acciona done enough, however, to ensure its own operations are safeguarded against the inevitable multifaceted effects of climate change?
Exhibit 1: Acciona’s global operational footprint by type of asset 
Renewable energy: Solutions to climate change that come at a price
Although renewable energy is the main weapon against human-induced climate change, it is itself highly vulnerable to climate related risks. A framework proposed by McKinsey & Co.  categorizes these types of risk:
Exhibit 2: Categorization of climate change risks 
Value-chain risks are particularly salient in the renewable energy industry, given its capital intensity, commoditized offering and context dependencies. (In fact, rating, reputational and regulatory aspects of Acciona’s operations may evolve favourably as the impact of climate change becomes more apparent.) Due to the interconnected nature of power networks, vulnerabilities in one region or generation system will cascade negative effects.
Physical asset risks
One asset risk to be mitigated is the vulnerability of coastal infrastructure to rising sea levels; Acciona is particulary exposed to this in the Western Americas and Northern Europe. Increasing extreme weather events including storms, surges and hurricanes will also jeopardize assets and render their supply of energy more intermittent. Coupled with the shift in energy mix to more renewables, which are less consistent than conventional sources by nature, this will further exacerbate the issue of supply reliability.
As temperatures of water bodies increase, solar installations can suffer from a reduced cooling capacity, which may result in outages . A study for European solar generation has shown capacity may decrease by as much as 14% . Variation in precipitation volume may also lead to a reduced utilization of Acciona’s large hydroelectric plants. 
Price related risks
Raw materials used in the manufacturing of Acciona’s core assets, like rare earth metals for wind turbines and photovoltaic systems, will experience price volatility affecting the upstream supply chain . Regional droughts can also raise the price of water used in cooling.
Demand side fluctuations are expected to become more unpredictable in the future: higher air temperatures and occasional heat waves will increase peak power demand, requiring more redundancy and back-up systems to be built into the grid. Reliability will suffer; climate-related outages are already being observed, for example in Northern India’s 2012 blackouts. 
Acciona’s climate risk mitigation
Acciona has a strong track record of committing to sustainability in its operations, but only partially acted on the negative externalities of climate change so far. Its treatment of climate change as an area of social responsibility, rather than a tangible business risk, does not reflect the magnitude of the company’s exposure to it.
Building resilient infrastructure is the main pillar through which the company is attempting to pre-empt the climate risks it faces.  In the short term, it is aiming to utilize new solutions and materials in its construction processes to build more robust assets that are less affected by upstream supply chain risks, like new generation solar panels and turbine blades. In the medium to long term, it is trying to identify new types of projects to further diversify its portfolio and mitigate risks.
Acciona’s end-to-end water management process will also help alleviate some of the impact of droughts and floods in the regions in which it operates; the attainment of scale will be crucial.
Looking ahead: The urgency of planning around climate change
A thorough assessment of climate related risks for Acciona is paramount going forward. In the short term, climate forecasting must be used to assess which existing assets are most at risk, and what to do to protect them; this may include divestment, higher decommissioning provisions or introduction of redundancy in the case of outages.
Looking ahead, investment decisions for future project development must take into account their impact on the overall portfolio and promote asset diversification. Coastal areas with existing assets should be avoided, favouring geographic variability. To assess the business’ resilience to climate risks, scenario testing should be used similarly to the insurance industry. Innovation in the distribution network will help avoid reliability issues; this could include smart metering, microgrid provisions and power sharing technologies.
As Acciona attempts to navigate the changing energy landscape in light of climate risks, the broader context remains uncertain. Should Acciona consider investing in some natural gas assets in certain geographies? Would the company benefit from reducing its sustainability impact commitments to selfishly secure its own future?
 Acciona company information, https://www.acciona.com/business-divisions/energy/
 Accional Annual Report 2016, http://annualreport2016.acciona.com
 How Companies can adapt to climate change, McKinsey & Co, https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/how-companies-can-adapt-to-climate-change
 Energy Sector Vulnerabilities Report, US Department of Energy, https://energy.gov/sites/prod/files/2013/07/f2/20130716-Energy%20Sector%20Vulnerabilities%20Report.pdf
 The impact of climate change on photovoltaic power generation in Europe, Nature Magazine, https://www.nature.com/articles/ncomms10014
 Effects of Climate Change on Energy Production and Use in the United States, U.S. Climate Change Science Program, https://science.energy.gov/~/media/ber/pdf/Sap_4_5_final_all.pdf
 Power outages hit 600 million in India, New York Times, http://www.nytimes.com/2012/08/01/world/asia/power-outages-hit-600-million-in-india.html
 Acciona sustainable development goals, Acciona Energy https://www.acciona.com/news/acciona-contribution-sustainable-development-goals