policy risk is frequently highlighted as one of the most significant risks facing investors in sustainable energy and has a significant role in dissuading investors from allocating capital to this sector parhelion micale et al in particular retroactive policy change risk is highlighted as a principal concern as it directly impacts expected and historical revenues from projects and lowers investor confidence in the stability of the financial support available over the investment lifetime parhelion frisari et al government could precommit to reduce these risks eg through contractual penalties in the case of material policy changes