This short booklet, written by a university professor from Senegal, is worth reading for all African students. It provides useful advice to future social science researchers who are going to write a dissertation or a doctoral thesis. As in all textbooks, it defines what scientific research is, how to construct a research question, how to compile a precise literature review, how to choose a suitable field of observation, how to select and apply a robust research methodology, how to present the results – preferably valid and rigorous – of the observations clearly, and then how to discuss them, identifying their theoretical and practical contributions. The author accompanies his lessons with concrete examples and life stories drawn from African issues. Strangely, he makes no reference to the many works devoted to the epistemology of the social sciences. It is written in a precise and concise style, as befits any teaching manual. But this book is more than a methodological guide; it is a message to the young people of Africa who are eager to contribute to the prosperity of their village, their region and their country; it is a warning against facile discourse and improbable ideologies; it is an incentive to acquire useful assets, to exercise critical thinking, to feed the public debate, and to propose solutions rooted in social reality. “The budding researcher, through their rigour, humility and passion, becomes a guardian of freedom”, “a key player in the transformation of their country”. These are lessons that should also be taught on the Old Continent. Mistoihi Abdillahy is a university professor in social sciences and the founding president of ADP Consulting. Jean-Jacques Pluchart
David McWILLIAMS, Argent.- Une histoire de l’humanité , Bérengère Viennot (Traduction) 2026 , Presses de La Cité, 348 pages.
The object of our desires, the driving force behind our ingenuity… What if money were also humanity’s greatest invention? Did you know that the piastre was the predecessor of the dollar? That Hitler and Lenin used currency to manipulate the masses? That *The Wizard of Oz* is actually about the deflation associated with the gold standard? That our financial future lies not in Bitcoin but in phone credit? From the Sumerians’ barley grains to cryptocurrencies, via the revolutionary assignats and the invention of the dollar, David McWilliams traces, with a lively and accessible pen, the history of this invention which—just like the wheel or fire—has shaped human relationships. Far from the dry economic treatises, David McWilliams shows us that money is not merely an instrument of power. It can also lead to cooperation and collective progress. This is not the first book on money in literature or in the Cercle Turgot’s list of reviews. The renewed interest in this type of work lies in the author’s background and his own perception of money. This informs his choice of historical timeline and examples. Admittedly, we begin with Part 1, which is devoted to antiquity and the famous “fortune,” and continue with: money in the Middle Ages, revolutionary money, modern money, and finally, liberated money (who controls money, the psychology of money, the evolution of money, modern monetary theory, and M-Pesa). The book also explores numerous cultures that have contributed to the development of money and the innovations each has brought. The mastery of money coincided with other major advances such as writing, mathematics, law, democracy, and philosophy. This evolution raises a question: was money the cause of these other developments, or did these developments lead to the evolution of money? Which came first, the chicken or the egg? This is the originality of this book, which was named Book of the Year by the Financial Times: it provides food for thought in an attempt to answer that question. David McWilliams is a social commentator, so he has drawn on a wide range of advice and contributions, and expresses opinions—and… errors—that are his own and those of the people cited in the book. The reader’s task is not to identify any potential blunders, but to understand the intellectual journey of the contributors that may have led to “deviations from the consensus of economists specializing in monetary matters.” A book that should be read by anyone curious about ideas and their interpretation: money and currency are personal concepts. It is a common good and an…individual good as well! Dominique Chesneau
Jean PEYRELEVADE, La France, du populisme au chaos, Eds Odile Jacob, 235 pages.
The former deputy chief of staff to Pierre Mauroy, from 1981 to 1983, paints a polemical portrait of the economic, social, political and trade-union situation of our country. Democracy is weakened, society is fractured, the economy is in decline, public finances are heavily in deficit, and the political and trade-union world continues to demonstrate its inability to meet these challenges. The vertical concentration of power at every level, the refusal of dualism, the denial of reality, economic illiteracy, compounded by the intellectual fraud of a few, have pushed France into such disorder that democracy itself is threatened with disappearance. France is not capable, on its own, of forming a cohesive society. Post-revolutionary historical facts remind us of this: from the Terror to the Third Republic, which established itself after militarily defeating the Commune, France has reformed itself through riots and bloodshed. The various social forces and numerous political parties seek only to gain access to this supreme vertical power. Each therefore defends its own positions in its own interest, without concern for the common good. For the author, the current situation is not without resemblance to that of the July Monarchy. The crisis threatening us is at once economic, financial and political. Both the deficit and the debt are out of control, and our productive apparatus suffers from a lack of competitiveness. Employers’ organisations and trade unions remain entrenched in their positions, while, on the political side, the left, still profoundly anti-capitalist, remains trapped in the myth of the ultra-rich who should be taxed ever more heavily, and the right indulges in illusions, believing that it would be enough to reduce public spending without touching social expenditure. Meanwhile, extremists on both the left and the right, whose programmes have not the slightest capacity to restore the country’s economy, hold out promises of change and social upheaval in order to attract those at the bottom of the social ladder. And yet solutions do exist to address each of these problems. They are known and documented. But who, on the left or on the right, is prepared to state and explain what should be implemented? Solutions are born of drama: this is a very French habit. So must we first plunge into chaos — this being the most likely scenario according to the author — in order to see, once again, the emergence of a providential man or woman capable of solving the fundamental problems and finally changing our methods of governance ? Ph Alezard
Rogoff Kenneth, Our dollar, your problem, Eds Yale University Press 2025, 345 pages.
« Our dollar, your problem » reads almost like a novel as Kenneth Rogoff imparts the reader with a precise and technical recital of more than 40 years in renowned university and global institutional financial circles. The original term “our dollar, your problem” was coined by John Connally (US Treasury secretary) in the early 70’s, as he addressed frustrated European leaders following the suspension of the convertibility of the dollar to gold by the Nixon administration. European countries held vast amounts of US treasury bills at the time. In the current context of mounting geopolitical tensions around the globe and several conflicts in countries that have a historical monetary and economic reliance on the dollar, the so-called “pax era” that relied on the dollar “to produce stability and growth for the indefinite future” may be reaching a key turning point. In any event, Rogoff suggests that the period prior to the pandemic, will most likely give way to increased periods of instability, debt, inflation and volatile exchange rates. Rogoff delves, by way of his own personal experience, studies and insightful predictions, into the limits of previous challengers to alternative dollar dominance as he evokes the Soviet Union, the Yen, the Euro and China’s Renminbi. He makes a few interesting and pertinent points on the advent of the single European currency. Whilst in theory, the euro had the potential to seriously rival the US dollar, it remains largely a regional currency today. The insufficiencies of a “deeper political union”, “strong fiscal authority”, an “integrated banking system” and lack of sustained growth over the past decades, are just a few of the reasons that Rogoff attributes to the limits of the Euro as a serious contender for dominance against the US dollar. He sees however, the Chinese renminbi as a “more potent threat to the dollar” in the long term. If, for example, the Chinese authorities were to dissociate the renminbi from the dollar, that would result in a vast swing in Asian economies who rely on the dollar for their supply chains, in favour of the renminbi. Asia represents half of the dollar bloc (outside the US) on a weighted GDP basis. This hypothesis has nonetheless its challenges for China, including the softening of its historically strong growth model and the potential social and financial consequences of succeeding in alternative economic paths. In any event, the author esteems that dollar decoupling by China is inevitable. In several sections of the book, the author refers to a point that is especially poignant in current geopolitical circumstances; the relationship between military power supported by tech and the strength of a currency. Europe in particular, significantly lags behind the US and China in technology, essential for impactfully strengthening its defence capabilities. He rightfully questions whether Europe can apply the same rigour and achieve the same success in the accelerated ramp-up of its defence ambitions, as to the introduction of the Euro. Rogoff develops the topic of digital currencies and whilst he recognises that they can compete for a share of transactions against the dollar, their impact will remain relatively contained to the “global underground economy”. In any event, at least for stablecoins, their evolution will be subject, in fine, to government regulation. As far as central bank digital currencies go (CBDC’s), they represent a means of increasing efficiency and financial inclusion and can act as a barrier to an increased penetration of the dollar in global economies. The Fed has been slow to initiate a CBDC; the dollar is still the world’s dominant currency and there seems to be a preference to let others experience the turmoil associated with the launch into CBDC’s. Still, such an initiative as pursued currently by the ECB, could be a trigger to significantly gain terrain on the dominance of the dollar. The author finishes off this remarkable analysis by addressing the perks of currency dominance and the potential peak of dollar dominance. The obvious perks to a dominant dollar are the liquidity, linked to the strong demand for the currency and its abundant use for trade transactions. The author underlines once again the point made earlier in relation to military strength. The dollar dominance makes it easier for the USA to finance military spending and above all, provides room to manoeuvre financially if a sudden build-up is necessary. This is clearly what we are witnessing today in 2026. In terms of the question around whether the dollar has or will soon peak as the world’s dominant currency, the author explains that as long as the Fed manages to keep inflation at a sustainable and stable level and that “runaway” American debt is not left unchecked, nothing should fundamentally change. However, a volatile political environment, unrestrained increases in debt and/or political pressure reducing the independency of the Fed, could give way to instability and deliver opportunities for the outliers like China, crypto-currencies or even the Euro to make significant inroads towards changing the status quo. In a word of conclusion, Rogoff explains from the outset of his significant piece of work, that dominant currencies only change once every one to two centuries. Time will tell if we are reaching the era of one or several potential “new champions”. Kathleen Wantz-O’Rourke Kenneth Rogoff, former International Monetary Fund chief economist from 2001-2003, is Maurits C. Boas Professor of Economics at Harvard University. Grand Master in chess, he also serves on several official bodies, including the Council on Foreign Relations, and the Advisory board of the Federal Reserve Bank of New York. His numerous book publications and articles are published and referenced internationally.
Tribute to Professor René Passet,
Founding member of CIRET Professor René Passet, a founding member of the Centre International de Recherches et Études Transdisciplinaires (CIRET), who has just passed away at the age of 99, is the French economist who succeeded in liberating economic discourse from its confinement in order to consider it within the infinitely broader context of life on Earth. Contemporary economic discourse has its origins in the image of the pin factory put forward by Adam Smith in his seminal work The Wealth of Nations. We are familiar with the principle. A craftsman, working alone in his workshop, can at best produce 10 pins in a day’s work. Therefore, ten craftsmen will produce around one hundred. However, ten workers working together in a machine-equipped factory and dividing the work between them may produce 10,000 pins, i.e., 1,000 each. This represents a 10,000% increase in productivity. National prosperity will therefore increase by the same amount. To this is added the principle of comparative advantage, which suggests that the English should manufacture and sell textiles to the Portuguese, in return for which the Portuguese will sell them Port wine. The entire contemporary economic system is based on this dual principle. The problem is that it oversimplifies reality. First question: Is a factory worker, who spends their time performing repetitive tasks that are imposed on them, more or less happy than a craftsman in their small workshop? Economists are more or less silent on this point. Second question: Is the desired abundance compatible with the quantity of raw materials and energy available in the Earth’s subsoil, and can the waste from industrial activity be absorbed by the Earth without causing damage? The classical economist is also silent on this point. And so it is René Passet who, in his best-known book, L’Economique et le Vivant, asks whether the principle of economic efficiency is indeed compatible with the principle of preserving and reproducing living organisms. However, this question has become fundamental to the very survival of humanity. Some people suggest that the ‘green economy’, ‘sustainable development’ and ‘renewable energies’ will make it possible to ensure compatibility between economic life and the preservation of living organisms. However, these are merely words. As Nicholas Georgescu-Roegen, who was an economist but also a physicist, clearly demonstrated, ‘economic development’ manifests itself as a local expression of negentropy. And energy consumption, in whatever form, cannot sustainably exceed the amount of energy available. And as soon as energy consumption on Earth exceeds the supply of solar energy, we have to draw on reserves, which are limited. We can see this clearly, for example, in the case of ‘rare earth elements’, which are now indispensable for electronics. The question, in line with the logic of the living world as espoused by René Passet, is how we got to this point. This is the subject of the comprehensive work he published under the title Les grandes représentations du monde et de l’économie à travers l’histoire (‘The Major Representations of the World and the Economy Throughout History’), which spans over 900 large-format pages. We will not attempt here to present a summary of this work, which would inevitably be incomplete. What we will take away from it is that the economic discourse, as it currently drives the majority of humanity, is an ideological construct. This ideological construct draws on philosophical currents that can be traced through history, and which have led to a worldview characteristic of the ‘modern world’. This worldview is leading humanity towards catastrophe, and that is why the assertion of a critical mindset is not only necessary but urgent, given the increasing effects of global warming and the poisoning of the biosphere. I will conclude with a personal reflection. In 1975, René Passet was the chair of my doctoral thesis examination board at what was then the University of Paris 1. I cannot imagine any professor of economics other than him who would have accepted a topic that fell more within the domain of anthropology than economics, and whose opening words were borrowed from Prof. Jacob Viner, ‘Economics is what economists say’. The passing of a man who will probably be recognised in the future as a pioneer therefore places a duty on us at CIRET to continue along the path he has thus charted. Hubert Landier René Passet, L’économique et le vivant, Petite bibliothèque Payot, 1983. René Passet, Les grandes représentations du monde et de l’économie à travers l’histoire, Les Liens qui Libèrent, 2010.
Tackling Poverty through Work
Nadia ANTONIN In a study published on 16 April 2026, INSEE reveals that the French redistribution system reduces income inequalities but locks beneficiaries into a structural dependency on public authorities. This reduction in inequality is mainly the result of four factors: 1) individualisable social transfers in kind; 2) cash social benefits in the form of replacement income; 3) collective expenditure; 4) levies (income tax and wealth tax). The INSEE study report also shows that, between the richest 10% and the poorest 10%, the income gap decreases from 1 to 20 before redistribution to 1 to 3.7 after the application of social welfare mechanisms. Finally, the INSEE analysis reveals that in 2023, more than one in two French people received more from the system than they contributed to it. Some claim that social welfare benefits in France trap people in an ‘inactivity trap’. Having examined the concept of poverty, we shall demonstrate that ‘work is indispensable to man’s happiness; it elevates him, it consoles him; and the nature of the work matters little’ […] (Alexandre Dumas fils). Examination of the concept of ‘poverty’ Ms Marie Lecerf from the European Parliament’s Directorate-General for Parliamentary Research Services points out (‘Poverty in the European Union’, March 2016), ‘there is no consensus on the definition of poverty, which is often defined by other concepts, such as well-being, basic needs, income or social exclusion, rather than by poverty itself’. According to INSEE, ‘a household and the individuals who make it up are considered to be poor when the household’s standard of living is below the poverty line, which is most often set at 60% of the median standard of living’. Like Eurostat and other European countries, INSEE measures income poverty in relative terms, whereas other countries (such as the United States or Canada) adopt an absolute approach. Absolute poverty refers to people who are unable to meet their basic needs (food, housing, etc.). The consequences of the decline in the value of work: living on state benefits Welfare dependency is over-developed in France. International comparisons reveal a ‘distinctive French exception’. Some refer to France as ‘the land of a thousand and one benefits’! The Directorate for Research, Studies, Evaluation and Statistics (DREES), the statistical department of the Ministry of Health and Social Solidarity, has entitled its presentation of the social protection accounts for 2024 ‘The French: Champions of Social Protection’. In 2024, social welfare expenditure reached €932 billion, i.e. 31.9% of GDP and an average of €13,650 per capita. In the EU-27, this expenditure accounts for an average of 27.3% of GDP. With redistribution having reached its structural limits, ‘France must be put back to work’. Work is the best way out of poverty In his book entitled ‘Celui qui ne travaille pas ne mange pas’ (‘He who does not work shall not eat’), Régis Brunet, a professor at the Catholic University of Louvain, points out that ‘from Benedictine abbeys to Bolshevik soviets, and from the Calvinist Reformation to capitalism’, St Paul’s dictum has continued to resonate: ‘He who does not work shall not eat’. This aphorism, adopted by Lenin during the Russian Revolution, expresses a social contract based on the ‘value of work’. In Candide, Voltaire writes: “Work keeps three great evils from us: boredom, vice and want.” Work is beneficial to human beings. According to Immanuel Kant, ‘the best way to enjoy life is through work: it is a profound deliverance that fulfils human beings, enables them to flourish in their freedom, rescues them from boredom and leads them to a deep understanding of practical interest, invigorates their reason, and ultimately brings them joy’. Escaping poverty through work certainly requires stability, fair remuneration and a favourable labour market, but also other essential conditions. Creating the conditions to enable individuals to succeed and progress through their work In his book ‘Development as Freedom’ (1992), the economist Amartya Sen proposes understanding poverty not in terms of insufficient income levels, but in terms of individuals’ ability to fulfil themselves: freedom of expression, dignity, self-respect, and participation in social life in general (what he calls ‘capabilities’). In order to restore work to its rightful place, we propose the following guidelines: – Reduce the tax burden on labour and productive capital. According to the OECD, France remains Europe’s champion of taxation. In 2024, the share of compulsory levies in France stood at 45.3% of GDP, compared to 40.4% for the EU as a whole (source: Eurostat). – Recognising work, i.e., identifying, assessing and rewarding each person’s merits. We must condemn bonuses for incompetence, nepotism and cronyism. In addition to the lack of recognition of merit, some people rightly complain about the devaluation of qualifications, particularly the PhD. – Combat envy, which is not confined solely to professional relationships. Described at the time as ‘social jealousy’, it lies at the root of a certain political ideal that advocates egalitarianism and reliance on welfare rather than financial prosperity earned through work. To conclude on the assertion that we can combat poverty through work, let us consider the Christian victims of the genocide perpetrated in 1915 in the Ottoman Empire. Having arrived as stateless persons, they found their place in society through their hard work. They received no help and held out with tenacity. They worked 16 hours a day, seven days a week. Hard-working and extremely dignified, they enabled their second-generation children to rise to the top of the hierarchy.
Michel ALBOUY, Frederic Bastiat au XXIe siècle. Un économiste visionnaire, eds EMS, 2026, 100 pages.
The aim of the book is to ‘revisit the work of a great French economist, little known in his own country but recognised abroad, for example in the United States, in the light of the current situation in 21st-century France’. The economist Florin Aftalion said of him: ‘Bastiat’s understanding of the workings of the state was so keen that he predicted the introduction of social security and that it would run into deficit even before it existed.’ In his book, Michel Albouy clearly demonstrates the continuing relevance of Bastiat’s ideas more than 150 years later. Bastiat believes that ‘the defence of the market and of competition appears to be one of the most enlightening issues for our era of resurgent socialism and interventionism’. He asks ‘why we pay such high taxes’, why the national education system struggles so much to properly educate young French people, why a war does not create jobs… By posing these questions, Bastiat proves to be a ‘visionary’. In his view, ‘the market and free trade are the foundations of national prosperity’, protectionism is recessionary, and price freezes create shortages. Bastiat criticises the inconsistency of citizens who approve of subsidies for businesses but criticise tax increases. At the heart of Bastiat’s thinking is also private property, which he considers a natural right predating the law, constituting ‘a bulwark against the arbitrariness of the State’ and a factor of freedom. He is a staunch advocate of the market economy, which makes it possible to ‘meet the real needs of ordinary people’, because it is ‘the most modest people, the poorest populations, who benefit from competition’. Using a bibliography of Frédéric Bastiat’s works as a starting point, Michel Albouy sets out his own understanding of the social role of economists, which he believes is to explain the consequences of economic policies and to inform public decision-making. This is precisely what Frédéric Bastiat did through his books and colums. Michel Albouy is Professor Emeritus of Finance. In particular, he observed that ‘it is the shareholder who finances their own dividend’ or that, in the event of a takeover bid, people criticise the resulting redundancies, forgetting that ‘the company in question was poorly managed and/or that the merger would make it possible to save what could still be saved’. Jean Jacques Pluchart
Tribute to Roger Guesnery (1943–2026)
By Jean-Jacques Pluchart On Tuesday, 14 April 2026, a tribute will be paid to the memory of the economist Roger Guesnery, Honorary President of PSE-Paris School of Economics and Professor Emeritus at the Collège de France, holding the Chair in ‘Economic Theory and Social Organisation’. His work contributed to advances in research on the functioning of public services: asymmetric information between the State and citizens, international coordination in the fight against global warming, rational expectations of agents, and the ‘second-best’ equilibrium, among other topics. Roger Guesnery co-founded DELTA (Département et laboratoire d’économie théorique et appliquée – Department and Laboratory of Theoretical and Applied Economics) with François Bourguignon. At the request of François Furet, then President of the EHESS, he was also the first head of the doctoral programme ‘Economic Analysis and Policy’ from 1981 to 1991. He served as Chair of the Board of Governors of the Paris School of Economics, and was a member of the Conseil d’analyse économique (Economic Analysis Council) and of the editorial boards of several renowned professional journals. He was Co-Editor-in-Chief of Econometrica (from 1984 to 1989), President of the European Economic Association (1994), President of the Econometric Society (1996) and President of the Association Française de Sciences Économiques (2003). He was awarded the CNRS Silver Medal (1993) and appointed as an Honorary Foreign Member of the American Economic Association (since 1997) and as a member of the American Academy of Arts and Sciences. The event brought together, in the Daniel Cohen Amphitheatre of the Paris School of Economics, around forty economics researchers, including two Nobel Prize winners and several professors from the Collège de France, the EHESS and the world’s leading universities. The speeches, which were often moving, provided an opportunity to appreciate Roger Guesnery’s human qualities, as well as the vitality of French research in economics – and especially in econometrics – which has already been honoured with five Nobel Prizes. Roger Guesnery’s latest publications Guesnerie R. et Stern R., Deux économistes face aux enjeux climatiques, Paris, Le Pommier, coll. « Essais – Savoirs et débats économiques », 2013, 128 p. Guesnerie R., Pour une politique climatique globale. Blocages et ouvertures, Paris, Éditions Rue d’Ulm, collection du CEPREMAP, 2010. Geoffard P.-Y., Guesnerie R. et Le Grand J., La Santé par quels moyens et à quels prix ?, Paris, PUF, 2010.
Antonin Bergeaud, La prospérité retrouvée, Eds Odile Jacob, 236 pages
The author opens his essay with a stark observation. After the Trente Glorieuses, a period during which Europe and France recorded growth rates of around 5 to 6% per year, enabling them to regain a level of GDP per capita almost comparable to that of the United States, a profound divergence gradually set in from the mid-1980s onward. This divergence has become so pronounced that France, like most European countries, now finds itself, in terms of GDP per capita, in a situation that is not unlike that of the post-war years. According to the author, the root cause of this decline lies in the accumulation of delays in achieving economic sustainability, but also in our inability to redirect the productive system toward innovation. The economic and social model shaped over the past four decades has allowed neither companies truly to take risks nor disruptive innovation to be financed effectively. Europe has thus become a space constrained by an entanglement of administrative, bureaucratic and regulatory norms. Each of these norms, in the social, financial, economic, industrial or environmental spheres, admittedly stems from legitimate preferences; yet their accumulation, as much as their interlocking nature, has generated such complexity that it now hampers the development of European businesses. This evolution has resulted in a decline in productivity at the very moment when productivity was being driven first in the United States by the spread of new technologies — personal computers, microprocessors, digital services and artificial intelligence — and then, over the past two decades, by China. Europe now finds itself in a position of heavy dependence on American digital services. The deficit associated with these services is estimated at more than €150 billion per year. Beyond this trade imbalance, such dependence above all reveals the inadequacy of a technological and industrial ecosystem capable of processing, hosting and enhancing strategic data. This weakness directly undermines Europe’s ability to develop high-performing, autonomous and competitive artificial intelligence models. The situation appears all the more worrying as power relations with Donald Trump’s United States and with China are hardening, while this transformation is unfolding in a particularly strained budgetary context for France. And yet, this context could also represent a historic opportunity for the Old Continent. It could compel Europe to reconnect with a genuine industrial ambition. For that to happen, Europe would need to be given a true driver of innovation, to stop artificially designating champions that capture funding, and to allow competition, experimentation and risk-taking to play a greater role in distributing the chances of success. It is equally necessary to stem the hemorrhage of talent, ideas and capital, and to put an end to the fragmentation of markets and career paths by offering more attractive careers, more flexible and dynamic environments, and better-adapted, more rewarding savings products. Artificial intelligence is undoubtedly still in its infancy; Europe could therefore reshuffle the deck by moving toward a more frugal model, compatible with climate objectives, and capable of establishing itself as a desirable benchmark. Economic history shows that setbacks are never irreversible. But such a recovery requires us to accept uncomfortable truths, finally to build a genuine capital markets union, to reject fragmentation and all that it entails, and to break both with the easy recourse to deficits and with the fear of change. For our social model can only be preserved over the long term at the cost of renewed economic efficiency. Ph Alezard
BESS: Sustaining Value in an Uncertain World
Column: Florence Anglès In the previous column, the focus was on verifying the project’s viability. But once this point is clarified, the question shifts. It’s no longer about whether value can be created, but whether it can be sustained. In a constantly evolving environment, the challenge is understanding when the equilibrium might become fragile. Sustaining Value: From EBITDA Volatility to NPV Sensitivity After verifying the structure’s solidity, the focus shifts to the sustainability of value rather than its mere existence. The question then becomes: do the projected cash flows remain stable in a realistic operating context, considering all technical constraints? Unlike traditional infrastructure, BESS construction projects are heavily dependent on revenues generated in the market. This makes them sensitive not only to price fluctuations but also to profound changes in market dynamics. At this stage, the aim is to assess risks to transform operational uncertainties into financial uncertainties, and thus measure how the investment reacts to key assumptions. Fragility of Revenue Streams and Risk of Market Saturation BESS projects often rely on multiple revenue streams, such as arbitrage, frequency response, voltage support, and sometimes capacity mechanisms. This diversity can reduce risk, but it also leads to exposure to market fluctuations. These markets are often highly competitive and can change rapidly. When new capacity is added, revenue margins tend to decrease, and past performance is no longer a guarantee of future results. In this context, the main risk is not the fluctuation of short-term earnings, but rather the gradual decline in margins over time. The key questions are: Weak revenues primarily affect EBITDA levels, but due to discounting and leverage effects, they can have a much greater impact on internal rate of equity. A project evaluated using overly optimistic growth assumptions, without considering downside risks, demonstrates financial vulnerability rather than genuine strength. Degradation, Efficiency, and Integrity of Long-Term Cash Flows Technical assumptions significantly influence financial results. In battery energy storage (BESS) projects, factors such as degradation, efficiency, and system condition directly impact the sustainability and reliability of cash flows. Battery degradation plays a significant role in energy production capacity, the duration of revenue generation, the need for capacity expansion, and the remaining asset value. Overly optimistic degradation assumptions may lead to inflated final cash flow projections, potentially resulting in an excessively high net present value (NPV). Other technical assumptions follow a similar trend: Even small deviations in these assumptions can have significant financial consequences. In some cases, they may be enough to push the project’s IRR below the investor’s cost of capital. The key question is: at what level of technical degradation or underperformance does the project become unprofitable? If small deviations in technical performance have significant consequences for returns, robustness should be prioritized over optimization. Schedule-related risk: commissioning delays and discounting effects Time is a critical but often underestimated risk factor. Delays in commissioning not only postpone revenue generation but also reduce the net present value. Initial cash flow plays a more significant role in net present value (NPV). An initial cash flow lag increases the risk to NPV, particularly in capital-intensive projects. A six-month lag may have a limited nominal impact but a disproportionate effect on NPV due to the discounting effect. From an investor’s perspective, the question is not only whether the lag can occur but also what lag the project can withstand without impacting its returns. Furthermore, a delay in commissioning can lead to various side effects, including: In leveraged structures, schedule risk can directly impact debt repayment capacity and refinancing conditions, thereby amplifying its effect on return on equity. The question, therefore, is not whether the project will ultimately be operational, but rather: how significant is the value erosion caused by an execution delay? Leverage, Coverage Ratios, and Resilience to Risk Ultimately, a project’s “bankability” is tested in a crisis, not in baseline scenarios. A project may appear robust under optimistic assumptions but prove fragile under more realistic adverse conditions. Stress tests must assess the robustness of the investment project under adverse scenarios, such as: At this stage, it is essential to make the following distinction: A project with a stable NPV under adverse scenarios is considered investable despite fluctuating short-term performance. A project with a marginal NPV under moderate crisis scenarios is considered inherently fragile. Conclusion Ultimately, the goal of risk assessment in battery energy storage (BES) mergers and acquisitions is not to create a perfect model or to account for every possible scenario. It is to answer a few practical questions, even if the answers are not always clear or perfectly structured. First, is the project feasible in a safe and realistic way? This is the starting point. Grid access, permits, regulatory compliance: if any of these elements are uncertain, the projected revenues become meaningless. The project may look promising on paper, but it simply won’t materialize. Then, assuming it does materialize, the question is whether its value will hold over time. BESS assets do not operate in a stable environment. Performance fluctuates, equipment ages, and market conditions change. What matters is not the base-case scenario, but the project’s behavior when conditions are less favorable. There is also the question of execution. Delays or friction, even relatively minor ones, can have disproportionate effects, not necessarily because they significantly alter the project, but because the time factor may not be as secondary as one might think. Costs skyrocket, revenues fluctuate, and the overall balance sheet changes. Over time, operational stability becomes equally crucial. A project unable to maintain consistent performance tends to accumulate problems. Individually, these problems may seem manageable. Together, they can become far more significant. Finally, there is resilience. A project should not be evaluated solely under favorable conditions. The real test is observing its reaction to pressure, declining revenues, rising costs, or less favorable market conditions. This is where the distinction becomes clearer. Some projects remain largely intact even when assumptions change. Others do not. This isn’t always immediately apparent, but ultimately, it’s what makes an investment worthwhile. Therefore, risk assessment