Published on 31 March 2022
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Energy Market Update: Renewable Energy
Published on 31 March 2022
There is now more optimism in the renewable energy market as insurers are experiencing healthy profits resulting from the consistent hardening of the market since 2019; capacity withdrawal was also less than expected in 2021. The market is now stabilised and more accommodating for insurance buyers.
Renewable underwriters, when assessing a particular risk, are mainly focussing on performance and perceived Nat Cat exposure. Expectations for renewals are generally flat to 10%, excluding Nat Cat rate and capacity considerations.
Trends that should be carefully observed and managed in the future include:
- The increasingly unpredictable global weather patterns. New renewables projects are regularly deployed in high Nat Cat exposures e.g. North America, Asia.
- Rapidly evolving technologies presenting challenges to insurers. Underwriters tend to be more comfortable with certain technology advancements (e.g. upscaling of wind technology and solar systems) than others (e.g. floating technologies, battery energy storage systems, anaerobic digesters, energy from waste, biomass, geothermal).
- The large growth in the offshore wind sector in the North Sea, Asia, North America and beyond continues to present both high levels of risk and opportunity for reward for insurers. The technologies in development, i.e. floating, are often seen as prototypical in design and there continues to be concerns regarding risk aggregations in high Nat Cat prone areas.
- Increased supply chain issues and labour shortages which are driving up expenses.
These trends will require serious considerations by the insurance market and the careful deployment of underwriting capacity.
With the growth in the Offshore Wind sector the market will become increasingly supported by the upstream oil and gas market as traditional upstream companies become involved in delivering projects within this sector.
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Duncan Gordon
Duncan joined Alesco at the beginning of 2018, after seven years specialising in construction and operational insurances within the offshore and onshore renewable energy sectors.
He has direct experience of project finance transactions and ensuring that all insurance conditions precedent to financial close are satisfied. The key elements of this service delivery are efficient communication and the ability to coordinate amongst both the international and local placement teams.
Duncan has wide-ranging experience of renewable energy projects throughout the lifecycle and is a skilled practitioner in providing insurance solutions for large and complex assets and portfolios globally. He currently provides guidance and insurance solutions to clients in North America, the Middle East, Europe, Latin America, Australia and the UK.
