CLS Risk Solutions, a leading provider of property and renewables development risk solutions, has announced the launch of a new Permit Challenge Insurance for renewable energy infrastructure projects.
The policy gives comprehensive protection against interruption to a construction project due to third party (judicial review) challenges to the permit/planning permission. It enables the financing of renewable energy projects to go ahead and ultimately could unlock a significant number of renewable projects throughout Europe, which are currently held hostage to lengthy legal process.
Permit Challenge Insurance creates better investment opportunities for lenders and removes uncertainty from renewable development projects, like wind farms. It ensures the solvency of the developer during third party challenges and, in the event of an unfavourable final court order, it covers the capital investment into the project and financing repayment obligations.
There were over a thousand wind farms built in Europe last year alone. Every country has significant renewable energy targets to meet and according to the IEA wind will be the number one source of energy before 2030. Building continues apace and the existing stock of wind farms and other renewable buildings will also need renewing or replacing as they age.
Renewable energy is no longer in its infancy; developers and investors have to work harder to get projects underway and the remaining investment opportunities are riskier. Permit Challenge Insurance helps developers and investors access more opportunities by turning a “difficult” investment into an “easier” one. In a maturing market it is these B rated, riskier renewable projects, where there is potential for the bigger returns.
Will Brooks, Business Development Director, CLS Risk Solutions Europe, comments: “As well as creating better investments, the threat of a challenge to a permit is enough for private investors and banks to stop funding; without insurance there is no certainty that the business plan will perform. In the worst case scenario, they lose all their money. They won’t take that risk. In the simplest terms, without Permit Challenge Insurance, developers will find it difficult to get the funding they need to build wind farms.
“It is clear from our existing strong local broker partnerships in Europe, that the insurance industry has a significant opportunity to support the renewable energy sector by providing certainty that has been missing until now.”
CLS has long standing partnerships working with insurance brokers redefining the insurance market-place, including Marsh, AON, Willis and Verspieren. It already has an enviable reputation in the market for innovation and is recognised for its expertise in legal risks.
Will Brooks continues: “We are undoubtedly the leaders in the market for complex property risk solutions, including the growing area of renewable energy construction. But it’s an area of insurance that is little known and even less understood in the wider broker market – it has been a sleeping giant in many respects.
The growth potential is huge, but there is a lot of work to be done to raise awareness amongst brokers and their clients of these products and what they are capable of. We have first rate capacity, innovation and expertise at our fingertips and brokers have the client relationships and distribution capability. With the right collaborative approach and broker training, we aim to wake up this sleeping giant across Europe.”
CLS Risk Solutions is currently at Wind Europe 2019 in Bilbao, Spain, to speak to brokers, developers and investors about the potential in renewable and other property risks and indemnities.