The latest snapshot of the renewable energy market, which is attracting billions in public sector subsidies, usually funded by extra taxation on consumer bills, plus some private sector investment, often from pension funds or sovereign wealth funds. It’s a big opportunity for insurance brands, as major construction projects always require a variety of Specialty and Commercial cover;
The renewable energy sector has shown resilience and optimism in 2024 despite facing constraints such as climate issues, supply chain disruption, casualty deterioration, social inflation and geopolitical conflicts. However, overall profitability remains challenging due to variable results within energy classes according to the Renewable Energy Market Review 2024, published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
The review, titled Prepare for storms, plan for stability, includes commentary from international experts and specialists in areas such as battery energy storage systems (BESS), offshore wind, floating solar installations and green hydrogen, as well as a detailed analysis of the insurance markets for renewable energy. Together, they provide a comprehensive analysis of the risks and opportunities in 2024.
Several key trends are explored in this years’ review:
- El Niño & La Niña effect and climate volatility: unpredictable weather patterns continue to challenge the renewable market, with significant natural catastrophe losses and an unprecedented number of individual weather events exceeding $1 billion
- Supply chain instability: four years post-COVID-19 pandemic, global supply chains remain unstable, influencing lead times for critical items and assessments of asset reinstatement and business interruption risk
- Technological advancements and market response: the renewable energy sector is seeing rapid growth in large wind turbines, floating solar installations, green hydrogen, and utility-scale battery energy storage systems, prompting markets to innovate and adapt their strategies
- Energy storage innovations: lithium-ion batteries and green hydrogen are ushering in a new era of energy storage, driving a renaissance in well-known technologies such as hydroelectric pumped storage
- Resource skills gap: the renewable energy insurance market faces a major challenge in resource skills, requiring the transfer of skills from traditional energy sectors to support the transition to low-carbon infrastructure
Steven Munday, natural resources global renewable energy leader at WTW, said: “Recent challenges have tested the insurance markets, but resilience has improved. While surplus capacity exists for proven technologies, caution remains. The ongoing competition and potential for an La Niña year keep rates steady, with parametric solutions gaining traction despite integration challenges. To capitalise on emerging opportunities, renewable energy risk and insurance buyers should continue to engage with advisors and markets, employing smarter solutions to navigate the complexities of the evolving landscape.”
The complete report can be downloaded here.
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