Who’d be in renewables?

Not the greatest of weeks for those in the renewables market, whether (and PLEASE forgive the pun) at the coalface, or those who (re)insure renewables projects.

First, the market itself. According to venerable renewables player GCube Insurance, part of Tokio Marine HCC, it’s torrid out there, as the renewables sector is facing considerable impacts from continuing global supply chain disruption and rising inflation on renewable energy developers, manufacturers, and insurers, 

According to GCube, the COVID-19 pandemic and subsequent supply chain disruptions have pushed sector-wide average business downtime days up by 38% on 2016 levels; reversing a downward trajectory seen in 2018 with a more than 10% rise in downtime days between 2019 and 2020.

It adds that BI periods on those claims continue to lengthen, while the volume of BI claims examined remain static over the past two years.

As if this weren’t bad enough, the renewables (re)insurance market could be facing a potentially game-changing $1 billion+ in Ukraine-related losses alone.

Indeed, a story we publish today alludes to a recent paper from PCS which suggests that, in addition to the estimated industry-wide insured losses from windfarms reaching at least US$800 million in aggregate, solar energy insured losses could begin to arise as well – and, reading between the lines, the total renewables loss could be fairly unpleasant.

Time to reassess renewables? Hardly. Yes, this will be a torrid period indeed for the renewables (re)insurance market, but the long-term rewards for those prepared to stomach the hit are significant.

The simple truth is that we are now facing unprecedented demand for clean energy. Will coal and gas disappear overnight? Hardly. Will nuclear power help to fill the growing supply void left by the demise of fossil fuels? In part. But is renewable power set for a huge period of growth which it has never seen before? Absolutely.

So, hold on tight, prepare if necessary to vomit over the side, but this particular bumpy ride really will take the market to a fabulous promised land of renewable opportunity.

Marcus Alcock,

Editor, Emerging Risks

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