Howden: renewable energy sector growth vital
Howden Re has published a new report that examines the growth of the renewable energy sector and its associated opportunities and risks from a reinsurance perspective.
Entitled: “Watt Now? Reinsuring the Renewable Energy Transition”, the report underlines the pivotal role of the re/insurance industry in supporting the global shift towards renewable energy, which is crucial for both the climate and the future of the global economy.
As governments worldwide increasingly incentivise renewable adoption in pursuit of energy security and a cleaner power system, Howden Re’s report projects that renewables will account for 74% of the growth in global primary energy consumption by 2030. This substantial shift towards cleaner energy sources, driven by the declining costs of technologies like solar and wind, presents significant growth opportunities for the (re)insurance sector. The renewable energy insurance market is experiencing robust expansion, with notable premium potential in solar, onshore wind, offshore wind, and battery energy storage systems (BESS).
The report emphasises that (re)insurance is essential to the energy transition, highlighting the need for greater transparency and collaboration among all stakeholders to ensure risks are appropriately placed and managed. It highlights the varied risks associated with onshore and offshore wind, solar, and BESS, bringing awareness to how manufacturers, producers, cedents, and reinsurers can navigate these challenges together. For instance, severe convective storms (SCS) now account for 36% of global insured natural catastrophe losses, underscoring the importance of robust risk management strategies.
“The renewable energy sector is evolving rapidly, bringing a unique set of challenges and opportunities,” said James Metcalf, associate director marine, energy & terror, at Howden Re. “Collaboration across the industry is vital to support the sustainable growth and resilience of renewable energy projects worldwide.”
Howden Re said that it calls on reinsurers to refine their view of risk, offering bespoke solutions tailored to each generation technology's specific challenges, characteristics and construction needs. Cedents are encouraged to thoroughly articulate their exposure, considering the variable risks tied to construction lead times, asset design and environmental factors.
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