Howden Re has released a report analyzing the growing renewable energy sector and its implications for the reinsurance industry.
The report, titled “Watt Now? Reinsuring the Renewable Energy Transition,” outlines the role of the re/insurance industry in supporting the global move toward renewable energy, a shift that is critical for both climate goals and the future of the global economy.
The report notes that as governments around the world increasingly offer incentives to promote renewable energy adoption, the demand for cleaner power systems is rising. Howden Re projects that by 2030, renewable energy will account for 74% of the growth in global primary energy consumption.
This transition, driven by declining costs of technologies such as solar and wind power, presents significant growth opportunities for the re/insurance sector, particularly in areas such as solar, onshore wind, offshore wind, and battery energy storage systems (BESS).
Howden Re emphasizes the central role of (re)insurance in facilitating the energy transition, citing the need for greater collaboration and transparency among stakeholders to ensure that risks are properly assessed and managed.
The report identifies the risks associated with different energy sources, such as onshore and offshore wind, solar, and BESS, and points to the importance of manufacturers, producers, cedents, and reinsurers working together to navigate these challenges.
Severe convective storms (SCS) now account for 36% of global insured natural catastrophe losses, highlighting the growing need for comprehensive risk management strategies in the renewable energy sector.
James Metcalf (pictured above left), associate director of marine, energy and terror at Howden Re, said that the renewable energy sector is evolving quickly, creating both challenges and opportunities. He emphasized the importance of collaboration across the industry to ensure the sustainable growth and resilience of renewable energy projects globally.
Simon Brooks (pictured above right), managing director of marine, energy and terror at Howden Re, said that the renewable energy sector is at a critical juncture, facing complex natural perils and rapidly evolving technologies.
The report also calls on reinsurers to refine their approach to risk assessment, offering customized solutions that address the specific challenges, characteristics, and construction needs of different energy generation technologies.
Cedents are encouraged to clearly articulate their exposures, taking into account the variable risks linked to construction timelines, asset design, and environmental factors.
The renewable energy insurance market is experiencing steady growth, with significant premium potential across solar, wind, and battery storage sectors.
As the global energy landscape shifts, the re/insurance industry is expected to play a crucial role in managing the risks and supporting the expansion of renewable energy infrastructure.
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