RVS 2024 recap: Renewable energy & utilities
Published
The re/insurance industry has a pivotal role to play supporting the global shift towards renewable energy, which is crucial for 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 new report titled “Watt Now? Reinsuring the Renewable Energy Transition” projects that renewables will account for 74 percent of the growth in global primary energy consumption by 2030.
This substantial shift towards cleaner energy sources, driven by the declining costs of technologies such as 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).
A $237bn renewables opportunity
Howden Re has called on the reinsurance market to develop more sophisticated products that address the unique risks associated with renewable energy projects, with the broker estimating the sector will generate $237bn of cumulative premiums up to 2035.
The shift towards cleaner energy sources presents significant growth opportunities for the (re)insurance sector, the report continued, with particular premium potential in solar, onshore and offshore wind, and battery energy storage systems (BESS).
Howden Re argued that the growth trajectory of the renewables market and the impact on premiums is “reminiscent” of trends seen in the other expanding lines of business, including cyber.
According to estimates, if every national renewable energy target is achieved the sector could generate approximately $237bn of cumulative premiums between 2022 and 2035.
However, Howden Re warned that greater strides must be made in transparency and collaboration to ensure that risks are appropriately placed and managed.
Reinsurers should refine their view of risk to align with the specific risks associated with each renewable asset to provide greater value to cedants.
In a new report, Howden Re noted that renewables will account for 74 percent of the growth in global primary energy consumption by 2030
