ASIA, January 19, 2023 — Renewables will remain the darling of the global energy transition, yet risk managers will face multiple challenges arising from a ‘new trilemma’. It comprises the convergence of:
This trilemma will escalate risk management and ESG as key issues for the renewables industry in the year ahead, according to Renewable Energy Market Review 2023, published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
The Review, subtitled Geopolitics, inflation and the energy transition – Where do renewables go from here?, includes contributions from more than two dozen international experts and specialists. Together they provide a comprehensive and up-to-the-minute analysis of opportunity, risk, and insurance for the global sector, from floating solar in Asia to battery storage in Ireland. Throughout, the need to balance risk and opportunity in a changed economic, political, and social environment comes to the fore.
Contributing author Margaret-Ann Splawn, Executive Director of the Climate Markets & Investment Association, says: “Macro events and trends such as inflation, cost increases, security, and supply chains are impacting the renewable energy industry, making the current business environment a challenging one for risk managers. Several important steps will help them to assess their own vulnerabilities in the transition to Net Zero, and protect themselves from current and future ESG and climate-related risks.” In her contribution, Splawn advises risk managers to:
Despite the challenges, the renewable energy outlook in Asia remains promising, with significant capital injection expected into the sector. In particular, floating solar has gained traction and will play an important role in the energy transition of countries such as China, India and South Korea. This also coincides with India’s shift towards alternative renewable sources and technologies such as Round the Clock (RTC), Battery Energy Storage Systems and Wind Solar hybrid projects to meet its clean energy transition goals.
Sam Liu, Director, Renewable Energy, Corporate Risk & Broking Asia at WTW says: “Renewable energy companies globally are also facing increasing risks due to climate change. Parametric solutions can play an increasing role in complementing the traditional insurance solution as we are expecting a Nat Cat capacity crunch in the Asia Offshore Wind insurance market in the new future. We foresee that this will be exacerbated when each country accelerates its Offshore Wind development plan.”
Renewable energy is a key growth area for insurers and renewal rates are expected to continue to increase. However, newer technologies could be met with reluctance and low-risk appetite from insurers due to their limited technical understanding and lack of historical loss data.
“As the renewable energy industry in Asia continues to expand, insurers could struggle to keep pace with newer technologies like floating solar and the information needed to evaluate the insurability of newer sectors such as Green Hydrogen. This makes the role of WTW ever more important, as we continue to work with renewable energy companies to ensure that good quality information is provided early and holistically, in order to alleviate any risk uncertainties and minimise coverage restrictions. Working with an intermediary who understands each insurer’s specific risk appetite will be critical to moderating rate increases,” adds Sam.
The complete report can be downloaded from Renewable Energy Market Review 2023.
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