Renewable energy market review 2020

Produced by our Natural Resources team in London with contributions from colleagues all over the world, Willis Towers Watson’s Renewable Energy Market Review 2020 has been published at a time when we are seeing energy industry insurance buyers, risk intermediaries and insurers having to face up to adjusting to significant changes in our different business environments. How they adjust to these changes may be critical to their future prosperity in the years ahead.

The report indentifies several new realities that the industry needs to face up to at the beginning of the new decade. These new realities include:

• Geopolitical clouds:

  Conflicts and other international tensions are seemingly threatening the renewable business landscape – not only stand offs such as the US/Iran situation and the issue of North Korea, but also serious conflicts between Turkey and Syria and between India and Pakistan. The Review identifies new ways in which geopolitical risk can be managed more effectively than by simple insurance purchase.

• The new risks emerging from the climate change threat:

  As the threat of climate change makes itself more apparent with every passing year, it is now generally accepted that renewables are likely to make up the largest share of total global energy supply by 2050. But the Review finds that the accelerated renewable energy industry growth brought on by climate change is the bringing with it new risks and issues which need to be faced, particularly within sub-sectors such as Floating Offshore Wind and Hybrid Renewable Energy.

• A hardening insurance market:

  The long period of soft market conditions, characterised by an excess of (re)insurance capital and an emphasis on meeting premium income targets, has finally come to an end. Instead, faced with deteriorating loss ratios and increasing costs, the Renewable Energy insurance market seems to have come to a tipping point as truly hard market conditions have emerged during the course of the last 12 months.

• An increasing cyber-security threat:

  There is considerable concern across the industry as to how to quantify and manage its exposure to cyber risk; at a recent renewables seminar hosted by Willis Towers Watson in Prague, over 84% of delegates expressed concerns that the industry did not know how to manage this risk effectively.

• Uninsurable weather risk:

  With the renewable energy industry particularly suspectable to weather volatility, index-based solutions are being increasingly used to address power generation risks wind and low solar as well as power price volatility and power outages not linked to physical damage.

You can also read our Energy Market Review 2020 here: