Power companies are facing a tough challenge as electricity demand keeps rising while their infrastructure ages and climate change adds new risks, a recent report from Willis Towers Watson shows. The 2025 Power Market Review reveals that while investments in renewable energy like solar and wind have nearly doubled since 2010, spending on the electrical grid itself has stayed flat at about $300 billion a year. This gap means we would need to nearly double grid investment to around $600 billion a year by 2030 to meet climate goals.
In the U.S., most transformers — about 70% — are over 25 years old. Europe also has its share of aging equipment, with up to 35% of low-voltage power lines being more than 40 years old. This old infrastructure struggles to keep up with growing demand and new energy sources.
Tech companies are playing a big role in pushing energy use higher. Data centers, which store and process information, are expected to double their electricity consumption by 2030. Artificial intelligence chip production alone used over three times more energy in 2024 than in the previous year. To meet this demand, companies like Microsoft and Amazon have turned to nuclear power. Microsoft has deals with the Three Mile Island Unit 1 plant, and Amazon Web Services is getting energy from the Susquehanna nuclear facility.
Nuclear power plants in the U.S. must carry at least $1.06 billion in property insurance, no matter their size, according to Kate Fowler, who leads nuclear at Willis Natural Resources. Luckily for utilities, insurance costs are coming down after years of hikes. Property and business interruption insurance premiums are dropping by 10% to 30%. Insurers are also returning to long-term deals and offering rewards for claims-free periods, though some risks like climate change, certain chemicals, and supply chain failures are still excluded.
Carlos Wilkinson from Willis Natural Resources in the U.K. notes that insurance underwriters are still eager to find business because losses so far aren’t big enough to push prices up. However, liability insurance — which covers damage utilities might cause others — is easing more slowly. Power projects still attract insurers, but wildfire risk is causing more caution, especially in places like the U.S., Australia, and southern Europe. Coal projects are finding it hard to get insurance these days.
Willis Natural Resources deputy head Matt Clissitt says insurers want utility companies to show they are keeping a close watch on risks and putting prevention measures in place. Around the world, insurance markets are looking different. In Asia, new power projects in Vietnam, Indonesia, and the Philippines are getting good support, and hydrogen energy is growing. China’s power insurance market is expected to be huge this year, reaching 140 billion yuan.
In Latin America, utilities are seeing insurance discounts up to 30%. North America still relies a lot on thermal power to meet energy needs. Meanwhile, in the Middle East and North Africa, gas turbines dominate power generation even as hydrogen and renewables slowly grow.
The report paints a clear picture: power companies must deal with old equipment, bigger demand, and changing risks, but insurance is becoming more affordable. Still, significant upgrades and investments in the grid are needed if clean energy and climate goals are to be achieved.