The renewable energy sector is on the verge of a major shift. Experts believe that within the next five to ten years, renewable energy production could surpass that of fossil fuels. This change is being fueled by political support, new technologies, and a growing acceptance of renewable energy sources.
Steven Munday, a leader in renewable energy at Willis Towers Watson, refers to this upcoming phase as "Gen R." He explains that while we may not recognize this moment as significant now, it will be clear in hindsight. Munday points to research indicating that a tipping point for low-carbon energy generation and storage could occur between 2026 and the early 2030s.
As the insurance market softens, brokers have both opportunities and challenges in supporting renewable energy clients during this critical time. Munday highlights two key areas that will be particularly important: the combination of different energy technologies and advancements in energy storage. For instance, projects that integrate wind or solar power with large batteries can help address the intermittent nature of renewable energy. However, this integration also introduces new risks, as a failure in one part of the system can affect the entire project.
Brokers who can effectively communicate these risks will be better positioned to help their clients find the right insurance coverage. Munday emphasizes the importance of risk engineering in this process. Many renewable companies see risk engineering as a barrier to obtaining insurance, but Munday argues it should be a tool to clarify technology risks and facilitate financing.
Insurers are also adapting to the evolving landscape of renewable energy projects. Munday notes a trend toward multi-skilled underwriting teams that can draw expertise from various sectors, such as power, oil and gas, marine, and construction. This approach allows insurers to stay involved throughout a project’s life cycle, enhancing their understanding of how risks develop over time.
Despite the potential for innovation in the sector, significant challenges remain. Geopolitical instability is a major concern for project financing and development. Supply chain disruptions also pose risks, as delays in obtaining critical components can lead to costly downtimes. Additionally, the threat of natural disasters is increasing, with climate change contributing to more severe weather events.
However, Munday sees hope in technological advancements. Innovations like pumped hydro storage and kinetic energy generation from everyday activities could help overcome some of the sector’s challenges. He even mentions the exciting potential of space-based solar power, which is becoming more feasible with the rise in satellite deployment.
As "Gen R" approaches, brokers will need to adapt their strategies. They must present new technologies in ways that make them insurable and build closer relationships with both clients and insurers. Munday stresses that brokers play a crucial role in making the transition to clean energy financially viable. He believes that in the coming years, we may look back and recognize this as a defining moment for the renewable energy sector.