Power Market Review 2024

Modern, flexible, reliable and resilient power and transmission networks are fundamental to the success of the energy transition, but change comes at a cost. The bottom line is global grid capacity needs to grow 2.5 times its current size, with annual expenditure on grids more than doubling to $970 billion by 2050 to keep global warming beneath the +1.5°C ceiling as part of the Paris Agreement.

Speeding up grid expansion will require substantial technology investment over the coming decades, and attracting investment will demand a robust and resilient risk strategy that’s a cut above the competition.

Key themes this year

• Modern, flexible, reliable and resilient transmission networks are fundamental to the success of the energy transition.
• Energy use could double by the end of the century.
• The future is electric, and power companies are driving change.
• To meet this growing demand, the lifespans of power assets are being extended.

The insurance markets, at a glance

• After enduring years of hard market conditions, the (re)insurance property and business interruption market cycles are starting to turn.
• For property and business interruption, lower-level attritional losses remain a constant, but the absence of headline losses (>$500m) in 2023 and 2024 is paving the way for more competitive pricing for the power sector in the year ahead.
• The international liability market has stabilized with a small uptick in capacity and softer market conditions, leading to greater competition and downward pressure on rates.
• Placements containing coal and/or wildfire exposure continue to face greater scrutiny, as do those with significant United States (U.S.) exposure.

Looking ahead

• Robust life extension processes and independent engineering analyses will be key factors in ensuring that ageing assets continue to operate efficiently and safely.
• Finding ways to build operational efficiencies will be a focus for risk and finance leaders. Risk leaders need to identify more opportunities to reduce the total cost of risk and build resilience into risk financing programs.
• Stability is under the spotlight. Making strides in a softening market will demand renewed focus on getting valuations right, investing in risk engineering for ageing assets, and managing supply chain volatility through contingency plans.

Existing thermal processes maintain a base load of energy supply on which more renewable energy processes can build. In looking ahead, the power sector will be challenged with maintaining security of supply to support the energy transition.

Featured articles from the Review

1. 01

   The future is electric: How the power sector is driving change

   In this article from the 2024 Power Market Review, we explore how electrification, demand shifts, and energy security are reshaping the power sector and its future.

2. 02

   Controlling costs: TSOs’ risk strategies need to keep pace with change

   In this article from the 2024 Power Market Review, explore how TSOs can optimize risk strategies and capitalize on market shifts amid growing electrification demands.

3. 03

   Power ahead: an opportunity for liability buyers to capitalize on stability and softening conditions

   In this article from the 2024 Power Market Review, understand how power liability buyers can capitalize on market stability, softening rates, and emerging risk trends.

4. 04

   Forward-thinking power companies are driving business results in a softening market

   In this article from the 2024 Power Market Review, learn how power companies leverage a softening (re)insurance market to optimize pricing, capacity, and risk resilience.

5. 05

   How power sector trends are impacting key geographies in 2024

   In this article from the 2024 Power Market Review, we explore how trends are evolving in key regions and geographies for the power sector.

If you have any comments or questions, please contact a member of our team. We look forward to sharing more insights in the coming months.

Contacts

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Rupert Mackenzie

Global Head of Natural Resources

Rupert Mackenzie is the Global Head of Natural Resources for Willis. He has over 32 years of experience supporting clients in the Global Energy sector. He is an accomplished Chief Executive Officer with a multidisciplinary background in Property, Casualty and Claims, who has managed a broad and diverse range of Client and Market-facing roles throughout his career. Rupert is responsible for leading and driving the global execution of Willis' Risk and Broking strategy for Natural Resources, working across the four subsectors of Oil, Gas & Chemicals, Power & Utilities, Renewable Energy and Metals & Mining

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Carlos Wilkinson

Head of Power & Utilities, Natural Resources Global Line of Business, WTW

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Declan Cleary

Power and Utilities Broker at WTW

email Email phone +44 20 3124 8203

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Michael Buckle

Regional Industry Leader, Great Britain, Natural Resources, Willis

email Email phone +44 0 203 124 6531

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