Renewable Energy Market Review 2024

What are the key themes of the year to date?

The significant trends, which we explore in more detail in this year’s Renewable Market Energy Review, include:

• The La Niña effect, coupled with increasingly unpredictable weather patterns, is rendering the renewable market far from entering any period of benign complacency.

• Four years on from the COVID-19 pandemic, unstable global supply chains continue to influence assessments of business interruption risk and reinstating assets.
• Better experience and understanding of Chinese technologies are building appetite across the global insurance markets as these technologies are increasingly deployed outside of Chinese domestic markets.
• Energy storage is on the rise, with lithium-ion batteries ushering in a new era of energy storage and creating a renaissance in well-known technologies, such as pumped storage and hydrogen.
• The deployment of new, planned, and reliable transmission and distribution systems alongside efforts to address electricity system intermittency and outages, are helping to balance the supply and demand required to achieve net zero by 2050.

These factors driving the renewable energy industry and insurance markets to consider the next chapter in their evolution.

2024 insurance markets summary

At a glance, we have seen the following trends across global insurance markets so far this year:

• Markets continue to respond differently to risks on the technology-readiness scale. More mature renewable technologies — particularly for onshore wind and solar photovoltaic risks — continue to challenge insurance markets with well-known risks. Meanwhile, less proven technologies — such as larger wind turbines, a global increase in floating solar installations, the evolving green hydrogen industry, the advent of utility scale BESS systems and the move towards intensive energy farming with hybrid systems — are driving markets to reflect on their appetite and innovate their delivery strategies.
• Windstorm seasons created fewer losses than expected. Insurers, together with many renewable energy underwriting portfolios, have finally returned to profitability, though many remain mindful trading conditions may become less favorable in the near future. With the impact of the current La Niña system playing out, markets will be reluctant to drastically shift course. We expect they will cautiously watch the current market dynamics unfold, keen not to lose hardgained market share and flagship or profitable clients.
• Climate volatility persists and risks and liabilities associated with natural catastrophe events continue to dominate pricing discussions.
• Challenges around demand for experienced insurance market global resources, alongside the continued introduction of new capacity from construction, power and utility, and oil and gas product lines, are driving surplus proportional capacity in support of limited technical leaders.
• Following recent risk-adjusted pricing, since Q1 2024, appetite and capacity are moving the needle from a seller’s to a buyer’s market for attractive property and revenue clients and some risks are creating an improved position for many in 2024. Casualty remains challenged due to a number of factors, including elevated inflation and rate adequacy.

What’s changed since the Renewable Energy Market Review 2023

In previous reviews, we have reported on how markets focused on adjustment in technical rates to achieve a sustainable and profitable book amid the pressures of the hard market cycle. Driven by a well-reported unprofitable global relationship between risk carriers, actual losses sustained and achieved premium, the pendulum remained weighted to a seller’s market throughout the last five to six years.

In more recent years, unprecedented challenges resulting from the global pandemic, supply chain volatility, inflationary factors and increased frequency and severity of natural catastrophe events created headwinds in the insurance markets.

Today, the market has increased its general resilience to unknowns, resulting in a more profitable and sustainable relationship with insurance buyers, particularly when worst-case natural catastrophe events do not materialize.

What do we expect from the coming year?

The renewable energy risk and insurance buyers best placed to take advantage of emerging market opportunities this year will be those continuing to engage with advisors and markets and managing risk effectively by considering smarter solutions to existing or amplified problems within well-structured programs.

For our part, looking ahead, we’ll remain focused on remaining in lockstep with sector and market trends, delivering timely insights to support our clients and insurance partners as they build a sustainable future.