Parametric Solutions Propel Resilient Renewable Energy Sector in 2024

The renewable energy sector has demonstrated resilience and optimism in 2024 despite facing numerous challenges, according to the Renewable Energy Market Review 2024 published by WTW. The review highlights key issues such as climate volatility, supply chain disruptions, casualty deterioration, social inflation, and geopolitical conflicts that have impacted the sector.

The report, titled "Prepare for Storms, Plan for Stability," provides insights from international experts specializing in battery energy storage systems (BESS), offshore wind, floating solar installations, and green hydrogen. It also includes a detailed analysis of the renewable energy insurance markets, offering a comprehensive overview of the risks and opportunities for the year.

Key trends identified in the review include the influence of El Niño and La Niña on climate volatility, which has led to significant natural catastrophe losses and numerous weather events exceeding $1 billion. Four years post-COVID-19, global supply chains remain unstable, affecting lead times for critical items and increasing asset reinstatement and business interruption risks.

Technological advancements are driving rapid growth in large wind turbines, floating solar installations, green hydrogen, and utility-scale BESS, prompting markets to innovate and adapt their strategies. Innovations in energy storage, particularly in lithium-ion batteries and green hydrogen, are leading a renaissance in established technologies like hydroelectric pumped storage, according to the report.

However, the renewable energy insurance market faces a significant challenge in addressing a resource skills gap. This requires the transfer of skills from traditional energy sectors to support the transition to low-carbon infrastructure. Steven Munday, natural resources global renewable energy leader at WTW, emphasized the sector's improved resilience despite ongoing challenges.

While surplus capacity exists for proven technologies, caution remains. The ongoing competition and potential for a La Niña year keep rates steady, with parametric solutions gaining traction despite integration challenges. To capitalize on emerging opportunities, renewable energy risk and insurance buyers should continue to engage with advisers and markets, employing smarter solutions to navigate the complexities of the evolving landscape.

The complete report can be downloaded from WTW's website.