Insurance brokers are more likely than their power generation clients to see a mismatch between business interruption (BI) cover and real recovery times, according to a survey by FM.
Some 73% of brokers flagged the problem, compared with 59% of energy providers, and the report said providers may be underestimating it.
Across all respondents, 61% said business interruption terms do not match real-world recovery timelines. FM surveyed 750 power generation risk decision-makers, 150 brokers and 150 financiers across 10 markets, including Australia, in June 2026.
“Lead times for some of these critical pieces of equipment, such as transformers, turbines, and ancillary equipment, are now ranging up to five years,” said Sandy Calvert, senior vice president at consultancy Moore-McNeil. “Insurance isn’t going to cover that gap when the policy itself indemnifies at a maximum of 24 months, and 90% of the market is for 12 months.”
Willis’ latest Power Market Review found procurement times for transformers, turbines and generators have nearly doubled since 2021. A Wood Mackenzie survey in the second quarter of 2025 put average delivery at 128 weeks for standard power transformers and 144 weeks for generator step-up units, and some orders stretched to four years.
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An FM study of power generation losses put large transformer lead times at two to two-and-a-half years in normal market conditions and more than three years under stress, with gas turbine replacement at three to seven years.
FM said those timelines now materially exceed indemnity periods common in Australian commercial policies, and standard BI indemnity periods run 12 to 24 months.
Demand is adding to the queue. The Australian Energy Market Operator forecasts national electricity market consumption to rise about 28% over the next decade, and data centre consumption is expected to grow from 3.9 TWh in FY25 to 12 TWh by FY30 under its Step Change scenario.
The Waratah Super Battery in NSW shows how this plays out. One of three high-voltage transformers at the 850 MW/1,680 MWh project, owned by BlackRock-backed Akaysha Energy, failed in October 2025, and operating capacity was cut to 350 MW.
Output returned to 700 MW in June 2026 after a second transformer came back into service, and a replacement from Wilson Transformer Company was due in the third quarter, with full capacity targeted by year-end.
Tom Harries, a partner at specialist energy broker NARDAC, estimated at the time that total losses could reach A$50 million to A$80 million, depending on replacement timing and whether delay in start-up (DSU) cover applied.
“If the project can replace the transformers in six months, possibly under a delay in start-up cover depending on whether the project has fully gone live or is still in testing, then the loss could be as low as AU$50 million,” he said.
Pricing gives buyers some room. Willis said power rates have fallen for two years, with some cuts reaching about 40%, and advised buyers to revisit limits, deductibles and BI assumptions against current lead times.
Australian broker Crucial Insurance and Risk Advisors made a similar point in its 2026 outlook.
“Too many programs are under-cooked on indemnity periods, contingent business interruption, and the real time it takes to source replacement parts,” it said, and it urged renewable energy clients to audit DSU triggers and waiting periods against supply chain lead times and grid connection dependencies.
“There is a clear need for companies to map and manage recovery timelines, contingency planning, as well as the alignment between procurement, contracts and insurance structures,” said Rob Hale, global power and renewable energy leader at Willis Natural Resources. Willis has linked part of that exposure to growing reliance on Chinese solar and battery suppliers.
Read more: Renewable energy buyers hold the cards as insurer appetite hits highs
Some 78% of power companies and 85% of brokers say cover is available. Even so, 56% of respondents believe insurers put risk transfer ahead of prevention, and 65% of power companies and 75% of brokers say new and hybrid technologies are underinsured or inconsistently treated.
Inverter losses are also feeding into terms. Willis’s Pacific renewable energy leader John Rae said New Zealand solar projects that reach renewal without documented mitigation are seeing deductibles rise, and sub-limits and coverage restrictions could follow.
In Australia, a February 2025 fire at the Raywood solar farm and battery site north of Melbourne reportedly began in an inverter.
Financiers estimate a higher cost of risk than providers on all five risk drivers in the survey, including 19% versus 14% for lifecycle risk management gaps.
“Financiers often lack direct operational visibility,” said Michael Perron, FM’s renewable energy market lead. “As a result, they see uncertainty and they price it.”
