Between extreme weather, shifting regulatory landscapes, and unpredictable construction timelines, the renewable energy sector faces significant risks as it scales significantly in North America.
For insurers, the challenge has extended to anticipating how volatile weather patterns and trade policy will impact exposures across the project lifecycle.
"Severe convective storms are one of the emerging threats that aren’t being properly addressed," said Doug Akerson (pictured), head of energy, power and construction North America, Munich Re Facultative & Corporate.
"We’re seeing greater frequency and severity, and the insurance market is arguably not focused enough on that exposure."
This lack of attention is particularly worrying for renewable energy projects, which often rely on centralized installations and are sometimes located in vulnerable geographies. Akerson draws attention to what he calls a "lottery-like" exposure.
"You have greater accumulation, especially with solar, in areas where the projects are built in close proximity,” he told Insurance Business. “If a storm hits, it’s not just one installation that’s exposed, it could be multiple.”
Some insurers continue to write high limits in areas prone to this kind of weather volatility, without fully modelling for the clustering effect. “I don’t think insurers are fully prepared for the losses that could come from this,” Akerson said. “Some are aware, others aren’t.”
What’s also concerning is that some reinsurers are stepping in to support capacity in high-risk zones. “I’m not sure they completely understand what they’re walking into,” Akerson said.
The interplay with construction challenges is another area of concern for renewables projects. Rising tariffs, supply chain interruptions, and increasingly erratic construction schedules are also injecting new forms of risk into wind, solar, and battery infrastructure development.
Many renewable energy builds, particularly large-scale solar and wind farms, are on compressed schedules to meet government incentives or power purchase agreements. A disruption in the supply chain can delay the completion date and trigger significant financial losses.
"If a loss occurs and construction gets delayed, especially if it’s due to supply chain disruptions, the costs can be much higher,” said Akerson. “If the materials haven’t already been contracted or sourced, replacing them becomes expensive, especially if they’re subject to new tariffs or import restrictions.”
Weather-related uncertainty is just one part of the equation. Renewable energy projects are also contending with regulatory unpredictability, particularly in markets like the US where tax incentives and political support have swung between administrations.
“It all comes down to capital,” Akerson said. “If tax incentives like production or investment credits go away, some renewable projects won’t pencil out financially.
“At the same time, we’re seeing more permits for natural gas plants as a baseload source. That seems to reflect current economic and political priorities.”
Despite growing challenges, the insurance industry isn’t retreating from renewables, with Akerson noting healthy capacity in the market.
“Insurance demand is still there. We see coverage available for solar, wind, battery storage, biomass, as long as the technology is proven and the location is insurable,” he said. “There’s capacity for both renewables and traditional energy projects.”
However, Akerson pointed to gaps in how risk is priced and communicated. The lack of specificity and speed in current practices may be acceptable in less volatile industries, but for the renewable energy and construction sectors, it’s no longer sustainable.
"We still need more transparency from brokers and clients. More is better," Akerson said. "You’d expect more rigour given how exposed these projects can be, but some submissions still don’t answer key questions. What are the revenue values? What’s the timeline? Who are the contractors?"
