The renewable energy sector is growing, bringing both new challenges and new opportunities for the insurance industry.
“2021 was a record-setting year for renewable energy capacity growth worldwide, and that was on top of a previous record year in 2020 – where even though it was a little bit of a blip from COVID, it proved to be a very resilient marketplace, and growth really continued in an extensive way,” Walsh said. “And more than half of that growth over this past year was solar energy.”
And the renewable energy sector is only going to keep growing, Walsh said.
“The International Energy Association – the IEA – predicts that by 2026, renewable energy capacity globally will likely be equivalent to today’s fossil fuel and nuclear capacity combined,” he said. “So there’s certainly a lot of robust growth expected over the near future. But at the same time, when you have that sort of demand, there’s real impact on the industry as well – as well as external issues that are facing the global economy right now.”
Walsh said that insurance brokers wanting to move into the space should be sure to do their homework on the ins and outs of renewable energy.
“I think at the end of the day, communication is key – and making sure that you are knowledgeable about the space, about the equipment being used – but also being able to feed back to insureds where the insurers are in terms of their appetite, their ability to write and setting expectations,” he said. “I think the biggest difficulty is when you’re sort of coming down to the wire on a project and an insured needs very specific terms, and the insurer is not in a position where they’re able to grant them.
“That’s never a position you want any party to be in – especially as you’re getting close to a financial close or breaking ground. And so I think brokers are the real ones who are in control of being out in front of developers, in front of owners, and being able to influence the decisions that they’re making, as well as then messaging back to insurers so that they can sell the project in the best way possible and make [insurers] more comfortable with it and more likely to write it. So, yeah, communication is key.”