Renewable energy is a pressing topic, surrounded by political, media, and community discussions about climate change, consumer energy costs, and the need to supplement existing renewable sources with gas and coal infrastructure to meet the growing demand. As the fastest-growing energy source in Australia, the renewable energy landscape is becoming increasingly complex and requiring more sophisticated risk management options be considered. Developers, project owners, and operators in this rapidly evolving sector face heightened risk management challenges stemming from the accelerating global energy transition.
The renewable energy sector encompasses various energy sources, including:
- Battery Energy
- Wind
- Solar (Onshore & Offshore)
- Green Hydrogen
- Hydro
- Geothermal
- Biomass
- Wave
Each of these sources faces specific risk exposures throughout different phases of project development and operations. When assessing the risk for any asset, it is essential to understand and consider the company’s exposure across all key areas: legal, financial, regulatory, contractual, physical, and the associated social impact.
Businesses which have a comprehensive understanding of their risk profile are better positioned to achieve best practice corporate governance. This enables informed decision-making on how identified risks are managed, whether by transferring the risk to another party or knowingly retaining it on the company’s balance sheet.
A comprehensive understanding of a company’s risks is best achieved through the expertise and advice of a Risk and Insurance expert, in close collaboration with both operational and financial teams. This approach enables thorough consideration of all perspectives regarding the implications of identified risks on the business:
At 4Sight Risk Partners, we provide risk management strategies to proactively mitigate emerging risks, along with bespoke insurance solutions across all sub-sectors of renewable energy. We assist clients ranging from single project owners to multi-asset portfolios held by utilities and global investment or sovereign funds.
With extensive experience in the energy industry, we are a trusted partner in the renewable energy sector. Our team is dedicated to providing comprehensive solutions that address the unique challenges faced by businesses adopting renewable energy technologies, as well as those striving to reduce their carbon footprint or on the path to becoming carbon neutral.
We partner with a global network of experts who possess the knowledge and experience necessary to support our clients with current and emerging risk and insurance solutions. This includes providing risk management advice, updates on global risk incidents (e.g., EV fires in the U.S. following saltwater infiltration into car park basements after Hurricane Katrina) and developing tailored insurance solutions. We are also a proud member of Australia’s peak body for the renewable energy industry, the Clean Energy Council.
By leveraging the skills of our broking specialists in energy, construction, mergers and acquisitions, and Directors & Officers Liability/Prospectus Liability, we can formulate customised insurance solutions across all phases of renewable energy project development and operations. Which include:
Onshore wind
Our team has extensive experience providing coverage for owners, operators, and financiers of onshore wind projects, addressing risks during the project feasibility, construction, and transition into the operational phase. We support some of the most complex and challenging projects throughout their lifecycle, with turbine models ranging from 0.5 MW to 7 MW.
Offshore wind
Our team is closely monitoring the continued growth of the offshore wind sector, including the shift from shallow continental shelf activity to deeper waters and harsher environments, which significantly increases the risks associated with both construction and operation.
Solar
Solar power generation has become one of the leading renewable energy platforms and is predicted to grow exponentially worldwide in the coming years. Australia has the ideal climate to make solar a key component of our national renewable energy plan. However, several areas that are well-suited for large-scale solar farms face inherent climatic challenges, such as cyclones, which are becoming increasingly frequent and severe.
We have placed some of the world’s largest solar PV projects within complex portfolios in regions prone to extreme natural peril exposures—a significant risk factor for solar energy.
Battery Energy Storage System (BESS)
Wherever in the world you require risk mitigation for your BESS assets, our global insurance market relationships ensure access to the right options, enabling an optimal balance of risk, coverage, and value for money. We have the technical expertise to deliver relevant and timely input that aligns with your requirements while leveraging our networks to maximise coverage for our clients.
Geothermal Energy
While it is an emerging resource in Australia, it is already established globally, including in New Zealand. Our team possesses the expertise to ensure you secure comprehensive insurance coverage for every phase of your project, from exploration through production and power generation.
Hydro
Whether your project is small or large in scale, ranging from run-of-river to reservoir-based systems, our team has the capability to help you mitigate the insurable risks associated with your project throughout its entire lifecycle.
Wave and tidal
Across the world, tidal energy is advancing as engineers develop new concepts and technologies to meet energy demands. Our global energy team manages some of the most exciting tidal developments in North America and Europe, and we can assist on both local and global scales.
Biomass and Energy from Waste (efW)
Tightening conditions in this sector mean that a broking team with experience is one of the best ways to ensure your project is comprehensively and competitively insured. Our team, both locally and globally, is here to assist with construction and operational risks.
Hydrogen
At 4Sight Risk Partners, our renewable and traditional energy teams combine to provide clients with a comprehensive offering that blends construction and operational experience from the traditional midstream and downstream hydrogen markets, along with detailed knowledge of the wind and solar technologies used to power the new generation of electrolysers employed in hydrogen production.
Instilling Confidence in Sustainable Investment Opportunities
Insurance and risk consulting are vital components in the financing of energy projects. We provide a range of insurance coverages that can enhance the financial feasibility of energy projects, making them more attractive to investors and accelerating the transition to sustainable energy.
Our specialists offer insurance placement and alternative transfer solutions across multiple disciplines, including:
| Energy Insurance | Renewable Energy Insurance |
| Upstream exploration & production Downstream Midstream Contractors Power & Utilities | Offshore and Onshore Wind Solar BESS Hydrogen Hydro Wave & Tidal Biomass Geothermal |
We understand the sector and its associated risks, including physical risks, atypical solutions, and contractual, legislative, and regulatory challenges imposed on the business. We structure programs that can be accepted by financial institutions, enabling investment.
Anticipating Your Unique Needs with Energy Expertise and Market Insight
One of our key capabilities is providing interpretation and advice on policy wordings. The policies we craft help energy companies de-risk, enter new and emerging markets, and gain a competitive edge to achieve their commercial objectives. Our energy sector experts are well-versed in the complex challenges and evolving conditions in the exploration, production, and distribution of energy sources.
Our Comprehensive Insurance Approach to Mitigating Financial Risks in Renewable Energy
By working through a schedule of identified risks, a specialist Risk and Insurance Advisor brings experience and an in-depth understanding of the energy industry, as well as knowledge of the insurance market providers that offer capacity to this sector. They provide guidance on accessing and transferring risks to insurers through insurance policy coverages or help determine which risks may be retained.
Solutions may include traditional insurance mechanisms, adjustments to existing insurance products to meet specific needs, consideration of alternative risk transfer solutions, or a combination of these approaches. The key for any energy business is to have a clear understanding of their total cost of risk, which encompasses the risk coverage they are outlaying, what is being retained or ‘self-insured,’ and the costs associated with both.
Our focus is on providing advice to ensure our clients’ risk transfer approaches are best suited to their needs, taking into account their risk profiles and financial balance sheets. We adopt a holistic approach to risk, exploring potential alternative risk transfer mechanisms such as parametric insurance, captives, cell captives, and risk financial modeling. Additionally, we offer our clients a comprehensive strategy for risk and risk transfer by leveraging the expertise of our colleagues in other specialty divisions, including financial lines, construction, mergers and acquisitions, and workplace risk.
Another critical factor in renewable energy financial risks relates to the obligations imposed by the financial institutions involved, such as lender requirements for risk coverage in specific areas. These obligations often directly impact the insurance that the business must maintain. At 4Sight Risk Partners, we have significant experience working with financial institutions, focusing on identifying risks, placing coverage, and providing the appropriate documentation, including letters of reliance for these institutions.
Risk Considerations Across Renewable Energy Project Lifecycle
For energy businesses involved in low-carbon alternatives, risks are typically assessed through different stages of the project lifecycle, as exposures and vulnerabilities vary considerably during each phase and may be specific to the company rather than the energy type or operation itself.
In the start-up phase, risks are primarily corporate rather than operational. During this time, it is crucial to balance the current risk profile with the company’s future growth aspirations, considering their commercial appetite and cashflow (debt funding) consideration.
As the business progresses to the development or construction phase, the risk profile shifts, often influenced by the need to finance multiple projects. Investors significantly impact the risks retained or covered, particularly concerning protective guarantees against potential investment losses, which can arise from delays in project commencement or the inability to meet contractual sales obligations.
Post-construction, the focus of risk protection shifts to ensuring that assets are adequately covered, taking into account both technological advancements and the value changes between the project’s financial investment decision (FID) and completion. The goal is to safeguard the business against output losses while ensuring that all contractual and regulatory obligations are properly identified and addressed.
A critical factor for any new energy form is the reliability and consistency of production, especially when fulfilling contractual obligations for energy sales or supply agreements. It is imperative for the Risk and Insurance Advisor to fully understand these agreements and the associated responsibilities if production is compromised.
Additionally, supply chain delays following a loss, present further risk considerations, impacting both the physical reinstatement of assets and financial repercussions. Geographic and geopolitical issues may arise, where parts may be available, but the usual transport routes are no longer viable.
Evolving Risks: Transitioning from Traditional Energy to Renewables
The transition from a traditional exploration and production (E&P) company to renewables presents a significant change in risk profile, often necessitating a different selection of insurance coverage and program structure. This typically requires engaging different insurers and/or class underwriters than those used in traditional upstream markets to address the unique risks associated with the renewable phase.
At 4Sight Risk Partners, we have extensive experience managing this risk transition process, ensuring optimal outcomes for each operation while maximising potential marketing synergies. We also ensure there is no duplication of coverage, and that each insurance program structure accounts for the financial impact if either part of the business (traditional or renewable) incurs a loss.
For a transitioning business, it may be more advantageous to reinstate loss coverage from the exploration and production phase rather than focusing solely on insurance that covers the financial and regulatory obligations associated with closing these facilities.
Regulatory uncertainties further complicate the insurance landscape for carbon capture and storage (CCS) projects, as the legal and regulatory frameworks surrounding them are still developing. Since CCS projects vary widely in scale, location, and technology, insurers must tailor coverage to address the specific risks of each project.
Strategic Insights: What Insurers Need to Consider in Renewable Energy
Potential insurers of renewable or transitioning energy businesses must be informed about project timelines, built in redundancy and the associated contractual obligations regarding product supply. Engineering considerations are also significant, as the technology—whether new or proven—plays a crucial role. Insurers typically perceive proven technology as less risky due to its established capabilities. In contrast, new technology, including scaled-up versions of existing solutions, is seen as higher risk. This perception can directly affect initial pricing, potentially resulting in higher deductibles and more restrictive coverage options.
Partner with 4Sight Risk Partners for Expert Guidance
At 4Sight Risk Partners, we specialise in delivering tailored risk and financial management strategies for businesses entering or expanding their presence in the low carbon and renewables sector. Our comprehensive services include:
- Risk Identification: We meticulously assess and identify the unique risks associated with your projects, ensuring you are prepared for any challenges that may arise.
- Regulatory Expertise: Our deep understanding of the regulatory landscape allows us to navigate complex requirements, helping you stay compliant and avoid costly penalties.
- Market Insight: We leverage our extensive network and knowledge of the insurance markets to secure the coverage you need, enabling you to focus on growth without worrying about risk exposure.
With our extensive experience, strong relationships, and expertise in energy-specific insurance markets and wholesale brokers, we effectively understand renewable energy risks and how to represent them. This provides our clients with the confidence to make informed decisions that drive success throughout the various operational phases of their renewable energy projects.
Ready to take the next step? Contact us today to discover how 4Sight Risk Partners can enhance your risk management strategy and support your journey in the low carbon sector.