By Alicia Glover ,
VP, Renewable Energy Specialist
09/29/2021 · 3 min read
As investments in renewable energy assets grow, few tasks are as critical to a project’s success as risk management. But it’s no longer as simple as purchasing an insurance product a single time. Sophisticated risk management increasingly requires thoughtful consideration and analysis of key risks throughout the life of a project or across a portfolio of assets.
When overseeing renewable energy projects, risk professionals should be mindful of several common challenges. Renewable energy industry leaders can differentiate themselves by working with experienced and knowledgeable brokers to address those challenges.
A renewable energy project will typically involve several contracts, each of which is negotiated separately and subject to varying insurance requirements. What’s more, these agreements are often established years before any associated insurance coverage is purchased.
To the stakeholders negotiating these contracts, the key objectives are cost and timing, with risk management typically being further down the list of priorities.
To ensure their interests are properly protected, lenders often engage independent consultants to develop or review the insurance requirements in agreements. These third-party consultants do not negotiate on behalf of the lenders, nor do they recommend appropriate coverage for specific exposures or projects. Rather, they advise lenders as to what insurance requirements should be considered generally acceptable.
A growing concern and continued area of focus for insurers is the use of prototypical technology. To prevent routine maintenance from becoming insured events, underwriters are likely to scrutinize:
Renewable energy asset owners should select brokers with renewable energy expertise and resources and strong relationships with insurers, lenders, and their consultants.
Specialized risk advisors who understand the industry and can anticipate the distinct challenges of renewable energy projects can make a significant difference. These experienced advisors can enable greater access to insurance coverage and financing — ultimately yielding better outcomes for asset owners’ renewable energy portfolios.
Proactive owners know to engage their brokers early in the process. The right broker can act as a guide through the risk management and insurance purchasing processes, supporting stakeholders through:
As the renewable energy industry continues to expand, and insurer underwriting standards tighten, it is all the more vital for asset owners to adopt sophisticated risk management tools and strategies to ensure the long-term success of their projects. A qualified broker and specialty risk advisor can be a cornerstone of these activities.