As Australia continues its transition toward a decarbonised energy grid, developers and investors in renewable projects are being called to rethink how they approach risk – well before construction begins.
According to Cameron Sheild, strategic risk advisor for power and energy at Lockton, emerging challenges such as extreme weather events, supply chain delays, and technology shifts are fundamentally changing the way insurers evaluate renewable energy assets. These evolving risks now play a significant role not just in coverage decisions, but also in how projects are valued and traded in the market.
“Insurers are no longer just pricing risk; they are making value judgements about your engineering, planning and operations. A poorly communicated project, or one with gaps in documentation, can face longer insurance placement timelines, narrower capacity, and sometimes full insurer withdrawal,” Sheild said.
He noted that insurance providers are adopting a more forensic approach when reviewing solar, wind, and battery energy storage system (BESS) developments. Common weak points that raise red flags include inadequate spacing between equipment in BESS installations, use of increasingly fragile solar modules in high-risk hail zones, and insufficient planning for spare parts in wind projects with large-scale turbines. These overlooked factors can lead to higher premiums, increased deductibles, and in some cases, a lack of insurer appetite altogether.
Natural catastrophe (NatCat) assumptions are also facing heavier scrutiny. Sheild pointed out that many insurers are questioning whether current modelling practices – such as relying on one-in-100 or one-in-250-year return periods – are still appropriate in wildfire-prone regions, given the increasing volatility of weather patterns.
For developers seeking financing or preparing for a sale, the impact of risk framing extends far beyond insurance costs.
“It affects due diligence confidence for equity and debt stakeholders, M&A outcomes, and grid operator trust when operational continuity is in doubt,” Sheild said.
He stressed the importance of treating risk as a core component of the project narrative, rather than a compliance obligation. Questions around wildfire response, component sourcing, and thermal event planning are becoming central to insurer evaluations. Merely presenting a well-organised data room, without clear documentation of risk assumptions, is no longer enough.
Insurers are increasingly seeking tangible demonstrations of resilience, according to Sheild. This includes on-site spare parts that can shorten business interruption periods, as well as updated modelling that reflects current climate realities rather than legacy standards.
“‘Data is king’ in the insurance industry, and the best way to meet this is with a proactive strategy that treats risk as a story, not a disclosure,” he said.
