Power companies are grappling with rising electricity demand, outdated infrastructure, and climate risks, according to the Power Market Review 2025 from Willis Towers Watson (WTW). The report also finds that insurance markets have swung in favor of buyers, with utilities now securing double-digit rate cuts.
The study points to a widening gap between renewable energy investment and grid spending. While solar and wind investment has nearly doubled since 2010, grid spending has stayed flat at around $300 billion a year. Meeting climate goals would require about $600 billion annually by 2030.
In the U.S., 70% of transformers are more than 25 years old, and in Europe, up to 35% of low-voltage lines are over 40 years old.
Tech companies are turning to nuclear power as data center demand rises. WTW notes that electricity use from data centers is set to double by 2030, with AI chip production alone consuming 350% more energy in 2024 than the year before. Microsoft has signed agreements with Three Mile Island Unit 1, and Amazon Web Services has contracted supply from the Susquehanna nuclear plant.
“It’s not just like any other risk. In the U.S., it doesn’t matter how big or small the reactor is, it’s mandatory to buy $1.06 billion in property insurance,” said Kate Fowler, global head of nuclear at Willis Natural Resources.
Insurance prices are falling after years of increases. Utilities are seeing 10% to 30% reductions in property and business interruption premiums. Long-term agreements and no-claims bonuses are returning, though insurers are holding firm on exclusions tied to climate change, PFAS chemicals, and supply failures.
“Attritional losses are not significant enough to have an impact on the rating environment at the moment and underwriters remain pressured to secure business,” said Carlos Wilkinson, head of power and utilities at Willis Natural Resources, U.K.
Liability insurance is softening more slowly. WTW says generation projects still attract strong insurer appetite, but wildfire risks are raising scrutiny for transmission lines, especially in the U.S., Australia, and southern Europe. Coal projects face limited options.
“As underwriters increasingly focus on evolving exposures within the power sector, there is a continued expectation for insureds to evidence monitoring and mitigation measures,” said Matt Clissitt, deputy head of liability at Willis Natural Resources.
Regional differences are also emerging. In Asia, insurers are backing new projects in Vietnam, Indonesia, and the Philippines, with hydrogen technologies gaining ground. China’s power insurance market is expected to reach 140 billion yuan this year.
Latin America is offering discounts of up to 30%, while North America continues to rely heavily on thermal power to meet demand. In the Middle East and North Africa, combined cycle gas turbines remain dominant even as hydrogen and renewables expand.
