The energy transition in Europe is progressing as a strategic necessity, with implications for economic stability, national security and long-term prosperity.
Zurich notes that this shift is driving the transformation of energy infrastructure, as governments and energy companies focus on delivering cleaner sources of power.
The declining costs of renewables mean these assets are expected to play a dominant role in future electricity generation.
Physical climate risks, including extreme weather events, are becoming more frequent and severe. Zurich observes that these risks affect all forms of energy generation, but renewable and storage assets are particularly exposed to perils such as strong winds, floods, hail and drought.
Recent incidents, including Storm Darragh in 2024 and the European floods of 2021, have highlighted the vulnerability of energy infrastructure. Zurich’s analysis suggests that these physical risks remain under-assessed and under-addressed in many cases.
Insurance coverage for renewable energy projects is also under increased strain as natural catastrophe and extreme weather risks grow. In Europe, 2024 saw record insured losses for renewables, with some projects facing exclusions for perils such as flooding.
These exclusions can affect the financing and viability of projects, as developers and lenders must seek alternative coverage or adjust project structures to meet risk requirements.
This year, the International Association of Insurance Supervisors (IAIS) also updated its guidance, urging insurance regulators to integrate climate change risks into supervisory practices. The IAIS now recommends scenario analysis and stress testing, with a focus on long-term protection gaps and transition plans.
Zurich emphasises that clean, reliable and affordable energy is essential for mitigating climate risks and supporting economic success.
The insurer’s findings indicate that physical climate risks already present a threat to energy assets across Europe. Zurich’s data shows that by 2030, 46% of total renewable generation capacity will fall into a critical-risk category, with solar assets making up 58% of that group.
For storage, 82% of total capacity – pumped hydro and battery – will also face critical risk. Zurich warns that without action, both physical and financial risks to energy infrastructure will increase.
Businesses are responding to severe weather by adopting new risk management procedures, but many remain focused on short-term challenges rather than long-term resilience. According to a 2025 Beazley report, only 20% of executives rank climate-related catastrophic risk as a top concern, despite the surge in extreme weather events.
Regulatory uncertainty and non-compliance with environmental, social, and governance (ESG) regulations also remain significant risks for businesses. In 2025, 19% of executives cited ESG non-compliance as a concern, reflecting the ongoing challenges companies face in aligning with evolving climate and sustainability standards.
Zurich states that resilience adaptation measures can mitigate potential risks, support further investment and strengthen the energy grid. The rollout of new infrastructure presents an opportunity to integrate resilience from the outset. With renewable generation capacity projected to increase by 62% by 2030, Zurich suggests that the transition can be made resilient by design.
Insurers, according to Zurich, have the tools to model climate risks and identify where resilience interventions are most effective. Collaboration between companies, the public sector and insurers can help quantify the value of resilience investments and avoid substantial costs.
Zurich also notes that successful delivery of enhanced energy infrastructure resilience will require national planning, localised assessments and close cooperation between public and private sectors.
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