As renewable energy deployment accelerates globally, insurers have become more willing to underwrite these projects… but only when developers can clearly demonstrate resilience.
According to Michael Perron, renewable energy market lead at FM. the market is no longer pricing renewables as a homogeneous asset class. Instead, insurers are differentiating sharply between projects that can prove resilience and those that cannot.
Perron said just a few years ago, insurers were still getting to grips with renewable risks. Today, overall comfort has improved but so has scrutiny.
Early solar development in relatively mild climates such as California and New Jersey had created a false sense of security. As these projects expanded into higher-risk regions, such as tornado-prone parts of the Midwest, loss experience exposed gaps in design assumptions.
That pattern is now repeating globally. Perron cited recent unexpected losses tied to sandstorms in the Middle East, record flooding in Bahrain and destructive hail events in Australia. Insurers are therefore demanding stronger engineering standards and better operational controls before offering favorable coverage terms.
“There is still strong appetite for renewable energy, but there needs to be more emphasis on building assets that can last their full useful life,” said Perron. “Some projects will be hit by hail five or ten times over their lifetime. If they’re not built for that, they’ll be rebuilt repeatedly instead of producing energy.”
Beyond weather risks, supply chains and aging grid infrastructure are emerging as major obstacles for renewable projects.
Transformer shortages are one example of this, said Perron: once a relatively routine replacement, large transformers can now take 12 to 48 months to procure due to global manufacturing bottlenecks. Delays significantly affect how insurers structure policies and limits, he said.
At the same time, power grids are struggling to keep up with the influx of renewable projects seeking connection. In the United States alone, more than 2,600 gigawatts of generation projects were waiting in interconnection queues as of 2025, according to the Lawrence Berkeley National Laboratory. Similar backlogs are emerging in Europe and other regions.
“These delays are not insurable,” Perron noted. “They become financial risks that developers have to plan for.”
Renewable infrastructure also faces growing cyber-security concerns.
Unlike conventional power plants that concentrate generation in a single facility, renewable systems often rely on thousands of interconnected devices, which includes inverters and control software, spread across multiple sites. The decentralized nature of some of these structures could make renewable networks vulnerable to coordinated cyberattacks.
“You might assume attackers would target large, centralized assets like nuclear or combined-cycle plants. But it’s possible to target many solar or wind assets simultaneously through control systems,” Perron pointed out. “That worries me and others in the field.
“While property insurance doesn’t cover cyber risk, it’s still a major concern because of the potential impact. A fire in an inverter is disruptive but relatively quick to fix. A cyber incident could require a lengthy investigation and extended shutdown.”
Ultimately, resilience is becoming a critical factor not only for insurance but also for financing renewable energy projects.
According to Perron, building stronger infrastructure, from thicker solar glass to better monitoring systems and traceable supply chains, typically adds 2% to 5% to project capital costs but can reduce lifetime risk costs by 10% to 20%.
“It starts with traceability. Developers need detailed supply chain documentation and contractual flexibility in case suppliers become restricted,” Perron said.
“Next is diversification: multiple OEMs, appropriate technology choices for specific risks, and standardized equipment to enable shared spares. Third is monitoring and cyber-physical hygiene: transformer monitoring, network separation, signed firmware, and incident response drills. Fourth, developers must plan for uninsured delays. Insurance won’t cover customs holds or interconnection delays, so financial buffers are essential.
“Finally, resilience must be embedded in operations: regular stow testing, documentation, and backup power to ensure systems function during outages. The bottom line is that a small upfront investment pays off, often before anything goes wrong, through better insurance terms and financing.”
