Published on 05 August 2025

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Renewable Energy Market Update H2 2025

Published on 05 August 2025

Forecasts for the second half of 2025 suggest a competitive market, driven by the expanding capacity of lead and follow insurers. Loss free accounts are expected to experience premium rate reductions ranging from 10% to 20%, an increase from the 5% to 15% reductions noted in the H1 update.

The next significant influence for onshore wind will likely be the deployment of 7MW-8MW turbines, which are currently being installed. Historically, new wind technology tends to face initial challenges as performance and operations begin which could impact claims ratios.

Consequently, these larger wind turbine generators (WTGs) and their components are being underwritten with increased deductibles and site-specific premium rates to reflect normal loss expectancies and revenue loss from associated lead times.

However, any claims related to the new larger WTGs should be sustainable. The market has stabilised in recent years, thanks to a larger premium pool generated from existing global wind capacities, providing a buffer against potential loss spikes.

Regarding solar energy, technology continues to improve, especially in relation to hail and wind mitigation measures. While weather event forecasting has improved and allows for mitigating action, the implementation process for new projects is lengthy, and retrofitting existing projects remains limited.

Battery Energy Storage Systems (BESS) are experiencing a decrease in premium rates due to an improving claims ratio and advancements in technology performance. Despite headline-grabbing incidents, such as the significant fire at the Moss Landing project in California in early 2025, which resulted in an estimated USD400 million insurance claim, the overall risk profile of the BESS sector is improving.

Looking forward, the BESS industry is likely to continue reducing its fire risk exposure with improved battery technology and careful siting and layout of facilities. Enhanced monitoring and control of battery performance and safety, aided by AI and IoT sensors, will play an essential role in making BESS more attractive to investors and insurers.

In the context of offshore wind, the demand for net-zero emissions by individual countries remains robust, which has positively impacted recent announcements for continued growth in regions such as the Celtic Sea, the Baltics, and the Philippines. However, this optimism must be balanced with the reality of rising costs, supply chain challenges, and execution risks. Several offshore wind projects have recently been cancelled or postponed, including Ørsted's Hornsea 4 project in the UK and Taiwan's cancellation of development rights for two offshore wind projects. Conversely, Equinor has seen progress in the US, with the construction on the Empire Wind 1 project resuming.

In an effort to address supply chain constraints, particularly for turbines, Chinese original equipment manufacturers (OEMs) like Mingyang are expanding their operations beyond China, with plans to invest in and build a wind turbine factory in Scotland. However, these plans have faced intense scrutiny due to security concerns about critical national infrastructure, as voiced by Wind Europe and the governments of the UK and Norway, influenced by the US.

Insurers remain cautious about the insurability of floating projects. However, leading carriers such as NIORD and Gard in Norway, Scor in Paris and London, and Lloyd’s and London companies, along with their Loan Market Association (LMA) body, are actively engaging in discussions to find viable solutions for their existing and prospective clients.