Capacity has improved in the renewables market but insurers are selective on coverage and natural catastrophe exposures remain a key issue, a report from Willis says.

Pacific renewable energy leader John Rae says Australia “continues to be top of the leaderboard” for renewable energy investment, and global property insurance availability and affordability hinges on project-level risk quality.

Willis – a WTW business – says the Australian renewable energy sector continues to grow rapidly, with 7.5 gigawatts of capacity added, including 4.3 gigawatts from large power stations and 3.2 gigawatts from small-scale rooftop solar installations.

“Despite hardening of the renewable insurance market in prior years, capacity has improved due to increased coverage appetite from global markets,” Mr Rae says.

But insurers are cautious about mounting claims, extreme weather events and evolving technology risks, with capacity directed to well-managed, technically sound assets.

“Insurers are increasingly becoming selective on their coverage, particularly for older solar farms, wind assets in bushfire- or cyclone-prone areas and battery energy storage systems ... with limited thermal controls or inadequate spacing,” Mr Rae said.

Willis says appetite remains flat or declining where natural catastrophe exposures are an issue.

Risk modelling – particularly around flood, hail and bushfire – and mitigation strategies are required, and there will be more scrutiny of site selection, along with civil works for flood resilience. 

Insurers are also focusing on project accumulation in any one area. 

“Stakeholders in the industry should engage their insurance brokers and risk advisers early, invest in risk mitigation and embrace data-driven risk transparency to navigate a more technical and disciplined insurance landscape,” Mr Rae said.  

Premiums are likely to remain risk-based rather than experiencing uniform market price trends, WTW says.

The full report is available here.