The renewable energy market in Asia has a positive outlook with significant capital injection expected into the sector, according to a report from Willis Towers Watson (WTW).
Floating solar has gained traction in particular, WTW’s Renewable Energy Market Review 2023 found, and will play an important role in the energy transition of countries such as China, India and South Korea.
This also coincides with India’s shift towards alternative renewable sources and technologies such as round the clock (RTC), battery energy storage systems and wind solar hybrid projects, to meet its clean energy transition goals.
Sam Liu, director for renewable energy, corporate risk and broking in Asia at WTW, said renewable energy companies globally are facing increasing risks due to climate change.
He added: “Parametric solutions can play an increasing role in complementing the traditional insurance solution as we are expecting a nat cat [natural catastrophes] capacity crunch in the Asia offshore wind insurance market in the new future.
“We foresee this will be exacerbated when each country accelerates its offshore wind development plan.”
Asia renewable opportunities
Renewables will remain “the darling” of the global energy transition, according to the report, yet risk managers will face multiple challenges arising from a “new trilemma”.
This comprises the convergence of the need for net-zero energy security, unsettled global macroeconomics, and rising demand for renewable energy in an era of squeezed supply of inputs.
This trilemma will escalate risk management and ESG as key issues for the renewables industry in the year ahead, WTW predicted.
Renewable energy is a key growth area for insurers and renewal rates are expected to continue to increase.
However, newer technologies could be met with reluctance and low-risk appetite from insurers due to their limited technical understanding and lack of historical loss data, WTW forecast.
Liu said: “As the renewable energy industry in Asia continues to expand, insurers could struggle to keep pace with newer technologies like floating solar and the information needed to evaluate the insurability of newer sectors such as Green Hydrogen.”
Good quality information will need to be “provided early and holistically”, he added, in order to alleviate any risk uncertainties and minimise coverage restrictions.