Oil and gas exploitation has a long history. However, carbon’s future role as an energy source and geopolitical factor has become the subject of controversial debate. It is clear that wind, solar and geothermal energy are in unlimited supply worldwide. Energy from sources such as these saves resources, reduces the impact on the environment, and actively contributes to sustainable management and climate protection.
Growth potential for insurers
New coverage concepts can take a good deal of the burden off the energy industry’s balance sheets. The manufacture and construction of wind power plants is a lucrative business – as long as the turbines generate electricity. Whenever there is an outage or disruption, however, the costs for the manufacturers can be substantial. With special risk-transfer solutions for project- or performance-related risks and natural catastrophe covers, insurers can play a key role as enablers and improve credit risk management. In addition, the engineering and natural catastrophe knowledge and experience gathered in decades of risk assessment for the energy industry make insurers suitable advisors and consultants for innovative energy projects.
Solar and wind parks, biogas and geothermics are still in the early stages as renewable sources of energy. Accordingly, it is still impossible to predict with any degree of certainty how reliable facilities are, how great the failure risk, or how constant energy production will be. As well as opportunities, the technologies required in these fields also harbour entrepreneurial and new kinds of risks, such as fluctuations in wind resource or solar irradiation, or the inadequate productivity of hot water in the case of geothermal drilling. These risks have a direct influence on investment returns. The transfer of these risks to the insurance market improves the planability of cash flows, thereby supporting business models and investment in technologies for a low-carbon future.
On the road towards this target, Munich Re is actively promoting renewable energy and providing innovative insurance solutions that are tailored to the potential offered by these new technologies and their operators. We are thus supporting the propagation of renewable energy sources.