Green Tech Solutions offer great opportunities to companies
A specialised unit at Munich Re offers valuable support to the green tech sector, allowing companies in the field of renewable energies and energy efficiency to outsource risks, investors to benefit from greater planning certainty, and start-ups to bring their revolutionary technologies onto the market.
The agenda for the 23rd World Climate Conference in November 2017 included activities to limit the consequences of climate change. Diplomats, politicians and representatives of civil society from all over the world discussed common goals to promote climate protection.
In the run-up to the Climate Conference in Bonn, Erik Solheim, Executive Director of the United Nations Environment Programme (UNEP), commented that we already have all the technology we need to effectively cut greenhouse gas emissions: renewable energy, energy-saving buildings, reforestation concepts, alternative transport systems and ecologically sound agriculture.
Promising and highly dynamic sector
Many countries are passing laws aimed at implementing the results of the Paris Climate Agreement. Although developments in the USA are certainly muted following that country’s announced withdrawal from the agreement, the USA continues to be attractive as an investment market – it is the second biggest market for solar power after China and, according to analyses, is likely to remain so in the foreseeable future. Large technology companies like Google, Amazon and Apple would like to gain a foothold in the renewable energy sector, not only because it fits in with their corporate social responsibility strategy, but also because there are now attractive financial models that allow profitable investments in the long term, in some cases even without government support. Asia is showing the greatest dynamism: China is making the world’s biggest investments in clean energy, while renewable energy capacity in India is set to grow to 175 gigawatts by 2022.
New technologies – new risks
As the spread of green technologies increases, so do competition and cost pressure – and thus also levels of uncertainty. This in turn creates a greater need for adequate insurance coverage to stabilise the business trend in a sustainable way or to implement long-term plans. New technologies and falling government subsidies are resulting in rising individual risks. Among photovoltaic module manufacturers, for example, there have been many insolvencies, causing performance guarantees to lose value and affect project financing. Risk transfer for green tech companies, for example to safeguard product warranties, ensures security for investors and customers.
This is something that Green Tech Solutions (GTS) – part of Munich Re’s Corporate Insurance Partner unit Special Enterprise Risks – specialises in. Its product range addresses established technologies like photovoltaics and wind power on the one hand, and emerging fields like biomass and battery storage systems on the other. Demand for the latter is expected to grow over the next few years due to the increasing spread of e-mobility and the storage of renewable energies.
Numerous start-ups have been working closely with GTS since 2011, for example in the field of soil and environmental remediation as well as decontamination. In order to be able to offer them even better support, this year Munich Re has expanded its international presence and – in addition to Hong Kong and Tokyo – is now represented with an office in San Francisco.
First point of contact for new technologies and risks
GTS works closely with market players and is constantly developing new products. This year it brought the Sales and Buyer Cover onto the photovoltaic market, thus meeting the sector’s growing demand for flexible protection for module manufacturers while at the same time providing greater security for project investors. For the first clients, this cover is already of crucial importance during the tendering procedure and has enabled significant growth since its introduction.
To date, GTS has enabled investment in over ten gigawatts and €16 billion worldwide. The unit is constantly developing its product range in order to better cover manufacturers’ needs to protect their balance sheets and investors’ needs to increase their financial security.
Financial added value with insurance
Munich Re has technical expertise and many years’ experience in the area of renewable energies and energy efficiency. As business enablers, the Green Tech Solutions team gives investors, project developers, photovoltaic and wind power plant manufacturers and start-ups with disruptive business models a wide range of possibilities to be successful in the market. Thanks to our strong financial rating, for example, we enable clients who are still in the financing phase to obtain better loan terms. Our performance and warranty covers also allow flexible capital allocation, i.e. reserves that would normally have to be built up for warranty losses can be reduced. The freed-up equity capital can thus be used more flexibly, e.g. for research and development, or to improve cash flow models. Furthermore, our partnerships promote comprehensive risk management of our clients, which is essential to make them attractive to buyers or investors. With our own branches in the Asia-Pacific and North America regions, we can design tailor-made covers worldwide which take full account of local rules and sector specifics.
Are you interested in our solutions in the area of renewable energies and energy efficiency or would you like detailed advice on this?