Global energy demand is currently outstripping supply, and renewable energy solutions have begun to offer a cost-effective path to meeting growing business and consumer needs.
Insurance partners with a global perspective are well positioned to support traditional power and energy companies moving away from legacy fossil fuel assets as well as developers installing wind, solar and battery technologies in underserved territories, says Tom Clifton, head of international power and renewables at The Hartford.
“The transition is seeing Decarbonization through electrification within the constraints posed by reliability, availability and affordability of cleaner forms of energy,” Clifton explains. “In the U.S. and Europe, the move to renewables is being driven by decarbonization. However, this is contributing to a strain on energy security that will introduce demand for storage and transmission infrastructure,” he explains. “In developing nations electrifying areas for the first time, utilities will need to focus on the reliability of their equipment and continuity and affordability of supply chains.”
Inflection Point: As Global Electricity Needs Climb, Clean Power Technology Is Finally Getting Cheaper
The International Energy Agency (IEA) expects global electricity consumption to rise at the fastest pace in years between 2025-27, with renewed demand from advanced economies but most of the additional demand coming from emerging economies.1 Meanwhile, a report by Bloomberg NEF indicates the cost of clean power technologies including wind, solar and battery are expected to fall between 2% and 11% in 2025, breaking a 2024 record.2
“Supply chains in Asia have strengthened to the point where we can produce renewable energy at the lowest cost we’ve ever done,” says the London-based Clifton. “Renewable power generation once required extensive subsidies because it was more expensive to produce a megawatt (MW) of renewable power than that of a gas power plant. But in the last few years that’s reversed itself. However additional factors such as battery storage must be considered in the overall cost to provide reliable power.”
Between 2025-27, the IEA reported that U.S. coal-fired electricity generation was on track to fall around 2% a year with gas-fired production down 1% annually. However, electricity generation from renewables was expected to grow 10% annually over the period. Meanwhile, in 2024, renewable electricity generation in the European Union grew by 8.4%, with its share of the total mix reaching almost 48%, and is set to surpass 50% in 2025.3
Increasing lead times to build out grid infrastructure and permit sites could be constraints to meeting these renewable energy targets.
Commercially, increases are coming from intelligence (AI)-related data center expansion and industrial reshoring. However, business and consumer demand in the developing world will be a major driver, this will be met by both traditional coal and gas power and renewables, Clifton notes.
Where Insurers Play a Strategic Role in the Clean Energy Transition
Renewable energy installations present their own challenges for customers both in maintaining and optimizing the performance of their assets over time as well as ensuring asset resiliency is at the heart of their operations, Clifton explains.
“Europe was one of the big markets to really start investing in renewables, but many companies there are still operating conventional fossil fuel facilities. It’s a similar picture in the United States, Clifton adds. “So, it’s helpful for their insurer to understand their legacy businesses and their emerging competitive landscape. The energy transition value chain spans different countries and a range of customers, suppliers and industry stakeholders. Insurers that have a global outlook are best positioned to partner with customers and evaluate their business risks.”
Insurers who understand the challenges associated with technology selection and long-term performance and supply chain resiliency “can help leaders anticipate risks and adjustments they’ll encounter over a renewable investment’s life cycle,” he notes. “But day-to-day operating issues can be the most important issues to consider. For example, we ask leaders if their long-term contracts and supply chain management system ensure access to replacement parts and repair expertise as such equipment may become scarce, including critical spares like power transformers.”
Additionally, Clifton says most headlines related to offshore wind installations in the USA have focused on geopolitical debate. However, this overlooks the real impact of policy uncertainty on supply chain investment and rising costs for manufacturers involved in delivering these the turbines and related services and equipment.
Then there’s the impact of climate events. “Natural catastrophe (NatCat) events will have different effects on wind or solar power facilities than thermal power plants,” Clifton explains. “So, energy insurers need to consider how various factors on the ground and in the water compounded by climate change may affect renewable infrastructure over time so business leaders can make those assets more resilient.” Insurers need to regularly review their risk models and be able to communicate changes in methodology and appetite with their brokers and customers, he adds.
Solar power has its own production and equipment challenges. “Obviously, the sun may not deliver the same amount of energy each day, so companies need reliable performance on the battery and (energy) storage side,” he says. “Insurers with an expert understanding of these operating conditions are essential to safeguarding renewable energy assets.”
Clean Energy Transition Topics to Explore with Experienced Insurers
Clifton emphasizes that trusted internal and external risk partners, including agents, brokers and carriers, can provide valuable insight for energy leaders, wherever they are in their clean energy transition.
Here are points business leaders may consider discussing with current or potential insurance partners:
- How will you help us manage the risks associated with existing assets transitioning to cleaner forms of energy? Insurers should be able to understand a customer’s long-term strategic plans, such as greenfield development of renewables and potential life extension plans for existing assets. This can also include plans for decarbonization of fossil fuel plants via carbon capture techniques or repowering sites with different technologies including battery storage.
- How will your risk engineering team and their technical partners support our legacy and renewable assets as we transition? Insurers with risk engineering teams focused on renewables and transition can advise clients on best practices in infrastructure life extension, potential site design for renewable energy applications (such as battery storage) and managing obsolescence.
- How do you approach natural catastrophe planning and which experts are behind the modeling systems you use? Renewable energy applications, wind (onshore/offshore) and solar PC (also knows as solar photovoltaic), are inherently less resilient to natural perils than traditional assets. Experienced insurers should be involved at the planning stage for new projects, highlight the use of NatCat tools, and identify risk management features such as weather alert systems and overall emergency response.
Finally, Clifton suggests that business leaders be prepared to ask insurers about their own best practices regarding client operating standards, asset resiliency and business continuity planning. “Insurers are happy to share best practices, and this insight typically comes from teams that include claims managers, underwriters and risk engineers all focused specifically on energy transition.”
1 “Electricity 2025,” International Energy Agency, Executive Summary, February 2025.
2 “Global Cost of Renewables to Continue Falling in 2025 as China Extends Manufacturing Lead,” Bloomberg NEF, February 6, 2025.
3 Electricity 2025,” International Energy Agency, February 2025, Page 55.
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