The rising share of renewables in the global power mix may spur insurable losses of as much as $41.7 billion a year by 2030, according to Swiss Re Ltd.
As new energy projects become bigger and more complex driven by demand from nations with climate goals, the risk of losses caused by disasters and adverse weather increases, according to a report by the world’s second biggest reinsurer.
The insurance industry is betting on gains from growth in renewables pursued by nations from China to Germany as they seek to limit emissions. Insurer Munich Re last month signed the first deal to insure offshore wind turbines at a German farm while Swiss Re, based in Zurich, covers risks including weather exposure and electricity price volatility at renewable plants.
Clean power and other emissions-cutting projects could push potential annual losses in the energy industry to $41.7 billion a year by 2030, the report found. That’s under the “greenest” of six scenarios it outlines for the future energy mix with the largest proportion of clean technologies spurred by the most policy support.
“Risks associated with new energy technologies are expected to drive future losses. But these risks are small relative to total investments,” Swiss Re said. Total investment in biofuels, wind and carbon capture and storage projects could reach as much as $3.1 trillion by 2030, according to Swiss Re.
“This makes a strong case for investments in renewable energy sources,” the reinsurer said.