2022 has been a year of unprecedented challenges to the renewable energy industry. Amid ongoing pressure to bring new technologies to market, the year has been plagued by a severely stretched supply chain globally and by extreme weather conditions, the likes of which have outweighed anything we have seen for some time – most notably in the US. GCube has engaged with these talking points throughout the year to highlight risks and opportunities in the market.
Talking Point One: Technological Development
As the demand for renewable energy has increased, so too has the innovation that’s occurred across the industry – the sector is now accustomed to the emergence of new technologies. However, the speed at which new models are being pushed through has given cause for concern.
At the start of the year GCube assisted in Power Magazine’s analysis of the risks looming over the power sector. Speaking about the need for a more unified approach to writing insurance in the renewable energy market, GCube noted that the race to roll out the newest technology has sometimes come at the expense of quality control. The offshore wind market stood out as an example of this.
The spectacular turbine blade failure at the Anholt wind farm (on Denmark’s east coast) underlined the risk surrounding ageing offshore wind turbines. GCube advised Recharge that the incident exposed the insurance market’s inadequate pricing of catastrophic offshore wind events. We expressed the need for a meeting of minds to agree upon comparable prices for the risks attached to the wind sector.
Responding to the increasing awareness of the cybersecurity risk in the global energy sector, GCube spoke to Windpower Monthly to assess what kind of cyber attacks are taking place, and what the sector is doing to combat them. We outlined how, though currently a low-incidence risk, the losses incurred by even a single cyber attack have the potential to be substantial, both in terms of project ‘downtime’ and reputation.
In April, GCube was delighted to announce its presence in both Australia and Spain by opening new offices in these regions. Australia’s unique environment and climate distinguishes it as a market that poses distinct risks to developers and investors. The new base in Sydney enables GCube to increase the local support it offers, while expanding its network. Meanwhile, the new Madrid office better places GCube to operate in Spanish and Latin American markets.
Talking Point Two: Supply Chain
The start of Russia’s war in Ukraine exacerbated two trends in the renewable energy sector. Firstly, it accelerated the demand for renewable energy as countries looked to address their reliance on Russian gas; secondly, it put further strain on an already faltering supply chain.
GCube responded to this at its Renewable Energy Risk Seminar in Amsterdam, which gathered together guest speakers with expertise in offshore wind, onshore wind, solar development, and operations and risk management, and focused on the difficulties posed by the supply chain. In tandem with this event, GCube published its ‘Supply Another Day’ market insights report – a detailed analysis of the supply chain issues threatening to bring the renewables market to a standstill.
After releasing ‘Supply Another Day’, GCube was interviewed by The Guardian to detail the ‘perfect storm’ of challenges disrupting the growth of renewable power. In this exclusive coverage of the report, we drew on key findings to paint a picture of the supply challenges inhibiting the renewable energy transition globally, as well as the particular impact on the Australian market that is bearing the brunt of the acute supply chain and inflation crisis.
Calling on the insight from ‘Supply Another Day’, Reinsurance News reported on the impact that the stretched supply chain is having on developers, insurers and manufacturers at a time when the demand for renewable energy is higher than ever. GCube explained the report’s findings and the hope that it would serve the industry as a whole, focusing on how the depth of preparation of new plans will make or break the market.
On the two-year anniversary of Tokio Marine HCC’s acquisition of the company in June, GCube confirmed that its London presence would move to the 6th floor of the iconic Walkie Talkie building on Fenchurch Street. The move gives GCube’s people access to world-class facilities to receive brokers and clients and an enhanced work environment.
In July, GCube was pleased to announce two senior appointments: Olly Litterick’s arrival as the Head of London Underwriting; and the promotion of long-serving Josh Shimali to the Head of Onshore Underwriting role. As GCube expands across the world, the company continues to invest heavily in its personnel to maintain its position as a leading renewable energy underwriter.
Talking Point Three: Nat Cat
A year of extreme weather events proved to be a destructive examination of the resilience of renewable energy projects. Hurricane Ian alone is thought to have inflicted insurers with losses of up to 70bn USD.
In response to this, GCube’s exclusive Advisory Council Meeting pooled together risk management and renewable energy insurance specialists to share their knowledge of the effects of Extreme Weather events on the market. At the event, GCube issued an update on North American Nat Cat claims, which delved into how renewables could better mitigate the devastating consequences of the very thing they are trying to tackle: climate change.
Off the back of GCube’s Nat Cat Update report, PV Tech interviewed the company to get extra detail on what the extreme weather has taught us about the resilience of solar modules. We explained how the current weather-testing that these modules are put through is inadequate and fails to simulate the devastation of real weather events brought about by climate change. We also showed how this is indicative of a wider problem in the industry, where efforts to combat weather risks have been slow.
In the wake of GCube’s report, we worked with Risk&Insurance to summarise the impact the unprecedented weather of 2022 has had on the renewable energy market, and to outline the necessary industry response. Amongst other lessons to learn, a key point was the utilisation of data to improve sector-wide understanding of unmodelled events.
In a year where solar power provided a crucial outlet for the strained electricity grid in Texas, while the state experienced record temperatures, GCube had two significant announcements to make. In August, GCube opened a new office in Houston and made the senior appointment of Sarah Bratton to head up this office. A local presence in this important location for renewable energy allowed GCube to hone its services for customers, and further invest in the development of its people.
In December GCube announced Zoe Massie would head up its London Market Offshore Wind Team. Adding to five other dedicated underwriters in three continents focusing on offshore wind and a dedicated claims team, the appointment cements GCube’s position as one of most well-resourced offshore wind underwriters in the market. With claims rapidly developing in this sector and 2023 developing into a big year for new projects, it will be interesting to see who can weather the storm in this difficult market. Our prediction – not many!