Supply Another Day
Supply Another Day: Even world-famous super spy James Bond isn’t immune to the effects of a global pandemic. His latest film ‘No Time to Die’ was released almost 18 months later than its original date of April 2020; Aston Martin delivered only 10 of its $2.4 million Valkyrie hypercars in 2021; and the soaring price of steel, plus maxed out capacity at shipyards, means the modern-day villainess must pay twice as much and wait twice as long for her brand-new superyacht.
And if 007 can’t escape the supply chain squeeze, spare a thought for your humble renewable energy project owner – and their insurer – grappling with a growing influx of Business Interruption (BI) and Delay in Start-Up (DSU) claims. Delays and other impacts resulting from the last two years of COVID-19 measures and geopolitical turmoil are a clear antagonist to the renewable energy industry and its ambitions to support climate resilience, economic recovery, and energy independence.
The demand for renewable energy projects and the technology, equipment and skilled labour required to deliver them is unprecedented, but the roadblocks created by the pandemic on the world’s path towards a cleaner energy future have exposed weaknesses in the global supply chain, and subsequent risks to insurers, which are critical to address.
Extended lockdowns in key manufacturing hubs like China have demonstrated the clear disadvantages of isolated supply routes, and over-reliance on singular sources to support entire industries, such as solar. Diversification is sorely needed to give developers more options to source replacements within their downtime policies, lest they find their lost revenues uninsured.
Meanwhile, although government interest in supporting renewables development has grown over the last decade, long-term, public-sector stimulus is stalling at the development stage and not penetrating backwards into the supply chain, leaving suppliers and contractors woefully under-supported to service demand. Key to this capacity challenge is the lack of recruitment and skills development in the workforce, which emerges as the most impactful shortage for the entire sector, and a key driver of rising contractor quality claims.
In Supply Another Day, we draw on the perspectives of GCube’s global underwriting and Claims teams to assess the impacts of these supply chain challenges on the insurability of renewable energy, the soaring quantum of BI claims, unpredictability of downtime periods, and discuss where insurance can and cannot foot the bill for mounting losses.