Geopolitical tensions are driving momentum for renewable energy technologies

As underwriters of energy risks and investors in green renewable energy technologies, the global insurance industry is a key participant in the changing energy environment. In view of recent events, change is rapidly accelerating as geopolitical and economic instabilities drive concerns about the ongoing availability of traditional energy resources at feasible cost levels.

“While energy technologies like solar and wind have seen steady growth over the years, the conflict in Eastern Europe has driven increased urgency in the development of renewables,” said Jeanne Jankowski, Head of Energy Casualty for Zurich North America. “Many projects are now being fast-tracked to get them online sooner and at greater scale. We are also seeing growing interest in more emerging technologies, such as biofuels, carbon capture and storage, and hydrogen-based energy resources.”

While the global energy horizon was already changing before the conflict in Ukraine erupted in February 2022, in the months since, growing geopolitical tensions have given new impetus for the deployment of renewable energy technologies to help mitigate supply chain risks associated with reliance on fossil fuels from politically volatile regions of the world.

“Renewable energy technologies are growing rapidly but they are still relatively new in the evolution of the energy industry,” she said. “As we gain more data about the exposures and impacts of these new, green technologies, the global insurance industry will be able to more precisely price and structure customized programs; playing an even greater role in driving their adoption.”

Insurance providers are focusing on this for additional reasons, not simply to leverage business opportunities through expanding the range of services delivered to customers.

“Providing insurance and risk management solutions for renewable energy technology is in synch with Zurich’s own commitment to climate and accompanying ambitious sustainability goals,” Dorsett said. “We are dedicated to reducing our own carbon footprint as well as helping customers and the communities we serve contribute to a more sustainable world.”

Offshore energy footprints are expanding

Jankowski notes that offshore solar and wind are two renewable energy technologies that present huge growth potential. Both technologies are already increasing their contributions to the global energy mix.
“As these technologies expand, we are seeing more interest in positioning wind and solar installations in offshore locations,” she said. “The potential for offshore locations is exciting, and we are already in discussions with some customers about these possibilities. This is an opportunity for Zurich to serve both U.S. and foreign companies thanks to our far-reaching global energy footprint.

“To deploy renewable technologies at scales needed to make significant progress toward green, carbon-reduction goals, we need big, new spaces where large installations can be positioned,” Jankowski added. “Given that need, offshore locations offer great opportunities for growth.”

Geopolitical flashpoints are driving innovation 

For many leaders considering renewable energy technology, the proverbial elephant in the room is a growing concern about stability of some of the world’s major energy-producing regions. Clearly, the conflict in Ukraine has acted as a catalyst for the energy industry and consuming countries to explore ways to reduce dependence on oil and gas imports from Russia.
In the short term, this dynamic has meant that some nations will temporarily turn to more carbon-intensive energy sources to provide capacity until new, renewable sources come online at the necessary scale. Progress toward the development and adoption of more sustainable, renewable energy technologies has nowhere to go but forward, but the needs of the moment must be acknowledged.

“The transition requires new energy infrastructure to be built out over time, and the effort will critically rely on the intentional investment and expertise of all stakeholders,” Dorsett said. “The mission of our industry will be to continue to support the needs of our customers, while we  unite with them to accelerate progress toward the greener, renewable energy technologies of the future.”