Renewable energy risk management and the institutional investor: keys to a new energy future

Profiling the risks in wind and solar, a joint study by Swiss Re and Bloomberg New Energy Finance, analyzes the importance of risk management and the institutional investor in expanding the renewable energy sector.

We now realize that we must pave the energy path for future generations with much less reliance on fossil fuels. Getting the energy mix right depends on creating a sound renewable energy infrastructure. And creating a sound renewable energy infrastructure requires money. This is where risk management comes in.

In Profiling the risks in wind and solar (PDF, 974 KB), a Swiss Re-sponsored study by Bloomberg New Energy Finance, we dig deeper into the relationship between renewable sector risk management and an important investor for the industry - the institutional investor. The study also examines six leading markets for renewable energy investment and projects in solar and wind: Australia, China, France, Germany, the UK and the US.

The insurance industry: a reliable partner

The renewable energy sector uses relatively new technologies, which could be viewed as too risky by institutional investors such as pension funds. This is particularly the case for offshore wind farms, where weather conditions can vary significantly year after year. In Profiling the risks in wind and solar, we look at sound risk management and risk transfer solutions that can help make the renewable energy sector attractive to prospective investors.

The report explains the role of insurance as a mitigator of some of the risks, highlighting the industry's ability to reduce risk exposure for developers, owners and investors. For example, risk transfer products can reduce the risks associated with the construction of wind turbines or photovoltaic arrays. Another example: solutions can be designed to compensate for when the sun doesn't shine or the wind doesn't blow.

Facilitating growth and innovation

As a risk solution provider, Swiss Re Corporate Solutions can design a risk management framework for renewable energy projects that allows investors to become comfortable with investing in such projects.

"Fostering risk management expertise and making new, cost-effective insurance products available will facilitate the investment decisions essential to growth and innovation in the renewable sector," the report says.

Find out more

- Download Profiling the risks in wind and solar (PDF, 974 KB)

- Read the press release

Published 25 July 2013

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