Hidden risks threaten to derail renewables shift

This uncertainty leads to higher costs for companies.

Renewable energy companies continue to face blind spots that lead to increasing costs and limited insurance coverage.

According to a recent survey by commercial property insurer FM, 59% of renewable energy providers said they are confident in their project’s resilience. However, they lack insight into technology and environmental factors. 

The lack of transparency from equipment manufacturers (57%) was the greatest source of uncertainty. It was followed by the lack of understanding of environmental factors (53%) and the pace of technology change (47%).

“Providers are doing the best they can with the information they have, but they need more insight into the technology they are buying and the environmental factors that threaten it,” said Doug Patterson, senior vice president, Forest Products and FM Renewable Energy at FM. 

Uncertainty over resilience in the face of risks leads to increased construction costs (52%), increased insurance costs (47%), and inability to fully insure projects (44%), it added.

FM found that 53% of financiers expect projects to employ third-party risk assessment during construction, and 48% expect them to consult with external engineers during operation.

The online survey conducted in August and September 2024 on behalf of FM covered  650 energy providers and financiers from North America, UK/Europe, Asia and South America.