As renewable power accelerates across the world, insurers are reshaping how they assess, price and mitigate risk for a new generation of energy assets.
The International Energy Agency (IEA) forecasts that global renewable capacity will double between 2025 and 2030. South Africa has ambitious targets in this regard, aiming to increase the share of renewables in its power mix from 11% to 41% by 2030. Yet this rapid transition brings new exposures that challenge traditional insurance models.
According to Mershalene Maharaj, underwriting governance specialist at Santam Specialist Solutions, the convergence of Insurtech and green energy is key to managing these risks.
“Both sectors are driven by data-led innovation,” she explains. “Green energy introduces new risk categories like solar, wind, and battery storage, while Insurtech provides digital tools using AI, IoT and blockchain to model, monitor, and mitigate those risks.
“Together, they enable sustainable growth with smarter insurance solutions, making renewable projects more bankable and attractive to investors,” Maharaj adds.
Emerging markets stand to benefit significantly from this shift, as renewable developments in these regions often struggle to attract capital due to perceived risk and limited historical loss data. Maharaj believes technology can bridge this gap.
“Insurtech can reduce uncertainty through predictive analytics, enabling micro-insurance and parametric products for small-scale renewable projects, and supporting financial inclusion in ways that accelerate energy access,” she says.
However, the underlying risks remain complex. Solar plants face hail, storm damage and inverter failure; wind turbines face mechanical breakdown and lightning; and grid-scale batteries carry fire and explosion risks linked to thermal runaway.
“These exposures are difficult to insure because they are high-severity, low-frequency events. Components are also interdependent, meaning a single failure can cascade through an entire system,” says Maharaj.
African developers face several additional exposures compared to more developed markets. Infrastructure gaps increase vulnerability to theft and vandalism, while extreme weather variability affects solar, hydro and wind performance. Limited fire-fighting resources also complicate battery incidents, and political and regulatory uncertainty adds another layer of complexity.
To address these evolving risks, insurers are building new risk models tailored to renewable technologies. IoT-linked sensors supply ongoing operational data, while scenario modelling helps assess battery degradation and fire probabilities.
“AI-based maintenance can assist in identifying stress points early, reducing uncertainty before failures occur. This is a major step forward in improving insurability,” Maharaj says. “Continuous monitoring shifts insurance from being reactive to proactive. Instead of only settling losses, we can help prevent them. This reduces catastrophic losses and can contribute to improving project bankability and sustainability.”
For insurers, the opportunity is substantial. Currently, renewable-energy insurance remains under 30% of the size of the fossil fuel insurance market. The Swiss Re Institute estimates that if countries meet their renewable targets, global renewable energy premiums will exceed $237-billion by 2035, compared to $22-billion in premiums from oil, gas and coal insurance paid in 2022.
Maharaj concludes that the future of energy insurance will be defined by technology-enabled risk insights and closer stakeholder partnerships. “As renewable infrastructure becomes more complex and climate risks intensify, Insurtech gives us the tools to support resilience, protect capital and enable the energy transition in a sustainable way,” she says.