Meeting Renewable Energy Challenges with Descartes’ Parametric Renewable Energy Insurance Solutions
The renewable energy industry faces growing challenges due to climate change, leading to increased demand for innovative insurance solutions. As the demand for alternative energy sources surges, the need for reliable risk management becomes paramount, especially in the face of potential business interruption due to natural catastrophic events and climate change. In this dynamic environment, Descartes offers tailored parametric insurance for renewable energy companies recognizing the unique risks posed by climate change.
Increased demand for renewable energy insurance in the face of climate change
The demand for renewable energy insurance has risen as the industry expands in the wake of climate change. According to the IEA, the share of renewables in global electricity generation increased to over 50% in 2023, compared to 2022. Although coal and gas still account for about 60% of worldwide electricity generation, a significant growth in renewables has occurred in recent years. Preliminary estimates from EEA show that the EU’s renewable energy consumption accounts for 22.5% of total energy consumption in 2022. The increased use of renewables for energy, heating, and cooling is largely responsible for the overall positive trend. Despite this positive trend, the industry remains vulnerable to climate risks.
Climate Change and Risks
As climate change accelerates, climate-related disasters are becoming more frequent and intense. 240 climate-related disasters were registered in 2023 alone, especially with a major rise in floods and storms, resulting in economic losses of at least $171.3 billion.
For renewable energy producers, climate change significantly threatens production and the industry at large.Unlike other industries, the renewable energy sector is particularly vulnerable to climate risks and is therefore complicated to cover by traditional insurers. A lack of historical claims data makes it specifically hard to insure and protect.
Descartes’ Parametric Solution
Descartes’ parametric insurance helps the renewables sector build resilience against climate risks. Ourparametric renewable energy insurance offers completely bespoke and transparent cover for each client. Built on objective data and real-time monitoring via IoT, radar, and satellite imagery, it provides a way to assure liquidity following a qualifying weather event through a quick, direct payout. With more affordable premium rates than traditional insurance, Descartes constructs a policy within clients’ budgets.
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