The threat of extreme weather on renewable-energy projects

We’ve all seen and experienced the results of climate change in recent years. Wildfires, floods, heatwaves and more, are all occurrences that were once rare but are now happening more frequently.

Renewable energy offers humanity a way to reduce and reverse changes to the planet’s climate by reducing the use of fossil fuels. However, investing in renewable energy projects is fraught with risks that are increasing as the planet heats, and the weather becomes less predictable.

It doesn’t matter where the projects are located or what the green technologies are, the challenges presented by climate change are threatening renewables projects the world over.

The most disruptive conditions are hailstorms, windstorms, hurricanes, typhoons, cyclones, floods, storm surges, wildfires, smoke, ice, snow load, freezing rain and heatwaves, and low .

They threaten every kind of technology associated with renewable energy: solar, battery-energy storage, offshore/onshore wind, hydropower, and substations.

 

What has extreme weather done to the Renewable Energy industry?

 

These incidents have caused a spike in the frequency and severity of claims over the past few years. This is driven by weather events in more exposed geographies and also in places that have not experienced them before. Other reasons for a rise in claims include rapid portfolio growth, inflation in repair costs, and serial/aggregate losses from convective storms and hail.

With claims rising, insurers are rethinking their exposure and tightening what they offer. We are seeing higher premiums, restricted capacity in catastrophe-prone regions, stricter deductibles and sub-limits for perils like hail, flood, and windstorm.

Insurers are requiring tougher design, construction, and operational standards. The market is moving toward more structured placements such as:

• coinsurance
• parametric covers (insurance that covers the likelihood of a loss-causing event happening)
• captives (where insured parties establish a licensed insurance company for their own use and benefit) to manage volatility.

For those in the renewable energy sector looking for cover, it’s important to have risk management plans in place, and data to demonstrate past experience in the locations they are operating in.

 

Does this scupper renewables in the long term?

 

There are actions that the renewables industry is taking. Businesses involved are changing where turbines, for instance, are located to avoid floods, and how they’re designed, using more resilient technology to better withstand hail or typhoons.

Operators are also strengthening operational controls through forecasting, automated stow (i.e., a safer, flatter position for turbines or solar panels), and robust maintenance regimes. Meanwhile, investors are pushing for improved construction quality, stronger warranties, and sharing of risks.

At a portfolio level, diversification, data-driven monitoring, AI modelling and the use of parametric tools are helping projects stay financially and physically resilient in the face of more volatile weather. How are risk and insurance solutions evolving to help better manage volatility and uncertainty?

This is happening rapidly, with insurers and investors leaning on more innovative tools to manage volatility. Parametric covers for hail, wind, flood, and lightning are increasingly layered alongside traditional indemnity programmes, while structured risk transfer, captives, and catastrophe bonds help smooth out annual losses.

The industry is also seeing tailored wordings for technologies like solar trackers and offshore cables, expanded delay in start-up and supply-chain covers, and even cyber protections for operational tech.

All of these are supported by insurer-led risk engineering and performance solutions that better align financing, operations, and resilience.