From Humble Beginnings: The Evolution of the Renewable Energy Insurance Market

The renewable energy share of global power generation is forecast to expand from 30% in 2023 to 46% by 2030. The booming wind and solar energy industries and the promise held in nascent technologies represent the future of global energy and underpin economies’ net zero targets. Given how far renewables have come it may be hard to believe that, just over a couple of decades ago, the technology was almost crushed in its infancy. I know because I was there and have had the privilege of being part of this journey from the very beginning.

The story of modern renewables begins in the 1980s, deep in the deserts of California; places like Cabazon, Mojave and the San Gorgonio Pass. While nothing much grows under the sweltering heat, the sweeping winds which carved out the region’s hills carry opportunity for an energy-hungry nation. These deserts were an ideal location for early wind power generation.

US federal and state tax incentives introduced in the aftermath of the oil crisis skyrocketed investment in wind energy projects. California, in particular, experienced a new gold rush. Investors flocked to the sector. Early wind turbines vaguely resembled the ones of today in that most had three blades, but beyond that, designs varied wildly. They were much smaller at the time and usually only a few hundred kilowatts as opposed to the multimegawatt machines of today. Some were designed to capture downwind (never a favourite of birds), others, like today’s machines, upwind. The tax credits created to help incentivize the industry, were poorly drafted — and provided tax relief to investors regardless of whether the turbines actually worked or not! This lack of operational standards led to a proliferation of poor designs, many of which generated no power, failed frequently, or simply did not work in the first place.

The insurance market, eager to support and capitalise on this emerging sector, offered broad coverage terms and pricing came down as more and more capacity came to the market, despite not fully understanding the technology or industry they were insuring. Inevitably, losses began to mount. By the early ‘90s, insurers had largely abandoned the renewable energy sector, labelling it unviable. Even Lloyd’s, the market of last resort for specialist risks, had lost its appetite.

I was a Lloyd’s broker at the time. Bringing wind power risks from California to London and walking into One Lime Street looking for coverage became an exercise in how to handle rejection. No one wanted to deal with renewable energy risks. Yet, despite the prevailing scepticism, I was convinced that the market had potential, and I was determined to prove it.

I partnered with a contact in Newport Beach California to help rebuild a credible renewable energy insurance market from the ground up. We started with nothing but a personal belief in the potential of renewables and a promise to myself to do things differently.

We were methodical. We analysed manufacturers, identified reliable technologies, and focused exclusively on insuring proven, high-quality projects. We were firm on the terms offered and the need for rate adequacy. We literally went from wind farm to wind farm, banging on doors in the desert heat, trying to sell insurance directly to the industry, focusing on building a portfolio of good developers with demonstrable potential. It was slow, painstaking, sweat-inducing work. Gradually, we began to build relationships with key manufacturers—businesses like SeaWest WindPower which would later become AES, and enXco, which grew into EDF Renewables. We targeted manufacturers with a proven track record, primarily from Denmark and Germany, and offered tailored insurance solutions.

But even then, despite all our efforts, obtaining insurance coverage was an uphill struggle. The market had been burned. Underwriters were just not interested. We barely managed to scrape together a few million in capacity from those brave enough to give it a second try and listen to the story.

Then one day, I received a phone call from Charles Franks. At the time he was the energy underwriter at Kiln, but he would eventually become CEO. Charles knew I had been trying to place wind insurance into Lloyd’s and was intrigued. He had read an article on the topic in the newspaper and, despite not being an energy risk in its truest form, he wanted to know more. I was in his office with my pitch and presentation before he could hang up the phone!

I talked him through the businesses, explaining the technology and why the prevailing wisdom in the insurance market about wind power projects was wrong. There wasn’t enough distinction between the manufacturers; between the turbines which had a proven track record and those which didn’t. Charles listened politely. He then explained that he was an offshore underwriter specialising in offshore oil and gas. He didn’t write onshore he was interested in the offshore wind turbines, a technology, at that time still many years from being viable.

I left crestfallen.

The next day, Charles called me again. He had discussed the concept with some of his onshore peers and they had reconsidered. He was tentatively onboard and we agreed that, essentially, we were talking about “energy” risks. We created a small underwriting facility for onshore wind, offering $30m in insurance capacity. Despite the modest scope, it was a massive step forward. The Californian wind power industry could now secure the insurance it needed. Better yet, we were the only insurer available. We were in a privileged position, and the business began to grow steadily.

Despite some early successes, we continued to face significant barriers. While cover was becoming available, renewable energy developers struggled with the fragmented nature of insurance offerings. We learned quicky that renewable energy developers did not care about how the insurance market operated in its siloed classes. They needed comprehensive coverage to develop and operate their projects, but available solutions often spanned multiple insurance lines, leaving gaps and creating frustration.

The lightbulb moment for me came in a meeting with a team of developers. I was dressed in a suit and tie. They were in shorts and t-shirts. I was talking about our insurance products, and how the market operated, while they were interested in how to make their projects a reality, bringing in parts from one country and securing investment from another. We were speaking completely different languages. They didn’t care about the intricate details of the insurance market. This realisation led us to introduce a cradle-to-grave policy, bundling marine, construction, operational, mechanical breakdown, liability and financial coverage such as delay in startup, into a single package.

The approach resonated with the renewable energy developers and operators. It did not with the insurance market itself. I was told, on numerous occasions, that the idea and concept were doomed to failure. “It’s not how the insurance market works son. Go and do something that will make us money like oil and gas. Stop being an idiot,” I recall my old boss firmly saying. However, I was determined. By eliminating coverage gaps and simplifying the insurance process, we could provide clients with the certainty they needed to secure financing. It was a game-changer that laid the foundation for the system we still have in place today.

At this point in my career, I was still a broker, but my interest in using my understanding of risk to develop a more comprehensive product drew me toward underwriting. I was coming up with rates and risk premiums, terms and conditions, and taking my ideas to Charles at Kiln. Once more, he proved to be the catalyst for change, this time in my career. He told me point blank, “You need to make a choice. Are you an underwriter or a broker? You can’t do both!”

I chose the former. With backing from Kiln, I created an underwriting MGA business eventually to be branded as GCube: G for green, and the six sides of a cube symbolizing the six types of green energy: wind, solar, biomass, wave, tidal, and hydroelectric. We launched with seven people between London and California, and what a journey it’s been.

Over the past few decades, the renewables insurance market has gone through cycles of overcapacity and under-pricing, driven by new entrants eager to capitalise on growing demand. Just like in the ‘90s, many of these entrants lacked the expertise to assess risks accurately, leading to unsustainable practices and, in some cases, significant losses. But we persisted, buoyed by our understanding of the sector and long-term relationships.

In 2020, GCube was acquired by Tokio Marine HCC thanks to the vision of Barry Cook and Simon Button. By this stage, we were a market leader, handling over 2,000 projects in 38 countries. It was a full-circle moment, given that a few years earlier our perennial partner Kiln had also joined the group, becoming Tokio Marine Kiln under the leadership of none other than Charles Franks.

Today, the renewable energy insurance market is at another critical juncture. While the sector has grown and evolved beyond recognition, geopolitical shifts, economic uncertainty, and changing investor sentiment are continuously reshaping the landscape. In Europe, the war in Ukraine underscored the continent’s reliance on imported fossil fuels, pushing energy independence up the agenda. Globally, inflation and interest rate hikes have significantly increased the cost of large-scale projects, making access to capital a core concern. Supply chain disruption caused by geopolitical tensions continues to challenge project timelines. Simultaneously, renewables, intended to mitigate the risks of extreme weather, are becoming increasingly exposed to the consequences of worsening climate change.

Despite all these challenges, global renewables capacity continues to grow. Offshore wind is expanding into new markets. Floating wind is gaining traction, using the same wind turbines as conventional seabed-fixed offshore wind but instead mounted on floating structures secured to the seabed with mooring lines and anchors. Battery energy storage systems (BESS) have become an important pillar of any energy strategy, but especially when using renewable solar power, stabilising power supply at all times of day. Green hydrogen is showing signs of moving from concept to commercialisation, while carbon capture and storage is attracting increased policy support.

The market is in transition and adaptability and innovation will be key. Traditional underwriting models have to evolve to reflect these developments, which means underwriters must think beyond renewables and embrace opportunities within the wider green transformation.

The future is not just about standalone wind and solar projects, but about hybrid projects, sector coupling, and integrated ecosystems that reshape the way we produce, store, and consume energy. Energy storage, industrial decarbonisation, grid modernisation, and sustainable infrastructure all have increasingly important roles to play. As insurers, our role also continues to extend further, beyond risk mitigation. We must help unlock investment in the technologies and infrastructure needed for a cleaner, more resilient world. The transition to a decarbonised society offers vast business potential, but also represents an immense undertaking. Momentum, focus, and commitment are growing globally. We must step up.

Our Group’s response is Tokio Marine GX (TMGX): a new, dedicated proposition targeting businesses across multiple sectors that seek to take tangible steps to decarbonise. TMGX empowers the expertise and deploys the full resources of Tokio Marine to provide businesses with a market-leading insurance partner.

The green transformation is more than just a climate imperative—it is a defining economic opportunity for decades to come. Achieving decarbonisation will require innovation, collaboration, and, most importantly, a long-term perspective. If we get it right, we are unique position to grow our business while accelerating progress toward a cleaner, more sustainable future.

I have witnessed and played a part in the exceptional growth of the renewable energy sector over the past four decades. Believe me when I say we’re just getting started. The insurance industry has been a key enabler of many major successes to date. Now, at this new inflection point, we plan on becoming the enabler to many more.