Insurance premiums for renewable energy projects look set to rise by up to 10 per cent over the next two years, as a direct result of the current economic crisis.
Specialist renewable energy insurer GCube has announced that it has secured an increased underwriting capacity to cover business up to a value of $800 million (£463 million).
But the firm, which provides insurance for transit, construction and operation of all the major renewable energy sectors as well as general liability and business interruption cover, says that premiums for clean energy schemes will “almost certainly” rise as the country heads towards recession.
According to GCube, the credit crunch means increasing risk for renewable energy projects, putting up the cost of insuring them.
Fraser McLachlan, the chief executive officer of GCube said: “As a direct result of ongoing financial market instability, the liquidity difficulties experienced by the industry, and substantial losses arising from Hurricane Ike in the US, renewable insurance premiums will almost certainly rise.”
Mr McLachlan said he thought the rise insurance premiums for renewables projects had been inevitable, but reassured developers that they would not lose out.
He said: “A soft market has forced renewable insurance premiums down to a level that is unsustainable in the long term, particularly since providers are being asked to take on greater levels of project risk.
“And while this will undoubtedly place increased pressure on renewable energy directors in the short term, it’s important to recognise that this anticipated shift will enable providers to continue to develop their range of policies on offer, in the face of a rapidly maturing market,” he added.