- Climate-driven risks in renewable energy are no longer just a U.S. problem, as Europe, the Middle East, and Australia face increasing uncertainty
- New report, “Known Unknowns”, draws on extensive loss and claims data to highlight how Nat Cat and extreme weather are putting project bankability and viability at risk
London, 14th April 2025 — Nat Cat and unmodelled extreme weather risks are emerging as a defining challenge for renewable energy markets worldwide, raising concerns about the long-term bankability and viability of clean energy projects as the industry expands. This is the key finding of Known Unknowns: The growing threat of Nat Cat and extreme weather to global renewables, a new market insights report from GCube Insurance, drawing on its global claims database.
“For years, the US has been at the frontline of the renewable energy market’s battle with Nat Cat and extreme weather risk”, said Fraser McLachlan, CEO of GCube Insurance. “But while North America has long been the focal point of these challenges, it is now evident that this has become a global issue. Across Europe, the Middle East, and Australia, the renewables sector recognises the increasing climate-driven risks, but, due to modelling and data shortfalls, the full scale and complexity of those risks remain unclear.”
Key findings from Known Unknowns include:
- US: Hail and wildfire losses are rising, with some Nat Cat events exceeding $300M in insured damages. The tightening of coverage limits, and rising deductibles is adding further pressure on project owners and financiers.
- Europe: This region can no longer be considered a lower-risk renewables market. In 2024, Europe faced unprecedented renewables asset losses from Nat Cat and extreme weather, alongside its second-costliest year for flood damages — leading to a rise in the frequency and severity of claims across the continent.
- Middle East: Previously considered a ‘benign’ market for extreme weather, MENA renewables now face growing climate risks. As these risks escalate, insurers must rethink exposure, and the renewables industry must move beyond short-term fixes and begin to address the underlying vulnerabilities of its projects.
- Australia: Losses to renewables from extreme weather fortunately remain low, but the current rapid expansion into new regions increases exposure to bushfires, cyclones, and hailstorms.
Fraser McLachlan, CEO, GCube Insurance, said: “The sector is acutely aware that Nat Cat and extreme weather risks are increasing, but there remains uncertainty around their true scale and impact, particularly in new and rapidly expanding markets. These “known unknowns” – the recognition of Nat Cat and extreme weather risks without a full understanding of their true severity – are what make this moment so critical. If the market fails to respond now, we risk a scenario where insurability and bankability become major barriers to growth.”
The report also highlights that Nat Cat and extreme weather risks are increasingly impacting project bankability, particularly in the US, where some developments are struggling to secure financing due to coverage gaps and rising costs.
These changes have not yet made projects “unbankable,” but we have encountered real challenges, said Cécile Luciano, Director of Structured Finance Energy Origination at NORD/LB, who contributed to the report. “For example, I’ve seen a project in a flood-prone area where the insurance policy excluded flooding entirely. That’s not something we can accept, forcing developers to find coverage elsewhere, often in a different market. We are seeing more engagement between lenders, insurance advisors, brokers, and developers to ensure that policies are bankable from the start. This needs to happen early in the process, ideally before construction insurance is finalised.”
The report calls for action from insurers, developers, and financiers to close the global renewables risk management gap. This will involve enhancing data accuracy through updated Nat Cat modelling, optimising asset design to withstand emerging weather threats, and strengthening resilience strategies through closer collaboration between insurers and financiers to maintain long-term insurability and effective risk-sharing.
With renewables markets worldwide experiencing unprecedented expansion, Known Unknowns serves as a timely warning that unchecked exposure to Nat Cat and extreme weather could derail the energy transition. Adapting to these risks is no longer optional – it is essential for the sector’s future security.
About GCube:
GCube is a leading insurance underwriter for global renewable energy projects, on- and offshore. With over 25 years’ experience in the renewable energy sector, GCube understands the unique exposures of these power generation projects and assists its clients in identifying, quantifying and mitigating risk efficiently and economically while helping them achieve their business objectives.
GCube is a trading name used by the Tokio Marine HCC group of companies headquartered in Houston, Texas and operates:
- in the United States through GCube Insurance Services, Inc. (California license number 0B86549)
- in the United Kingdom through:
- HCC International Insurance Company plc (company number 01575839)
- HCC Underwriting Agency Ltd (company number 04632146)
- Houston Casualty Company (UK Branch) (Branch registration number BR004760), each authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA and registered office address at 1 Aldgate, London, EC3N 1RE
- in Europe through Tokio Marine Europe SA (company number B221975) authorised by the Luxembourg Minister of Finance and regulated by the Commissariat aux Assurances, with registered address at 26 Avenue de la Liberte, Luxembourg, L-1930
To learn more about how we can support your insurance coverage requirements, please visit our website at www.gcube-insurance.com
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