The Insurers Federation of Egypt (IFE) has called for investment in training specialised technical cadres within insurance companies, enabling them to understand the complex nature of risks associated with solar energy, wind energy and battery energy storage systems, and to evaluate and price the risks with a higher degree of accuracy.
In its latest weekly bulletin, that focussed on insurance for solar and wind farms, the IFE highlighted the importance of developing training programmes and cooperating with technical experts and scientific bodies, in addition to taking advantage of data analysis techniques and advanced climate models, which help insurance companies improve underwriting processes and determine risk levels more accurately.
The federation also stressed the importance of developing flexible and specialised insurance products that include coverage for risks associated with modern technologies, most notably heat surges and cyberattacks, in line with the rapid development of renewable energy projects.
The federation noted that strengthening partnerships between insurance companies, developers, investors, technical experts and relevant parties has become an essential element for improving the quality of underwriting and exchanging data and experiences related to risks.
In the bulletin, the IFE said that the expansion of renewable energy projects has been accompanied by an increase in the size and complexity of risks, as a result of increased production capacities and the development of technologies adopted.
Wind energy projects, especially offshore ones, have become dependent on larger turbines and more complex equipment, while solar energy projects face multiple risks during the stages of transportation, installation and operation, as well as natural disasters and manufacturing defects.
The bulletin added that battery energy storage systems have become an essential component of the renewable energy system, but in return they pose a set of new risks, foremost among them thermal runaway, operational malfunctions and cyber risks associated with energy management systems.
Insurance coverage for project lifecycle
The Federation believes that the insurance sector is one of the pillars supporting the growth and sustainability of investments in renewable energy, by providing financial protection for projects during the various stages of their life cycle, from design, construction, transportation and installation, to operation and maintenance.
It stressed that specialised insurance solutions can reduce the financial impact of natural, technical and operational risks, and protect cash flows and support business continuity, thereby enhancing investor and financier confidence in renewable energy projects.
The Federation said that the continued growth of these projects requires insurance companies to be capable of providing integrated solutions that cover the various stages of the project, while developing insurance products that are appropriate to the nature of emerging risks, especially thermal runaway in battery systems, natural disasters, technical malfunctions in large turbines, and cyber attacks and risks.