The rise of renewables

Posted on: 14 December 2018

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By Steve Kelly, Engineering Underwriting Account Manager

November 2018 marked the tenth anniversary of the Climate Change Act 2008; legislation which formalises the UK’s approach to tackling this topic. It’s arguably more relevant now than in 2008, given the Renewable Energy Directive (RED) targets for the European Union. This Directive requires the EU to fulfil at least 20% of its total energy needs through renewable sources by 2020, with the UK’s target currently set at 15%.

The burning of fossil fuels has been blamed for contributing to global warming. With a limited supply of fossil fuels remaining, renewable energy could be a game-changer in both combatting climate change and providing alternative power sources. Renewable energy sources include solar, geothermal, wind, hydro and various forms of bioenergy. Given the UK’s propensity for windy weather, it’s perhaps unsurprising that onshore and offshore wind makes up the largest share of the country’s renewable energy at 13.8%. This is followed by bioenergy (10.2%), solar energy (4.2%) and hydropower (1.8%)1.

Renewable energy installations require regular inspection and maintenance. Performing maintenance on wind turbines can be challenging, given their generally remote location and need for an engineer to work at height, often in squally weather; this means that remote condition monitoring systems are essential to continue operations. Biomass systems, comprising heavy-duty equipment such as steam boilers and furnaces, are also subject to health and safety law, given the potential for accident. Various insurance covers exist for renewable power installations, including core construction and operational policies, together with specific insurances for such as lack of wind or sun cover.

With nearly two thirds of the world’s end-use of electricity consumed by the commercial and industrial sectors2, corporate organisations face mounting pressures to adopt and promote renewable energy. The falling price of solar and wind can offer an economic advantage to companies in the form of lower energy bills; and the availability and  accessibility of renewables can translate to fewer power outages and minimised business interruption.

The renewable energy market remains one of the UK’s fastest growing industries, with an estimated market value of £15.9bn. The industry recently expressed disappointment following the Autumn Budget, at the lack of progress on requests for fairer tax treatment around the uptake of solar and battery storage. However, with a strong focus on climate change and no slackening of the challenging EU targets, the trend for renewables is surely set to rise.

 

This article was originally published in Modern Insurance Magazine (Issue 35). It may not be replicated in any other publications.