US renewables market growth at risk - report

The financial impacts of extreme weather and natural catastrophe events are outpacing the development of mitigation strategies in the North American renewables market, whilst a combination of supply chain and inflation challenges are exacerbating the complexity of nat cat claims.

These are among the latest market insights from GCube Insurance, whose North American Nat Cat Update further warns that a softening of rates could jeopardise the sustainable growth of US wind and solar.

The US renewables market has just experienced its worst summer on record for nat cat claims, with unmodelled extreme weather events proving far more prevalent and damaging than traditional nat cat.

Hail losses experienced this year in Texas, for instance, are projected to reach US$300m – almost ten times the estimated losses from 2020’s Hurricane Hanna.

While total claims values are still being calculated, multiple instances of losses exceeding sub-limits of up to US$50m call for improved modelling and the more effective use of existing weather data, Gcube warns.

“While the increasing frequency of extreme weather and nat cat events is not surprising to us, the rising severity of losses, and the industry’s continued difficulty in managing these risks, is a concerning trend,” commented Fraser McLachlan, CEO, GCube. “The unprecedented growth potential unlocked by the Inflation Reduction Act will count for little if the North American renewables sector is unable to combat extreme weather risks.”

“Concerted effort is needed across the value chain to strengthen policies, improve data utilisation, and update modelling and testing procedures, and support sustainable growth for the sector. Our latest report issues a clear call for collaboration in the US renewables industry to develop measures to combat the fallout of extreme weather, and support a stable, successful energy transition.”

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