A report published today by WWF and RSA states that China may not be able to tap fully into its renewable energy potential due to lack of an insurance system for the sector.
The aim to reduce CO2 emissions by 45% and generate 15% of energy from non-fossil sources by 2020 has positioned China as the fastest growing renewable market in the world. However, the development of China’s wind energy industry has grown so rapidly that local insurers have not been able to keep up the pace. Insurance is needed to cover risks related, for example, to natural disasters, mechanical failures or operational activities.
Opportunities and Challenges
The report Wind Energy Insurance in China: Opportunities & Challenges has found that more than 80% domestic insurers and wind energy companies are not developing insurance products to meet the demand of nearly 40,000 turbines and a predicted increase of 10,000 per annum.
In other regions, such as North America and Europe, insurers have been working with wind energy companies for over three decades, offering products that cover all elements of their operations.
By establishing an effective insurance system and involving international insurers on complex risks, China’s wind energy industry could increase capacity and benefit from know-how exchange.
Use all financial tools that can boost renewable energy
“Wind energy has high potential for low carbon development but it’s not risk free. As technology continues to develop and we see bigger wind turbines, experienced insurers are needed to understand, manage and reduce the potential risks”, said Elton Chang, CEO of RSA China. “The technical support of insurers is paramount for the growth of the sector, especially as further growth is expected in offshore wind energy.”
“WWF envisions a future in which 100% of energy will be from renewable sources by 2050. To support this goal, it is important that we use all financial tools that can boost renewable energy. Insurers play a significant role to mitigate risk, reduce financial costs and increase investments in this crucial sector”, said Dr. Li Lin, Deputy Country Representative at WWF China.