Nat cats and unmodelled extreme weather risks are emerging as a defining challenge for renewable energy markets worldwide, according to sector specialists at GCube. The insurer warns that the long-term viability of clean energy projects may be at risk as the industry scales.

Hail and wildfire losses are rising in the US, the insurer says, with some climate-related events exceeding US$300m in insured damages.

Europe, meanwhile, can no longer be considered a lower-risk renewables market, GCube warns. In 2024, the bloc faced unprecedented renewables asset losses from climate-related perils and extreme weather, alongside its second most costly year for flood damages, leading to a rise in the frequency and severity of claims across the continent.

In the Middle East, a previously benign market for extreme weather, renewables now face growing climate risks, while in Australia, rapid renewables expansion into new regions increases exposure to bushfires, cyclones and hailstorms.

“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.

“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’…are what make this moment so critical."

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