Get the right protection for your scheme or risk financial losses, warns expert

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Operators of renewable energy schemes are at risk of significant financial losses due to being underinsured, warned an insurance specialist.

In recent years, the renewable energy sector has grown at an exponential rate, thanks largely to technological advancements, governmental incentives and increased affordability.

With PM Boris Johnson recently announcing that every home in the UK will be powered by electricity from offshore wind farms within a decade, this upward trend shows no signs of slowing.

There are a raft of options available to those looking to launch a green energy project, from anaerobic digestion (AD) and hydroelectric schemes to wind, solar, battery storage and biomass projects.

Although opportunities in the sector are plentiful and the launch of such projects are a step in the right direction of a more sustainable future for the country, Kris Johnson, of renewable energy insurance specialist Lycetts, is warning that key aspects are being overlooked in the planning stage.

Kris said that whilst many operators have insurance for renewable energy schemes, the policies are often insufficient – putting the viability of such projects in jeopardy.

“Renewable energy schemes are growing in popularity, whether it be farmers plugging into secondary revenue streams or companies launching mass projects as a main source of income,” said Kris.

“An issue we see time and time again is operators building new AD or biomass plants and not knowing what insurers will and won’t accept in terms of technology and construction.”

“One important consideration is the quality standards of equipment and installations. When it comes to equipment and installation, quality can vary greatly.  For equipment deemed less reliable, premiums can prove extremely costly and, in some cases, uninsurable.

“Anyone looking to build a new plant should engage with specialist insurers or intermediaries at the planning stage of the project.  These experts can provide advice from a risk management perspective and help operators divert from costly, and in some cases, business-critical decisions.

“It is not just new plants that are affected.  Plants that are several years old that may need to be upgraded to comply with new rules laid down by insurers.”

Kris urged operators to ensure they have comprehensive cover that is appropriate for their project and will cover for all eventualities.

He recommended operators seek a full engineering solution, including mechanical and electrical breakdown cover, in addition to the traditional fire and perils cover.  Conventional Public Liability policies (covering third party property damage) can also create gaps in cover when it comes to escape of pollutants and odour issues.  These gaps can be bridged by specialist Environmental Liability policies which are also recommended.

“We have seen claims that have run into the millions so we know the risks of underestimating the sums covered or relying on restrictive policies,” added Kris.

“Gaps in knowledge and experience are to be expected – but this can be addressed by bringing in the requisite expertise.  Insurance brokers can provide specialist advice on what cover is necessary, including contract works, delay in start-up, environmental liability, and machinery breakdown with resultant loss of revenue.”

For more information on how Lycetts can help with your energy scheme insurance needs, contact Kris on or 07769 695127.