Emerging Renewable Energy Risks in 2025

1. Renewable Energy Supply Chain Dependencies and Material Shortages  

In 2023, China dominated the renewable energy supply chain, providing 58% of global solar installations and 63% of new EV purchases. This reliance creates vulnerabilities as geopolitical tensions rise and nations adopt protectionist policies.  

Risk Engineering Solutions: 

• Diversification of suppliers across multiple geographic regions.
• Investment in domestic manufacturing capabilities.
• Development of alternative materials and technologies.
• Implementation of robust inventory management systems.
• Utilization of predictive analytics for supply chain disruption forecasting.

What it means: Insurance and risk strategies should factor in potential delays, rising costs, and supply disruptions when underwriting projects reliant on imported components.  

2. Climate Change, Natural Hazards & the Long-Term Impact on Renewable Energy Infrastructure

Climate change is intensifying sea level rise, extreme heat, and more destructive storm systems, all of which create renewable energy risks. Droughts are disrupting hydropower production, while hurricanes, wildfires, and floods threaten wind and solar installations. Extreme weather events are expected to increase by 20-30% globally by 2050.  

Without proactive planning such as natural hazard analysis, these environmental shifts could result in significant financial losses for producers in the renewable energy supply chain. Predictive modeling and hazard mapping are essential to identify risks and reduce potential damages. 

Risk Engineering Solutions:  

• Climate Change Assessments evaluate future environmental/climate change and severe-weather related risks at current installations or potential future job sites. Assessments determine longer-tail risks beyond your property program’s indemnity periods at both location- and portfolio-levels.
• Climate-resilient materials and infrastructure designed to withstand long-term environmental changes.
• Long-term adaptation planning to protect assets against evolving climate conditions.

What it means: Services like natural hazard analysis can help you plan for and mitigate these risks. Bonus points if you’re aligning this advice with your ESG goals.  

Climate resilience must be part of every risk assessment. Projects should incorporate adaptation strategies like elevated infrastructure, storm-hardening materials, and robust emergency plans.  

3. Fire Risks in Renewable Energy Infrastructure  

Battery energy storage systems (BESS), particularly those using lithium-ion technology, and solar installations are crucial for ensuring grid stability and energy reliability. However, they also present significant fire and explosion hazards. Overheating components and inadequate fire suppression systems have caused significant disruptions in recent years. Due to thermal runaway lithium-ion battery fires can burn for long time periods and take specific strategies to extinguish. Without adherence to best practices for risk mitigation and safe handling practices, these hazards can lead to costly downtime and reputational damage. (Check out our guide to avoiding lithium-ion battery fires.) 

Risk Engineering Solutions: 

• Proper lithium-ion battery storage to protect against fire.
• Thermal management and early detection systems to prevent overheating.
• Development of comprehensive fire risk assessments and management protocols.
• Training programs for staff on battery fire prevention and response.
• Research and adoption of safer battery chemistries (e.g., lithium iron phosphate).
• Design of energy storage facilities with enhanced thermal management and isolation features. 

What it means:  By integrating robust fire protection strategies and proper storage protocols for lithium-ion batteries, risk engineers help renewable energy producers minimize catastrophic battery storage fires.  

More recently, the development and increasing uptake of “inherently safer” battery chemistry technologies, such as lithium iron phosphate and flow batteries, also help mitigate the thermal runaway risk and keep the concern for an uncontrolled fire hazard in check.  

4. Grid Infrastructure and Intermittency Challenges  

By 2050, global electricity demand will double, requiring a 2.5x increase in grid capacity. However, delays in grid upgrades and the intermittency of renewable energy could create operational bottlenecks.  

Risk Engineering Solutions:

• Investment in smart grid technologies and advanced energy management systems.

• Development of large-scale energy storage solutions to balance supply and demand.
• Implementation of demand response programs to manage peak loads.
• Exploration of vehicle-to-grid (V2G) technologies to utilize EV batteries for grid Stabilization.
• Advancement of microgrid technologies for enhanced local resilience. 

What it means: Support for clients investing in grid-enhancing technologies and energy storage solutions can reduce risks and ensure smoother integration of renewables into existing systems.  

5. Cybersecurity Threats in Digitalized Renewable Operations

Cyber incidents in the energy sector rose by 50% from 2021 to 2023. Cyberattacks on the industrial control systems (ICS) in the energy and power sector are becoming more frequent and sophisticated. Bad actors are increasingly targeting operational technology (OT) systems, which were previously considered to be relatively isolated from IT networks. Suppliers and third-party vendors to the energy and power industry sectors have also become targets.  

Risk Engineering Solutions:

• Implementation of robust cybersecurity frameworks tailored to renewable energy operations.

• Regular penetration testing and vulnerability assessments of digital infrastructure.
• Development of incident response plans specific to cyber-attacks on energy systems.
• Investment in employee training programs on cybersecurity best practices.
• Exploration of cyber insurance products designed for renewable energy operators. 

What it means: Encourage clients to implement robust cybersecurity measures, including regular audits and employee training. Cyber risk insurance is also becoming an essential part of renewable energy coverage.  

6. Evolving Policy Risks and Regulatory Uncertainty  

In recent years, the Inflation Reduction Act and other legislation have had a transformative impact on renewable energy development in the United States. These policies are driving significant investment, accelerating deployment and helping to offset project costs. Policy changes, such as fluctuating carbon prices and renewable energy’s policy incentives and tax handling, can destabilize long-term projects and skew the bankability and insurability of new projects. Fossil fuel subsidies still account for 7% of global GDP, skewing market dynamics.  

Risk Engineering Solutions:

• Development of scenario planning tools to assess policy impact on project economics.

• Engagement with policymakers and industry associations to advocate for stable regulatory frameworks.
• Diversification of project portfolios across multiple jurisdictions to mitigate country-specific policy risks.
• Implementation of flexible project structures capable of adapting to policy changes. 
• Exploration of innovative financing mechanisms less dependent on policy incentives. 

What it means: Stay informed about policy shifts and advocate for adaptable coverage that evolves alongside regulatory landscapes.  

7. Wind Farm Supply Chain Disruptions & Fire Risks

Wind turbines are getting larger. In 2023, the average rotor diameter of newly installed wind turbines was over 133.8 meters (approximately 438 feet), which is longer than a football field. This significant increase in size allows turbines to capture more wind and generate more electricity. But with the increase in power comes new challenges such as increased transportation complexity for getting oversized turbine components to and from the site. Also, there are higher financial losses when a single unit is damaged due to increased turbine value, and fire suppression inside nacelles can be difficult due to confined space and altitude.  

Risk Engineering Solutions:

• Fire detection and suppression systems designed specifically for wind turbine nacelles.

• Advanced transportation risk management for large turbine components.
• Climate hazard assessments for wind farms located in high-risk areas like Texas, the U.S. leader in wind capacity.  

A well-structured risk engineering approach mitigates renewable energy supply chain disruptions and fire hazards, ensuring continued operational efficiency.  

8. Solar Power’s Vulnerability to Natural Catastrophes

Extreme weather events such as hail, hurricanes, and severe convective storms pose significant risks to solar farms. For example, in 2022 hailstorms hit renewable energy installations causing record-breaking losses of approximately $300-400 million. Hurricanes Irma and Maria in 2017 caused extensive damage to solar photovoltaic (PV) systems in the U.S. Virgin Islands. Estimates indicate that 80%-90% of the power transmission and distribution systems, including several solar PV generation systems, were damaged. According to Gallagher Re, severe convective storms accounted for 41% of global insured losses in 2024, totaling around $64 billion. The increasing significance of severe convective storms is a serious renewable energy risk which can also lead to insurable losses at solar farms.  

Risk Engineering Solutions:  

• Reinforced panel designs to withstand severe weather conditions.
• Site selection risk assessments to place facilities in lower-risk areas.
• Deployment of the latest tracker technologies and stow protocols to withstand hail and windstorm exposures.  
• Informed product and technology selection through natural hazards PML assessments as early as the 10% preliminary design stage. 
• Data-driven storm forecasting to anticipate and mitigate potential damage. 

Through predictive modeling and resilience planning, risk engineers help solar power producers protect their assets from extreme weather events. Shape  

Reducing Renewable Energy Risks 

Emerging risks in renewable energy are complex, but they also present opportunities for innovative risk management solutions. Partnering with the right experts ensures you can navigate 2025 and beyond with confidence.  

Risk engineering provides data-driven insights to help renewable energy companies future-proof their operations and infrastructure against climate-driven disruptions. Shape  

The future of renewable energy depends on proactive risk management. Risk engineering provides a strategic approach to anticipating challenges, protecting assets, and ensuring operational resilience of the renewable energy infrastructure.  

Protect your renewable energy operations—contact us today to learn how risk engineering can mitigate renewable energy risks and safeguard your assets.