Tokio Marine GX (TMGX), the specialist green transition underwriting arm of Tokio Marine Group, has warned that the insurance market will need to continue to adapt to support the growing number of co-located hybrid renewable energy projects being developed around the world.
In a new report, Colocation, colocation, colocation: Securing a flexible and clean energy future, Tokio Marine GX examines how the integration of technologies such as solar, wind, battery energy storage systems (BESS) and Power-to-X solutions is changing the risk landscape for renewable energy development.
The report draws on insights from the company’s global underwriting and claims teams and a series of project case studies to explore the impact of increasingly connected energy infrastructure on insurers and developers.
Tokio Marine GX said that while insurers have become increasingly familiar with established colocation models such as solar-plus-storage projects, the development of next-generation renewables presents more complex challenges.
Large-scale projects combining multiple technologies, industrial energy clusters and emerging Power-to-X facilities are introducing greater operational interdependencies and more diverse revenue structures, creating risk exposures that may not fit into traditional insurance frameworks.
Fraser McLachlan, Chairman of Tokio Marine GX, commented: “The rise of colocation is indicative of a wider shift in the way energy systems are designed, integrated and managed. As projects become larger, more interconnected and more strategically important, the insurance market must continue to evolve the way it understands, models and supports these emerging risks. Clean energy is now not just about decarbonisation, it is also about resilience and energy security.”
Tokio Marine GX points to several notable developments that illustrate the changing nature of renewable energy projects. These include Masdar’s All Weather project in Abu Dhabi, which combines 5.2GW of solar power with 19GWh of battery storage to provide continuous renewable electricity; and the Kassø e-methanol facility in Denmark, one of the first commercial-scale Power-to-X projects that combines solar power, electrolysis and fuel production to create e-methanol.
The company said the projects demonstrate how increasing scale and technology integration are placing greater emphasis on risk management, particularly in terms of asset concentration, system resiliency and project design. They also highlighted the importance of closer collaboration between developers and insurers as new technologies bring changing operational and commercial risks.
The report identifies several factors that are increasingly relevant in underwriting co-located renewable energy assets. Tokio Marine GX noted that the performance of integrated projects often depends on the effective interplay of multiple technologies, making technology interdependence an increasing consideration for insurance companies.
The company also found that while many of the industry’s core risks, including extreme weather events, equipment performance issues and supply chain disruptions, remain unchanged, the potential impact can vary significantly based on a project’s configuration, size and revenue model.
Tokio Marine GX further highlights that projects operating across multiple markets or revenue streams may require more complex business interruption models to accurately assess potential risks. The report also noted that aggregate risk may increase in areas where large numbers of assets are concentrated and rely on shared infrastructure, creating potential common points of failure.
Oliver Litterick, Head of Renewables at Tokio Marine GX, added: “The transition to more flexible, integrated energy systems is a positive and necessary step for the industry. Colocation plays an even more important role in this evolution. Our latest report shows that while risks are becoming more complex, with the right design, data and collaborative approach, they are manageable.”
Tokio Marine GX believes continued growth in the co-sited and hybrid renewable energy industry will depend on improved access to operational data, allowing insurers to better assess the performance, reliability and failure scenarios of integrated systems.
The company also believes that insurance products need to continue to evolve to reflect more complex technologies and revenue models, especially as industries such as Power-toX mature. Additionally, Tokio Marine GX highlights the value of early collaboration between developers, insurers, lenders and risk engineers to support more effective risk allocation and project planning.
Litterick further added: “The way insurance companies think about risk needs to evolve with colocation. TMGX has been involved in this space for decades, so we already have a strong foundation. By working closely with developers and continuing to invest in data, conversation and insurance product development, the wider insurance market can also play a key role in achieving the next stage of growth.”
