GCube: Extreme weather is global threat to renewables

The insurance challenges facing renewable energy developers are shifting from localised anomalies to a systemic global issue, GCube has warned.

As extreme weather and natural catastrophes become more frequent and severe, GCube Insurance warns that the insurability and bankability of projects are under threat – not just in the US, but across Europe, the Middle East, and Australia.

This is the core message of “Known Unknowns”, a new report based on GCube’s global claims data.

The publication outlines how climate-driven risks are increasingly putting pressure on both insurers and financiers, with implications for the long-term viability of the clean energy transition.

Fraser McLachlan, chief executive of GCube, said the risks once concentrated in North America have become a global concern. Europe, the Middle East and Australia are now experiencing losses that were once assumed to be unlikely or uninsurable.

But while awareness is growing, the industry is still struggling to quantify the full scale of the threat due to modelling shortfalls and data gaps.

“These ‘known unknowns’ – the risks we recognise but don’t yet fully understand – are what make this moment so critical. If the market fails to respond now, insurability and bankability could become serious obstacles to growth,” he said.

Bankability under strain

The report points to significant changes in how renewable energy projects are financed. In the US, coverage exclusions and rising deductibles are making it harder for projects to secure investment.

GCube data shows that hailstorms and wildfires are driving up claims costs and forcing insurers to re-evaluate how much risk they are willing to carry.

Cécile Luciano, director of structured finance energy origination at NORD/LB, said the challenge for lenders is real – particularly when projects are located in high-risk areas and insurers exclude key perils from coverage.

“I’ve seen a project in a flood-prone area where the policy excluded flooding entirely. That’s not something we can accept, forcing developers to find coverage elsewhere,” she warned. “There’s now more collaboration between lenders, brokers, and developers to ensure policies are bankable from the start.”

Luciano stressed that this dialogue needs to happen earlier in the process. Lenders want confidence that coverage is in place before construction starts – not after.

The increasing engagement between stakeholders is encouraging, but more work is needed to ensure resilience planning becomes standard practice.

Regional shifts in risk perception

While Australia has so far avoided major losses, the report suggests this may not last. Rapid expansion into new regions is exposing developers to hazards such as bushfires and cyclones.

In the Middle East, previously considered benign in terms of climate risk, extreme weather events are beginning to emerge. GCube argues that the industry can no longer rely on legacy assumptions of geographic safety.

Europe, in particular, experienced a sharp increase in weather-related claims last year, including its second-costliest year for floods. According to the report, this marks a turning point in how the continent is viewed from a risk perspective.

The assumption that Europe offers a relatively low-risk environment for renewables is no longer reliable.

GCube calls on the sector to take a more proactive approach to resilience. That includes updating Nat Cat models with better localised data, strengthening asset design, and embedding risk-sharing practices across the finance and insurance value chain.

Known Unknowns presents a stark conclusion, the report argues: climate risk is no longer a theoretical or distant problem for renewable energy. It is here now – and it is reshaping the terms under which projects can be insured and financed.

The sector is facing a critical juncture, according to the paper. If insurers and developers do not move quickly to close the gap between awareness and action, the result could be reduced investment, delayed projects, and an energy transition that fails to deliver on its promise.