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Case study: Insuring the next energy frontier

Case study: Insuring the next energy frontier

The next phase of the energy transition will be more complex. Early progress was powered by scaling solar, wind and battery storage. What comes next is more diverse, more decentralised and higher risk.

New technologies that once seemed improbable are moving into focus, including small modular reactors (SMRs), fusion and AI-driven energy infrastructure for data centres. These not only support the rising needs of renewables but move beyond them, and will reshape how energy is generated and delivered across land, space and sea.

“Entirely new forms of energy generation and infrastructure are moving from experimental science into commercial deployment. Insurance will play a critical role in determining how quickly those systems can scale.”

Denis Bensoussan
Head of Space, Beazley

Insurance must evolve with innovation

The opportunity is growing, but so is uncertainty. Many of these technologies:

Have limited or no historical loss data
Operate under evolving regulatory frameworks
Depend on highly specialised supply chains

To support this shift, insurers must support forward-looking risk management and actively co-create solutions for unproven green technologies. Not just insuring them once mature.

The new clean energy pioneers

Land
Small modular reactors (SMRs) are nearing realisation

Private investment and government initiatives are propelling nuclear SMR development¹⁵ as demand for stable, low-carbon power rises. Commercial SMR units are already active in Russia and China¹⁶. There is a push for deployment across North America, South America, Asia, and Europe, with launches expected over the next decade, with revenues of US$300 billion predicted by 2046¹⁷. This growth is driven by energy security concerns, data centre demand and net zero targets. As deployment increases, projects will need specialist cover addressing risks across construction, operations, transport, supply, decommissioning and increased liability risks owing to heightened nuclear regulatory scrutiny.
Fusion
Moving from fantasy to reality

Fusion is shifting from concept to early deployment, with billions of dollars of private investments worldwide¹⁸ and a planned 2028 deployment¹⁹. It offers the revolutionary long-term potential of near-limitless, low-carbon energy, but comes with high upfront cost, long construction timelines and complex technical uncertainty. Investment and capital deployment depends on proving these risks can be effectively managed and transferred. Early insurance activity focuses on construction and specialist liability, with broader operational performance and technology liability cover likely as the market matures.

Sea - Floating Nuclear Power Plants are poised to propagate

Floating nuclear plants extend SMR technology offshore²⁰. They support power demand from offshore data centres, port electrification, remote communities and coastal desalination hubs. But they introduce added SMR risks, including marine damage, environmental exposure, cyber threats and complex cross-border regulations.

Wave-powered data centres to take pressure off the land

Wave-powered energy centres promise 24/7 clean power directly to maritime infrastructure²¹. They address land and cooling constraints but face elevated operational risk from harsh marine conditions.
Space-Based Solar Power (SBSP) stay clear of weather risks

Orbital solar aims to deliver constant power by capturing sunlight outside Earth’s atmosphere. It could provide stable, high-yield energy²². It escapes earth-based weather risks on earth, but introduces new risks around launch, infrastructure and transmission.

Data centres on the Moon

Moon-based data centres are now in the early stages of commercial testing, with businesses investing heavily on the prospects²³. They will run on pure solar power and use the vacuum of space for cooling²⁴, essentially eliminating many of the issues on land – from water requirement to energy cost and reliability, to regulations and civil unrest.

These developments introduce entirely new risk categories that are yet to be modelled. However, they will include exposures around rocket launches and build, radiation issues, micrometeorite impacts, cyber risk and other business interruption risks if power transmission misaligns.

Boundaries are blurring

These projects demonstrate how the energy transformation is blurring the boundaries between energy infrastructure, digital infrastructure and industrial assets. The associated risks include hidden interdependencies and the increased potential for single-point failures to drive multi-line losses. In conjunction, insurers are increasingly being asked to assess risks that combine property, marine engineering, power generation, cyber resilience and critical digital infrastructure within a single asset class.

“The technologies themselves are only part of the challenge. What matters equally is whether supply chains, regulation, engineering talent and risk management frameworks can scale alongside them. Insurance becomes a critical mechanism for validating those systems and giving investors confidence that these projects are commercially viable.” Denis Bensoussan, Head of Space, Beazley

Insurance will follow risk

Risk will evolve as these technologies scale. There is no fixed model yet for pricing, coverage or capacity. As performance data builds, insurance structures will adapt.

Early insight and experience will shape how the market develops, improving underwriting over time.

Underwriting the future of energy

Insurance will remain central but will operate differently. It will draw on a broader toolkit, including captives, parametric solutions and alternative capital. Insurers that can understand and manage this complexity will play a key role in enabling investment and scaling the next generation of energy systems.
“Novel renewable technologies make risks more uncertain to predict, prompting reduced insurance capacity or higher prices. Parametric insurance eliminates such vulnerabilities with trigger-based payouts tied to event intensity, providing scalable, flexible protection as transition risks evolve.”

Stefan Wunderlich
Head of Alternative Risk Transfer, Beazley