South Africa’s Renewable Energy Push Offers Huge Opportunities For Specialist Insurers

South Africa has embarked on a major renewable energy drive, partly because the national power utility Eskom is unable to generate enough electricity to meet the country’s needs, but also in line with a global push away from fossil fuels.

The country aims to bolster the share of renewable energy in its power generation mix from the current 11% to 41% by 2030, according to the 2019 Integrated Resource Plan (IRP).

This would see utility-scale renewable energy public procurement of 22.9GW between now and the decade’s end.

This means that South Africa – which is rolling out renewable energy projects at a significantly faster rate than the rest of the continent – will need an investment of approximately $35.6 billion (R671 billion) to achieve its goals, explains Jared Nivison, Director at iTOO Renew Risk Africa.

It is expected that about a third of this investment will come from low-cost financing provided by the international community’s development finance institutions, while it is anticipated that the commercial sector will provide the remainder of the funding.

“As a country, we are currently on a tremendous growth trajectory in this space as we need to reach the targets for renewable energy set out in the IRP,” Nivison says.

“As such, a multitude of green energy projects are currently in the pipeline, at various stages of development, and many more are yet to get off the ground.

“This creates tremendous potential for the insurance industry as practically all renewable energy projects require project owners to take risk transfer and risk mitigation measures into consideration to mitigate a host of potential exposures.”

Nivison points out that renewable energy projects are extremely capital-intensive, and insurance is a prerequisite for lenders to provide funding for them.

Insurance is thus a critical component that helps to assure lenders that their investment is protected, and without which none of these projects could be completed and bankable.

iTOO Renew Risk provides cover for commercial or utility-scale projects with a power generation capacity of 5MW and above.

Local renewable energy projects generally range in value between R200 million and tens of billions of rand.

However, the typical solar power project on average is typically valued at about R3 billion, while wind power projects usually come in at some R4 billion to R5 billion.

“iTOO Renew Risk has established an exclusive underwriting partnership with several reinsurance partners for renewable energy insurance solutions that are tailored to the Southern African market,” says Nivison.

“We are Africa’s first and only niche underwriting manager, solely insuring renewable energy projects, and our unique and exclusive underwriting partnership has a combined capacity of $500 million or R9.4 billion per project”.

“We are the leading provider of renewable energy insurance services, offering comprehensive property, revenue, and liability coverage for utility-scale projects.”

Nivison says that iTOO Renew Risk and its reinsurance partners have dedicated renewables teams, that consist of a group of dedicated specialist consultants who provide insurance to major projects in South Africa and other parts of the world.

“iTOO Renew Risk and our reinsurance partners have extensive experience and understanding of utility-scale Renewable Energy projects,” says Nivison.

“By bringing together specialists with multi-disciplined professional backgrounds and a wealth of relevant experience from South Africa and the UK, we can provide the required insurance services to assist in making large capital projects a success.”

“We offer a bespoke cradle-to-grave seamless insurance instrument that ticks all the boxes and meets the requirements of developers, owners, manufacturers, contractors, lenders, lender insurance advisors, and brokers.”

Nivison adds that the company has been active in this space since the introduction of the first renewable energy projects in South Africa in 2011.

Since then, iTOO Renew Risk has underwritten various renewable energy risks to date and thus has the range and depth of experience to meet new challenges.

“The growth of renewable energy continues to gather pace in South Africa, not only as the country is aiming to decarbonise its power generation but also as companies and mines are building green energy plants to decrease their dependence on Eskom,” Nivison says.

“This means that the pipeline of renewable energy projects is constantly growing, and this provides huge opportunities for insurance companies such as iTOO Renew Risk to take advantage of this trend, for many years to come.”


Visit the iTOO Renew Risk website for more information.

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