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According to pv magazine Australia, insurance premiums for renewable energy projects in Australia are forecast to decrease this year. The underwriting firm Tokio Marine GX has indicated that premiums for large-scale solar, wind, and battery projects are likely to decline in 2026, though natural catastrophes and severe weather remain significant concerns that may affect the rate of decrease.
An underwriter at the firm noted that premiums for renewable assets are generally on a downward trajectory. However, the pace of decline varies across different technologies. Premiums for battery energy storage systems are falling more rapidly, attributed to underwriters gaining access to improved operational data. In contrast, premiums for solar assets exposed to natural catastrophe risks are decreasing more slowly.
The frequency and severity of extreme weather events have increased globally in recent years. While Australia has not experienced the most severe impacts, the market may be overdue for some natural catastrophe losses, particularly given the rapid expansion of large-scale solar. The deployment of utility-scale solar in the country accelerated from less than 350 MW at the end of 2017 to over 13 GW by the end of 2025, with an additional 3 to 4 GW under construction at that time.
This growth means the number of solar panels exposed to potential extreme weather, such as hail, has increased dramatically. While hail mitigation technology is advancing, it is not considered fully effective. Despite the weather-related challenges, the maturing large-scale solar industry is having a positive impact, with a noted gradual reduction in construction and delivery risks as local experience grows.
The expanding battery energy storage market presents new considerations for insurers assessing lifecycle and operational risks. Early signs are positive, but the technology is new, and unforeseen issues may emerge. A key uncertainty is how losses will track over time, as historical data is insufficient to predict if patterns will mirror those of wind and solar, where losses typically cluster during construction, early operations, and end-of-life phases.
Claims for battery systems can also be more complex to settle than for solar or wind projects, due to a wider range of revenue streams and higher associated clean-up costs. Insurers are also monitoring other potential hurdles for battery storage growth, including supply chain constraints, installation challenges, and evolving technology.
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