Correct balance between insurance costs, risk key in renewables projects funding
Balancing the costs of insurance against the risks involved in building a renewable-energy plant in South Africa has proven critical to securing funding for these projects, says Marsh Africa director Nicola Harris.
The experiences gleaned from renewable-energy projects in countries worldwide have resulted in the engineering risks being well understood and more easily assessed, which subsequently reduces the risks that banks face when funding such projects.
Banks seek surety of returns on the funds that they provide for renewable-energy projects, while renewable-energy developers want to control their costs, ensure that they make a profit and sustain the project throughout its life cycle.
A properly constituted insurance portfolio is a significant part of a viable financial model of a renewable-energy project, as it reduces the risks banks are exposed to and, thus, boosts the funding banks make available for these projects.
“A key part of the function of insurance advisers is critically reviewing the contracts to identify risks. “Insurance portfolios must maintain the balance between risk mitigation and costs. “Insurance cannot mitigate all the risks associated with renew-able-energy projects, but it can help make such projects bankable.”
Determining the realistic appetite for proposed projects and the risk profile the lenders are comfortable with enables the projects to become financially viable.
“While the renewable-energy industry is relatively new in South Africa, it is well established in many other countries, enabling South African lenders and financial institutions to use the data from these countries to assess the severity of risks inherent in such projects,” she says.
Marsh Africa draws on its global network of expertise in the renewable-energy sector, its local knowledge of insurance regulations and engineering risk experts to provide clients with the correct and balanced insurance portfolio, says Harris.
“Marsh Africa aims to provide insurance and risk advice for projects, from conception to operation, including designing and modifying the projects’ insurance programmes according to changes in risks or the financial and regulatory environment,” she says.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation