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We're excited to share that Jeff McAulay has joined the "Insider's Guide to Energy" podcast as a co-host! With his extensive experience in the clean energy sector and passion for innovation, Jeff brings fresh insights to the show’s deep-dive conversations on the future of energy.

Tune in to hear Jeff and the team explore the latest trends, challenges, and opportunities shaping the energy landscape. Whether you're in the industry or just passionate about the energy transition, this podcast is a must-listen!

Check out more episodes here: Insider's Guide to Energy.

Last week, I was able to attend several Climate Week events in NYC 2024. This annual convening of thought leaders is crucial in driving top-down influence in the fight against climate change across every industry. Insurance has always been a priority of ours at climate week, but this year it was impossible to ignore the growing emphasis on insurance across all attendees, from venture investing to broader finance.

Historically, insurance discourse at climate events has revolved around resiliency and adaptation. Given that insurers have shouldered much of the financial burden from the physical damage caused by climate change , it's understandable that the industry has focused on mitigating and avoiding losses. Insurance has often been viewed as a tool to manage risk, especially as natural disasters increase in frequency and severity. However, this year, the conversation took a proactive turn.

The tone of 2024's discussions signaled a shift toward a more forward-looking role for insurers in preventing climate change itself. The industry’s growing engagement with “de-risking” clean energy and energy transition projects reflects a deeper involvement beyond traditional risk management. This shift not only introduces new players to the nuances of insurable risks but also demonstrates the powerful influence that Climate Week can have in aligning industries with climate action goals.

But the top-down influence observed during Climate Week NYC must be followed by meaningful action on the ground. As individuals within the industry, especially those involved in transactions, we have a responsibility to carry this momentum forward. Here are a few reflections on how insurance can continue to evolve as a force for change in the fight against climate change:

Engage Early

Every project or company must face a complex landscape of risk management. Engaging with insurers early in the process allows for crucial resiliency and adaptation considerations to be integrated into planning. This not only lowers insurance costs but also helps avoid costly last-minute surprises.

Early engagement can identify specialized products designed to transfer or reallocate risks that a project might not want to retain. By incorporating these solutions from the beginning, project stakeholders can model both the costs and benefits, ensuring more accurate planning and execution.

Quantify the Value of Insurance

Insurance is often perceived as an unavoidable expense, rather than a tool to create value. Shifting this perception requires a clear focus on the value an insurance policy provides. What measurable benefits does it bring to a project? Which key performance indicators (KPIs) does it optimize? These are key questions to answer.

At the same time, project owners and investors need to adopt an outcome-oriented approach. By isolating the tangible benefits of an insurance policy—whether it's protecting revenue streams or mitigating unforeseen costs—they can better balance the value it provides with its cost. The focus should be on achieving problem-solution fit, where insurance plays a critical role in enabling the success of a project.

Be Specific

Insurance can be broad and flexible, but to be actionable, it is crucial to be specific about the risks that need to be covered. This is especially important for emerging risks linked to the energy transition.

Taking a detailed approach to understanding the steps that could give rise to a loss, the potential economic impact, and the benefits of mitigating that risk ensures that the insurance solution is tailored and effective. For example, by mapping out the risk scenarios in a renewable energy project—such as operational downtime due to extreme weather—stakeholders can design an insurance solution that directly addresses these challenges, providing both financial protection and operational stability.

The impact of climate change was laid bare in 2023. It was the hottest year on record and the ten warmest years in the last 174 have all occurred in the last decade. Climate investment is attempting to rise to the occasion – investors poured $1.8 trillion into the energy transition globally, a 17% increase from the prior year. Still, the impact of climate change is clear, and capital deployment needs to accelerate in order to meet any of the stated energy transition goals at any level. Large, flat rooftops across America’s commercial and industrial (C&I) segment present a promising solution.

Installing solar panels on industrial rooftops provides an opportunity to bring meaningful chunk of clean energy generation online. Rooftop solar currently produces 1.5% of US electricity consumption, up tenfold from 2012; although this is a significant increase, there remains a large opportunity for growth. Environment America reports that widespread installation of solar on residential, commercial, and industrial properties could result in rooftop solar generating up to 45% of all electricity currently used in the United States. If all qualifying REIT real estate assets added panels on their rooftops, the amount of energy generated would make up 25% of commercial consumption. Large, flat warehouses roofs could produce enough electricity to serve their own consumption, leaving 80.14TWh available to the grid. Industries such as furniture, textiles, metal, apparel, and printing could generate enough electricity through rooftop solar to power their operations.  

Most industrial rooftops are flat and uncovered, creating ideal conditions for installation. Developers are not required to acquire land or work through burdensome siting and permitting requirements. Prioritizing onsite generation also mitigates significant interconnection delays that plague renewable deployment across the US. On top of it all, rooftop solar installation creates meaningful value for customers. Leasing rooftops to project developers creates an opportunity for landlords to increase net operating income (NOI). At the same time, onsite generation from rooftop arrays have the potential to reduce the cost of electricity. Commercial customers could see a 9% reduction in electricity costs relative to purchasing utility electricity in 2025 by installing rooftop solar. When coupled with battery storage, there are additional opportunities to generate income and reduce costs by participating in virtual power plants or providing ancillary services.

When considering the challenge ahead to combat climate change, the empty, flat rooftops in America’s commercial segment are a valuable resource. Unlocking this resource will be a massive uplift in the energy transition.

In the race to combat climate change, the energy transition has become an essential pillar. However, as we transition to greener energy solutions, there’s a critical piece of the puzzle that often gets overlooked—insurance. Innovative insurance solutions are key to reducing risks, encouraging investment, and driving decarbonization at the pace needed to meet global targets.

The Role of (Re)Insurance in Commercializing Energy Transition Technology: Opportunities in New York State (“the Report”), written by Cara Eckholm and Brandon Luebbehusen, offers a comprehensive look into the role of the re/insurance industry in the energy transition, showcasing the untapped potential for creating new insurance products that mitigate emerging risks. The Report also demonstrates why companies like Energetic Capital, which focuses on addressing credit risks and unlocking capital for clean energy projects, are vital to the energy transition.

Financing the energy transition is a recognized global problem. In his letter outlining COP29, President Designate Mukhtar Babayev highlights the New Collective Quantified Goal on Climate Finance as the "top negotiating priority." Boston Consulting Group estimates there is a $19 trillion financing gap that must be filled if the 2030 climate goals are to be met. Accelerating financing for the climate transition is crucial.

The march of progress is relentless; the Energy Information Administration projects global electricity demand could increase by about one-third to three-quarters by 2050. We need more energy, and we need clean energy. This is a multi-technology, multi-commodity challenge that extends beyond solar and wind to emerging solutions like renewable natural gas, green hydrogen, and sustainable aviation fuel. To meet our constantly evolving energy needs, we must build—renewable energy infrastructure across the value chain to increase deployment. We must also develop new financial products to support this deployment. Long-term, low-cost financing is vital to advancing our clean energy goals.

Murphy's Law tells us that "Anything that can go wrong will go wrong." Predicting the future is difficult, so considering potential risks is essential for successful long-term project financing. These transactions depend on consistent performance by counterparties for 10 or more years. Identifying, mitigating, and appropriately allocating risks is critical. As the energy transition accelerates, intelligent risk management will be vital to enabling low-cost financing on commercial terms.

The insurance industry has traditionally absorbed risks that project sponsors are unable to take or allocate—this has been the case for hundreds (if not thousands) of years. More recently, insurance has been used to cover more nuanced contractual and transactional risks. In combating climate change, the industry has focused on resilience and adaptation to reduce their exposure to losses from extreme weather events. This is appropriate, as insurers have disproportionately borne the costs of climate change. We believe there is a key role for insurers to play as a catalyst in driving climate solutions.

Energetic has been pioneering risk management solutions for renewable energy projects for nearly 10 years, viewing insurance as a mechanism to create market liquidity. We ask, “What can I achieve if I think of insurance as an enabler, rather than a requirement?” To date, our innovative credit insurance has unlocked over $500M in distributed energy projects across the U.S., avoiding more than 85,000 MT of CO2. Additionally, 30% of Energetic’s portfolio is located in disadvantaged communities, where most of these projects would not have been financed otherwise. We’re not alone at the forefront of risk-transfer innovation—other MGAs like kWh Analytics and New Energy Risk share this mindset. The insurance industry must continue expanding acceptable risk boundaries through deep expertise and specialized underwriting. Where private insurers need help, we champion the GreenieRE coalition to address bottleneck risks and accelerate deployment.

If finance is the fuel for the energy transition, risk management is the fuel for financing. Don’t let perceived risks hold back your projects—reach out to explore how we can collaborate to mitigate risk and advance our collective clean energy goals.

As the summer sun shines bright, there's no better time to unwind with a good book. At Energetic Capital, we're passionate about not just fueling financial growth but also nurturing intellectual curiosity. That's why we're excited to share our Summer Reading List—a collection of insightful books that have recently captured our attention. Whether you're lounging by the beach or enjoying a quiet evening at home, these reads offer fresh perspectives and inspiration to enrich both your professional and personal journey.