CLS Risk to ‘wake sleeping giant’ with renewables permit challenge insurance

CLS Risk Solutions (CLS), a provider of property and renewables development risk cover, has launched permit challenge insurance for renewable energy infrastructure.

It insures against barriers to construction caused by third party judicial review challenges to a project’s permit or planning permission. CLS said the policy will help secure financing for renewable energy projects that may have struggled to get investment in the past. The company said it “could unlock a significant number of renewable projects throughout Europe”, including wind farms, ensuring the solvency of the developer during third party challenges. It also covers the capital investment into the project and financing repayment obligations in the event of an unfavourable final court order.

As renewable energy has grown in line with green targets, existing wind farms and other renewable buildings will need to be renewed or replaced as they age. But as renewable energy is no longer in its infancy; developers and investors have to work harder to get projects underway, while the remaining investment opportunities are riskier, the company explained.
The new insurance product “helps developers and investors access more opportunities by turning a ‘difficult’ investment into an ‘easier’ one, CLS added. “In a maturing market it is these B rated, riskier renewable projects, where there is potential for the bigger returns.”

Will Brooks, business development director at CLS, said: “As well as creating better investments, the threat of a challenge to a permit is enough for private investors and banks to stop funding; without insurance there is no certainty that the business plan will perform. In the worst case scenario, they lose all their money. They won’t take that risk. In the simplest terms, without permit challenge insurance, developers will find it difficult to get the funding they need to build wind farms.

“It is clear from our existing strong local broker partnerships in Europe, that the insurance industry has a significant opportunity to support the renewable energy sector by providing certainty that has been missing until now.”

The company is partnered with insurance brokers including Marsh, Aon, Willis and Verspieren. Brooks added: “It’s an area of insurance that is little known and even less understood in the wider broker market – it has been a sleeping giant in many respects. The growth potential is huge, but there is a lot of work to be done to raise awareness among brokers and their clients of these products and what they are capable of.
“With the right collaborative approach and broker training, we aim to wake up this sleeping giant across Europe.”

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