Munich Re Expects Dramatic Growth From Renewable Energy

NU Online News Service, Oct. 25, 2:46 p.m. EDT

Renewable energy will be a driver for growth in insurance premium, at least in Germany where there is firm commitment to the growth of the industry, according to Munich Re.

The Munich, Germany-based insurer issued a report saying that premium growth is expected to rise substantially over the next 10 years, and also pointed to the growth in renewable energy as an engine for economic growth for the nation's economy.

Munich Re said that in 2009, premium income from the insurance of renewable energy facilities totaled approximately EUR186 million (U.S. $260 million at the current exchange rate) in Germany. For 2020, Munich Re said it expects premium volume to reach around EUR440 million ($615 million), an increase of 137 percent, according to National Underwriter's calculations.

At the same time, business potential should rise from EUR19 million ($27 million) to around EUR50 million ($70 million) owing to the construction of new facilities.

Munich Re underscored Germany's commitment to renewable energy, saying that "in line with political targets, the share of renewable energies in power generation in Germany is expected to increase from a current 10 percent to 60 percent by the middle of the century," creating the foundation for significant growth in premium.

At the end of 2009, there were nearly 340,000 people working in the renewable energy sector in Germany, a figure that has more than doubled within a period of six years, according to Munich Re.

The industry's profit totaled EUR36 billion ($50 billion) in Germany for 2009, compared with EUR18 billion ($25 billion) for 2005.

Munich Re declared that "renewable energies are therefore a growth area in a generally stagnating German insurance sector, with wind power, photovoltaic and biomass playing a central role."

"We are excellently equipped to support the structural transformation of the energy supply sector by offering customized risk transfer products," said Ludger Arnoldussen, member of Munich Re's board of management, in a statement. Our spectrum ranges from traditional coverage for industrial facilities to complex solutions, such as performance guarantee covers enabling capital providers to reduce their investment risks. Over the next few years we will continue to expand this product range."

The company said a recent example is the performance guarantee insurance concluded this month to cover so-called concentrator photovoltaic modules manufactured by the U.S. company SolFocus. Similar performance guarantee products are being planned for wind power and solar thermal systems, Munich Re noted.