U.S. energy is in crisis. Much of the country's current infrastructure, which was built in the 60s and 70s, is struggling to support present-day needs and demand. Extreme weather patterns have also tested and reduced the grid's longevity, resulting in faltering reliability and increased blackouts and brownouts. These problems are further exacerbated by the proliferation of data centers, which can consume as much energy as 100,000 households annually. Their added strain has caused electricity prices and demand to skyrocket, further burdening the aging infrastructure and maxing out capacity.
With energy demand projected to increase by 25% by 2030 and grid reliability continuing to decline, it's critical that the U.S. invests in more sustainable, reliable and scalable energy solutions — and fast. But to do so, we first must find ways to effectively reduce the financial strain and risks associated with pursuing renewable energy projects, allowing us to accelerate timelines and bring these solutions to market without sacrificing quality and assurance. And insurance offers the perfect solution.
Opportunities and challenges in today's renewable energy landscape
With gas equipment shortages, renewable energy sources — such as solar, wind, nuclear, and geothermal, as well as battery energy storage solutions — provide strong pathways forward for addressing the energy crisis and increasing electricity capacity, but their progress is being stalled at critical points.
Changes in the U.S. tax code and geopolitical tensions have caused project costs to soar and reduced developers' appetite to pursue large-scale projects. Last year, at least $14 billion in clean energy projects were cancelled in anticipation of the One Big Beautiful Bill Act. While solar is the cheapest form of energy, tariffs and the new Foreign Entity of Concern (FEOC) regulations are making it difficult to cost-effectively source components that are critical to completing utility-scale solar and other renewable energy projects.
While nuclear has received significant federal and industry support and backing, those projects still experience headwinds. Building and running a new nuclear facility can take decades; America's most recently connected reactor started construction in November 2013 and didn't connect to the grid until March 2024. Microsoft and Constellation Energy plan to restart Three Mile Island, but that pre-existing facility won't be able to generate power until 2028. Newer and more compact designs like Small Modular Reactors (SMRs) offer shorter timelines, but those first-of-a-kind projects need to undergo extensive testing and safety protocols before coming online. Nuclear projects also frequently go above budget; the average nuclear power plant has a construction cost overrun of $1.56 billion.
Newer climate technologies also face significant challenges. Without long operating histories or strong credit ratings, climate tech companies are pushed towards expensive, restrictive financial options to move their projects into the commercial space. These alternatives come with double-digit rates, dilution, and significant balance sheet strain, slowing the very growth needed to decarbonize industries.
Insurance can solve renewable energy project risks
The energy transition requires more than breakthrough technologies; it needs innovative, blended capital structures to bring them to market. One of the most effective ways to lower the weighted average cost of capital (WACC) is through targeted risk transfer.
Given that new energy infrastructure is a long-term investment with fluctuating costs depending on labor, the supply chain, natural resources, and the current geopolitical environment, investors need assurance that these projects will survive multiple economic and election cycles. With insurance, investors, lenders, and other stakeholders can feel secure against potential financial losses, unlocking additional capital. This is especially critical for climate technologies that are considered "unproven" — despite undergoing rigorous testing — as traditional financial institutions weren't built to underwrite performance in new or distributed technologies, take tail exposures, or operate in a market where past data is no longer a prediction of future outcomes.
Not only can insurance help protect against project risks, but it can also help crowd in other capital, whether it's state, federal, philanthropic, or venture. If we're too quick to scale new energy while maintaining affordability, we need to focus on capital efficiency and move away from subsidy-driven models, which have become increasingly unstable. Every dollar needs to be catalytic and focused on pulling in more capital rather than crowding it out.
MGAs can help lead the way
Fifty-one percent of renewable energy companies listed a lack of suitable insurance products as one of the most significant obstacles to transferring clean energy risks to the insurance market. If the insurance industry wants to capitalize on the $1.6 trillion renewable energy market, carriers need to build products and an ecosystem that can keep pace with the nation's evolving energy demands. Supporting MGAs is the best way to achieve that agility.
MGAs are lean, flexible organizations. There's a reason why they're such an important part of insurance: they drive innovation. They often have novel ways of approaching underwriting and risk assessment, and their deep expertise in niche markets makes them especially valuable for the energy transition, where exposures are complex and highly specialized. With MGAs providing the technical insight and established reinsurers supplying the capital, the industry can deploy targeted solutions that address specific renewable energy bottlenecks and quickly advance infrastructure.
Energy needs insurance
We need more domestic energy resources, and the insurance industry is uniquely positioned to help ensure new energy infrastructure reaches the finish line. By stepping in early and addressing the diverse risks that hold back these projects — ranging from tax, offtake, natural catastrophe, cost overruns, interconnection, and more — insurers can efficiently lower financing costs, provide a strong risk backstop, and unlock and attract both public and private capital. With this added assurance, clean, reliable, and affordable energy can quickly be deployed in communities across the country.
Jeff McAulay is the CEO of GreenieRE, an impact reinsurance company focused on the bottleneck risks holding back climate infrastructure projects.
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