The rapid growth of co-located and hybrid renewable energy projects is reshaping risk across the global energy market, creating new challenges for insurers and highlighting areas where existing coverage approaches must evolve, according to a new report from Tokio Marine GX (TMGX), the green transition underwriting business.
The new report, “Co-location, Co-location, Co-location: Underwriting the future of flexible clean power”, draws on insights from TMGX’s global renewable energy underwriting and claims teams alongside real-world project case studies, to explore how co-located and hybrid systems, combining technologies like solar, wind, battery storage (BESS) and Power-to-X – an approach that converts renewable electricity into other usable forms of energy like hydrogen, synthetic fuels, or heat – are transforming the nature of renewable energy risk.
While underwriters are currently comfortable with established co-located assets such as solar-plus-BESS, the report highlights a need to respond to the scale and complexity of next-generation megaprojects, industrial clusters and Power-to-X facilities. These emerging models introduce increasingly intricate technological interdependencies and more diverse revenue streams that go beyond traditional, single-asset insurance frameworks.
Fraser McLachlan, Chairman of Tokio Marine GX, said: “The rise of co-location signals a broader transformation in how energy systems are designed, integrated and managed. As projects become larger, more interconnected and more strategically important, the insurance market must continue evolving how it understands, models and supports these emerging risks. Clean energy is now as much about resilience and energy security as it is about decarbonisation.”
These dynamics are already playing out in practice. The report features large and complex project case studies including Masdar’s ‘Round-the-Clock’ project in Abu Dhabi – a landmark development combining 5.2GW of solar capacity with a 19GWh battery energy storage system to deliver continuous clean power at scale – and the Kassø e-methanol facility in Denmark, one of the first large-scale power-to-X projects to reach commercial operation, integrating solar generation, electrolysis and fuel production to produce e-methanol for industrial use.
Together, these examples illustrate how increasing scale and technological complexity are sharpening focus on risk management, particularly around asset concentration, system design and resilience. They also underline the growing need for closer collaboration between developers and insurers, and for more adaptive underwriting approaches as emerging technologies introduce new and evolving sources of uncertainty.
The report highlights several key findings relevant to co-located renewable energy projects:
- Technology interdependence matters – Performance and reliability are increasingly shaped by how effectively different asset types operate together. This interdependence can influence operational output and revenue continuity, introducing additional underwriting considerations.
- Core risks remain consistent, but their impact varies – Key risks such as extreme weather, supply chain constraints, and equipment performance are common across the renewables sector. However, their severity and financial impact differ depending on project design, scale, and revenue structure.
- Revenue complexity increases modelling requirements – Projects operating across multiple markets or revenue streams may require more detailed business interruption modelling to accurately capture exposure.
- Aggregation risk is location-dependent – Sites in regions with high asset concentration may face elevated aggregation risk, particularly where shared grid infrastructure creates a common point of vulnerability.
Oliver Litterick, Head of Renewables, TMGX, said: “The transition to more flexible, integrated energy systems is a positive and necessary step for the sector. Co-location is playing a more important role in that evolution. What our latest report demonstrates is that, while the risks are becoming more complex, they are also manageable with the right approach to design, data and collaboration.
Looking ahead, TMGX identifies three areas that will be critical to supporting the continued development of co-located and hybrid renewable energy projects:
- Improved data sharing and transparency to help insurers better understand performance, reliability and failure scenarios across integrated systems
- Ongoing product innovation to reflect more complex revenue models, interdependent technologies and emerging sectors such as Power-to-X
- Earlier and closer collaboration between developers, insurers, lenders and risk engineers to align on project design, risk allocation and mitigation strategies
Oliver added: “The way insurers think about risk needs to evolve alongside the growth of co-location. TMGX has been in the game for decades, so we already have a strong foundation to build on. By working closely with developers and continuing to invest in data, dialogue and insurance product development, the wider insurance market can play a key role in enabling that next phase of growth, too”.
The full report is available at: https://tmgx.com/insights/reports/co-location-co-location-co-location