Understanding emerging risks posed by different energy storage technologies, market uncertainty, and the threat of systemic risk lurking within connected, complex energy economies is critical. This publication, from the Chief Risk Officer (CRO) Forum’s Emerging Risk Initiative, a group of professional risk managers from the insurance industry, including Allianz Global Corporate & Specialty (AGCS) experts lays out the fundamentals of what is known – and the open questions that remain – about energy storage technologies, their (re)insurance relevance and the challenges and opportunities that inevitably come with a dynamic, emerging risk subject.
The urgent need to accelerate the development of a resilient and sustainable future energy economy has been highlighted by the impacts on energy supply due to the war in Ukraine. Decarbonization of the energy economy entails further massive investment in, and development of renewable energy infrastructure, which in turn requires the availability of technologies to store energy over a range of timescales.
This position paper explores energy storage systems as an important emerging field for the insurance industry. To facilitate the industry’s proactive engagement in this developing sector, building knowledge on the future landscape of energy storage systems is crucial. With a focus on emerging risks, this position paper looks at the most important energy storage technologies, their maturity, the related risks, and their relevance to the insurance industry. The promise of different technologies versus the barriers to their commercialization, are compared in the context of the outlook for the energy market.
Regarding the insurance market, we focus on potential risks and opportunities, potential impacts on various lines of (re)insurance business and risk assessment methods. While the market for energy storage will continue to grow tremendously, the future of energy storage systems will be diverse and complex. Proactive risk management and risk diversification will be crucial for the insurance industry to be able to support the current and future development of the energy storage industry, which is a critical component in the success of the energy transition.
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