A new European insurance fund for the ocean energy sector is being designed to slash the costs of the first commercial projects and accelerate the roll-out of the industry.
Ocean Energy Europe (OEE) has appointed risk and insurance consultancy, Renewable Risk Advisers to carry out the work as part of the EU-funded OceanSET project.
Project Manager for the work, Renewable Risk director, Joe Hulm, said: “This fund will help bridge the gap between insurance and project finance, the end goal being scale-up through a cheaper cost of capital. Ocean energy can pioneer this approach to reaching Net Zero, where insurance is enabling innovation.”
Final report due in spring
Renewable Risk have consulted with the ocean energy industry, and are now discussing with insurers, lenders and equity investors. The final report, detailing the fund’s design, is due in spring 2021. OEE and Renewable Risk will then work with financial stakeholders and funders to make the fund a reality.
A well-designed insurance fund will mitigate the early risks of innovative ocean energy projects, for which investors typically demand returns of 10-12%. Access to project finance is a significant obstacle for wave and tidal developers, looking to leverage equity and crack a €53bn per annum global market.
De-risking projects through an insurance fund can act as a ‘golden ticket’ for the scale-up of ocean energy. By enabling more projects to reach financial close, this will generate the operational data and experience necessary to meet the needs of insurers, lenders, and equity investors.
By Rebecca Jeffrey
