Beth wants the 30 new or recently retrofitted assets to have improved insurance terms & conditions as they have more robust building components, which also show better energy efficiency, and the newly installed flood and heat wave resilience measures can largely reduce the physical risks of the assets. They also hope that Andy could help them figure out measures to improve the 70 other assets and the potential of retrofitting for better insurance coverage. However, some of these assets could be too expensive to retrofit and end up being “stranded”.

Witnessing the progress of climate change response in his company, Andy is interested in the impacts of the insurance industry to the transition to net zero and how ESG reporting affects businesses. Beth’s requests provided him an opportunity to explore the potential of rewarding better performance buildings through better insurance terms and conditions. He would like to find the right data to support his vision.

Apart from general building information and some risk data provided by C&D and Beth, Andy needs to collect missing data for creating a schedule of risks and a risk management report for Insurers, capture additional data elements that inform mitigation and improve resilience of these exposures to improve asset risk profiles that could bring improved terms and conditions, and gather relevant claims and premiums information to be at a better position to negotiate insurance rates for Beth. Furthermore, he needs to find additional data that can enable him to work with insurers to innovate new insurance products that can reward net-zero behaviours and help Beth to retrofit and decarbonise their old assets.

Figure 2 maps the ecosystem in the insurance market and illustrates the current process for this use case to happen. The major data inflow points are at broker Andy and the insurers he connects with. The essential information in the process are the data for catastrophe modelling and insurance pricing, including primary modifiers (e.g. age, location, construction, number of stories and occupancy), secondary modifiers (e.g. roof geometry and anchorage,  construction quality, cladding, and basement etc.) for major catastrophe risks, and also building value and claims history, etc. 

Other data such as risk management and mitigation are useful for negotiating a better policy. All stakeholders play a role in data sharing, either as a data owner/provider or data user in this ecosystem. Large broking companies and insurers may have their own catastrophe modelling team and underwriting team to perform analytics for clients/customers. For smaller broking and insurance companies, they may rely on third party model vendors to carry out risk analysis, underwriting and pricing processes. At each data point in the ecosystem, there may be various issues causing the data recipients to look for alternative solutions from third party data providers, to fill data gaps and overcome data quality issues. 

At the end of the data chain, the insurer’s underwriting and pricing process may conclude some old assets are not insurable due to high risks or not profitable reasons. For those assets, Andy then needs to work with Beth and C&D to work out retrofitting solutions to make them insurable or consider other options. There are opportunities to work with insurers to explore new innovative insurance products that consider a retrofitting roadmap for these buildings and assist Beth and C&D to retrofit and improve resilience.

Data Required for the Use Case

There are a number of important datasets to enable this use case to be realised. Table 1 lists the data required to deliver this use case.

Service and Shared Data Infrastructure Required to Deliver the Use Case

In the use case, major data exchange happens between the broker and the asset manager. However, in most cases the asset manager is not capable of fulfilling the broker’s data request due to various reasons, such as large numbers of complex assets, no data or missing data, errors, data too simple, quality too low, wrong format, not usable etc. To fill the data gaps, the broker has to approach a wide range of third party data providers, such as

• Ordnance Survey for locations, occupancy, adjacent risks, digital elevation model (DEM), building heights data etc.; 
• Data Police UK for crimes data; 
• Fire Service UK for fire stats;
• Flood data service for flood risk data; 
• Catastrophe model vendor for wind risk data; 
• EPC register for floor area and EPC rating.

Data is fragmented, scattered, unsearchable, incomplete, many of them have to go through bilateral contracts to access, some are simply not accessible. Sustainable data is even more difficult to find and figure out how to use them. It is very challenging and time consuming to gather required data to deliver the use case. A new data service is needed to address the challenge. 

The new service is expected to be able to bring all the above fragmented data sources together either directly or through third party data service providers into a shared data governance framework, a secured digital infrastructure that promotes data sharing and consumption. The C-RBP supported by the SERI governance framework is the answer for it. The C-RBP will: 

• Bring building data providers and data service providers on board the SERI shared data governance platform through membership consents
• Obtain public open datasets metadata for the SERI platform to enable both open and Shared Data can be visible to data users
• Promote digitalisation of building related data
• Enable access to both Open Data and Shared Data and serve Shared Data through preemptive licenses
• Provide data through member data providers and member data service providers whilst all data are still owned, kept and updated by the data providers

The SERI shared data governance framework is based on a secured data governance structure, i.e. the SERI Shared Data Governance Framework, built on Open Banking and Open Energy foundations and many open data sharing standards (e.g. preemptive licenses). Within this infrastructure, the collaboration with a wide range of stakeholders makes data discovery, aggregation, management, and sharing through federalised data services much easier and more efficient. Data governance within the infrastructure can provide a secure platform for many current Closed Data to be shared through preemptive licenses. It can unlock a lot of new data (e.g. financial, business and environmental data, especially mitigation data for climate change) for businesses to innovate and potentially incentivise net-zero behaviours.

Through the C-RBP service, Andy can easily discover various building information and building risk data (inc. both resilience and mitigation risks) from his computer. Once data is identified, the system will show him if he is eligible and how to access the data through the SERI standard and preemptive licenses. Figure 3 maps the major components of the SERI Shared Data Infrastructure and demonstrates how Andy can access different types of data (Open or Shared) through the C-RBP service. 

With this service, all data he needs will be listed in the C-RBP Datasets Search (both Open and Shared Data), he can access Shared Data through preemptive licences. Andy no longer has to ask around to find data and data providers, then go through many bilateral contracts. The datasets from C-RBP are all digital and machine readable, and are produced under good data standards, easy to use and convert. This saves time, effort and money for him. The C-RBP also enables new datasets to be discovered. New and better datasets (e.g. operational data, emission data) can potentially give him insights to innovate.

Call for Support 

The C-RBP is currently a concept designed by the SERI project. To enable the creation of the C-RBP service, we need support from data providers and data service providers from both the built environment sector and the insurance sector to be part of the SERI shared data governance framework. We also need support from wider stakeholders in the insurance and built environment value chains for consultation to understand more on the values C-RBP can bring and how they can be maximized for industries. 

Photo credit: Photo by Dimitry Anikin on Unsplash

Data Challenges in the Built Environment and Insurance Sectors

The characteristics of the built environment sector and its data are well known to be fragmented and siloed. From design to construction to operation, a building can generate massive amounts of data, such as Building Information Modeling (BIM) data, materials, products, and operational data. However, much of this data is unstructured, in the wrong format (e.g. paper, PDF, excel sheet etc.), unmanaged or forgotten/lost, and most of this data are closed datasets, not for sharing. Issues of too much data to handle and lack of data co-exist, while repeated data capture is common. It is hard to work out the “what, where and how” questions when it comes to data access in the sector. When data is captured, there may still be issues for understanding and using it correctly. 

There are some attempts to aggregate building related data by the sector to tackle the problems. The attempts include the Building Passport platform that focuses on providing building fire safety; the MADASTER Passport that registers building material and product records; the Building Renovation Passport (UK, EU projects) that collects renovation related building information in a logbook and plans building renovation roadmaps, and a few others. However, they are still siloed and built for limited purposes, and at their early stage. 

On the journey to net zero, the insurance industry is preparing to support the net-zero transition of the economy, including the built environment sector, through transferring and mitigating risks. A few big insurers such as Aviva have already set up their own net-zero targets and strategies. A group of leading Re/Insurers has formed a Net-Zero Insurance Alliance to explore net-zero underwriting potentials. Others partner with academics, regulators and legal experts to explore net-zero underwriting policies and tools for building insurance (e.g. ClimateWise Principles) and develop insurance contractual clauses to combat climate change (e.g. TCLP insurance clauses). 

Data lies in the centre of insurance businesses. However, similar to the built environment sector, data are siloed, fragmented and inconsistent in the insurance industry. Data sharing is complex and difficult within and in-between companies in the sector, and has been limited in a closed circle through bilateral contracts for many years. High data friction and blockages are pushing catastrophe modellers and underwriters to accept lower quality alternative data and outputs. For building insurance, data capture focuses on buildings’ resilience to current and future climate risks rather than their potential mitigation contributions to climate change. No climate change mitigation related parameters currently exist in building insurance considerations. The insurance industry lacks understanding of where they can find and how they can incorporate climate change related information into their risk modelling and insurance pricing process to enable net-zero insurance. 

To tackle the above challenges, the Icebreaker One Standard for Environment, Risk and Insurance (SERI) project worked closely with our industrial partners and advisory groups and developed a Climate-Ready Building Passport (C-RBP) concept in our SERI Phase 1 work. 

The C-RBP Concept

The C-RBP is a design for a data service enabled by SERI open data standards that brings together the physical, environmental, financial, risk and regulatory data of a building in a digital form and under a unique identifier through a federalised secured shared data governance platform. It can bring together the above building passport platforms and many other data services to provide a means to capture and share data on a building’s life cycle. The data for C-RBP includes building design, build, operation, maintenance, renovation; risks, resilience, carbon footage, sustainability, retrofitting roadmap; historical records, real-time monitoring etc. It covers not only general building information e.g. financial, structural, physical and environment information but also includes risks, claims and GHG emissions related data. 

Through our research we have identified a number of valuable data that are currently not considered in current building insurance but will be covered by the C-RBP service. This data includes:

• Smart data (e.g. IoT data for temperature, pollution, water, flood, fire, electricity, pumps, lighting, energy efficiency etc.)
• Earth observation (EO) data
• Building Information Modeling (BIM) Data 
• Energy Performance Certificates (EPC, inc. EPC Rating) and Display Energy Certificates (DEC)
• Environmental Product Declaration (EPD for embodied carbon)  
• Building Renovation Passport (BRP) data elements including logbook & roadmap (e.g. retrofitting records)
• Environmental, Social, and Corporate Governance (ESG) data
• CREMM/GRESB & risk assessment tools

The C-RBP can provide building owners, insurers and other stakeholders beyond the insurance value chain with the data they need with ease and security on their pathway to GHG reduction goals. It can also assist the insurance industry to better underwrite building insurance. Consideration of the above list of new data in insurance risk modelling and pricing process through C-RBP could potentially open the gate to net-zero underwriting to incentivise net-zero behaviors of their customers through rewarding better building performance and enable the creation of a range of innovative insurance products. 

Call for Support 

The C-RBP is currently a concept designed by the SERI project. To enable the creation of the C-RBP service, we need support from data providers and data service providers from both the built environment sector and the insurance sector to be part of the SERI shared data governance framework. We also need support from wider stakeholders in the insurance and built environment value chains for consultation to understand more on the values C-RBP can bring and how they can be maximized for industries. 

We would love to hear from you. If you think your work is directly involved in our work, please get in touch by emailing us at seri@ib1.org.

Photo credit: Photo by Samson on Unsplash

Figure 1 The SERI Shared Data Infrastructure, where API stands for the “application programming interface”, FAPI stands for the “Financial grade API”, and OAPI is  the “Open API”.

The SERI shared data governance framework is a Shared Data Infrastructure (SDI), built on Open Banking and Open Energy foundations and many open data sharing standards (e.g. preemptive licenses). The key components of the SERI SDI are Data Authorisation Service, Membership/customer relation management (CRM), Metadata Harvester and Database, and Datasets Search Engine. Data and data service providers are brought to the SERI SDI through membership agreements. Data providers publish their data descriptions and register their licensing options per type of use through preemptive licensing or open data licensing for data users to access at different levels. Data remains in data providers’ databases under their management, performing data cleansing, verification, updates and correction locally.  Data flows from member data providers to member data service providers through Application Programming Interfaces (APIs), where shared data flows through a secured financial grade API (FAPI), designed for industries (e.g. financial industry)  that require higher API security; open data flows through a public/open API (OAPI) that may incur security issues at circumstances. Data users can search data from the Datasets Search Engine and access them directly from data providers or data service providers by complying to their respective licensing requirements. Figure 1 illustrates the SERI SDI ecosystem and how data flows within the system. 

Within this infrastructure, collaboration with a wide range of stakeholders makes data discovery, aggregation, management, and sharing through federalised data services much easier and more efficient. Data governance within the infrastructure ensures a secure platform for many current Closed Data to be shared in confidence through preemptive licenses. This can potentially unlock a whole range of new data (e.g. financial, business and environmental data, especially mitigation data for climate change) for businesses to innovate and potentially incentivise net-zero behaviours.

The Phase 1 SERI SDI is currently conceptual, at its embryo development stage and needs well defined use cases to demonstrate its value and how it works. The SERI team has developed a Climate-Ready Building Passport (C-RBP) concept as a service from the framework, associated with an industrial verified insurance market use case from a broker’s perspective. This use case demonstrates what commercial values the framework can create and how it assists the insurance industry incentives net-zero behaviours. In this use case, a broker was helping an asset manager to insure their complex assets (with many old and not retrofitted). Although they received a list of data from the asset manager, there would still be a number of extra data needed due to various reasons such as missing data, errors, data not usable etc. They have to shop around for data to fill the gaps from various third party data providers in order to be in a good position to negotiate the best insurance outcome for their customers. Data is fragmented, scattered and hard to find, and data related to sustainability in general is not identifiable or available. It is very challenging to find all the data the broker needs. A new service is needed to resolve this problem.

Figure 2 SERI Shared Data Infrastructure – A Broker’s view from the Climate-Ready Building Passport Data Service (Where API stands for the “application programming interface”, FAPI stands for the “Financial grade API”, and OAPI is  the “Open API”).

Figure 2 maps the major components of the SERI SDI for the use case and demonstrates how the broker can access different types of data (either Open or Shared) through the C-RBP service. Through the service, the broker can easily discover various building information and building risk data (inc. both resilience and mitigation risks, either open or shared) from the C-RBP search engine on the framework from his computer. Once data is identified, the system will show him his eligibility to access and how to access the data, through open or preemptive licenses. Potentially he may only need to go through one of the data service providers of the framework to access all required data. He no longer has to ask around for data and go through many bilateral contracts/agreements. The datasets from C-RBP are all digital and machine readable, and are produced under structured data standards, making it easy to use and convert. This saves time, effort and money, and enables new datasets (e.g. operational data, emission data) to be discovered to give the broker insights to innovate.

Call for Support

We are currently seeking more input from stakeholders in the insurance value chain to develop the C-RBP and the SERI SDI further. If your work is in a related field and you’d like to be involved in this initiative we would love to hear from you, please get in touch by emailing us at seri@ib1.org.

Photo credit: Image by Pete Linforth from Pixabay

Insurance Market Trends and Key Issues

Many insurance companies have been contributing to the growth of the renewable energy sector, supporting it with insurance products. However, despite the increasing awareness of climate change and continuing expansion of the renewable energy sector, the insurance market for renewable energy began to harden toward the end of 2018. Some insurers withdrew from underwriting specific sectors, whilst others closed their books entirely. This trend has continued throughout 2019 and into 2020, according to major insurance brokers Aon, Marsh and Willis. 

A survey of the insurance industry conducted by Allianz showed that business interruption, natural catastrophes, changes in legislation, cyber incidents and new technologies were the top five business risks in the renewable energy sector. Willis’s 2020 renewable energy review and Marsh’s renewable challenge research confirmed Allianz’s findings citing “several new realities” that the sector needs to embrace. These include geopolitical issues, new risks emerging from climate change, the acceleration of the renewable sector, a hardening insurance market and the increase of index-based solutions. Aon’s renewable energy market outlook 2020 report also confirmed a hardened insurance market where “a sustained period of competitive pricing and increased claims” reduced insurers’ appetites. According to Aon and Marsh’s research, component vulnerability, defective designs, extreme weather damage, large claims at project construction phase, and increasing fire and theft claims are the main drivers for increasing premium rates. Natural catastrophe limits, catastrophe model review, equipment warranties and obsolete technologies are also key issues in the industry.

Icebreaker One for Innovation

But risks and challenges bring forth innovation. Icebreaker One’s “Standard for Environmental Risk and Insurance (SERI)” project works with insurance industry partners and leading research organisations to bridge the data gap between insurance and climate change. The project incentivises climate-ready behaviours and a net zero transition through innovative insurance products. 

Renewable energy plays a central role in the UK’s transition to net-zero. The challenges of the sector and the underlying insurance industry can be translated into use cases for the SERI project which in turn can incentivise the wider adoption of net-zero initiatives and innovative insurance products. 

Use Case 1 – Insuring Flexible Energy Storage Services

Unlike traditional fossil fuel energy, renewable energy depends on natural resources that are out of human control, resources like sunlight and wind bring up availability and stability issues. Limited by high cost, energy storage also presents an obstacle for the industry with some firms being forced to turn off their generators when the grid exceeds its capacity. 

Flexible energy storage services offer a solution allowing renewable energy systems (home or commercial) and electrical vehicles (EV) to fully utilise their energy storage systems (hydro, thermal and batteries) by exchanging energy with the grid.  They act as individual suppliers or virtual power plants, storing electricity in their system at low demand periods and supplying electricity to the grid during periods of high demand. 

Aon and Marsh have reported large claims caused by construction errors, poor maintenance and bad risk management in renewable energy projects. This largely limited insurers’ appetites in the sector, especially in battery energy storage systems (BESS), Anaerobic Digestion (AD) projects. While the concept of a virtual power plant is still in its infancy, large claims and unknown risks are preventing the uptake from the insurance industry. 

An innovative insurance product for flexible energy storage services that utilises open data and shared high quality data between stakeholders (such as manufacturers, contractors, operators and insurers) could potentially break through the obstacles faced by the industry and help the renewable industry to better transfer risks and attract more investment for future development.

Use Case 2 –  Data-driven insurance products

Large claims and unclear performance of new technologies but upward pressure on the premiums of the renewable energy insurance policies are hardening the insurance market and driving away investment. This is especially true for small and medium-sized projects.

Claims can be caused by the unclear robustness of new technologies and increased failure rates of relatively untested components. Limitations in the skills and knowledge of people working in the industry, such as lack of awareness of correct installation practices also contribute to claims. 

Many of the lesser-known risks associated with renewable energy projects are present at all stages of construction and operation. The long list includes the reliability of catastrophe models, manufacturer designs and test results of assets, training and capability of construction contractors, critical updates of technologies, assets operation and maintenance procedures.

The inability to access key data lies at the heart of the problem. The insurance industry is unable to access essential asset-level data in the renewable energy sector such as breakdown data that may only be shared within a closed industry group.

Working with our partners and stakeholders in the renewables sector, we have outlined a  process to develop data infrastructure and data standards for innovative data-driven insurance products. These products will allow stakeholders to collaborate, collect, process, and share more reliable data, feeding this data into catastrophe models for more reliable outputs. The data will also aid in producing more realistic underwriting, fairer insurance cover and contribute to the softening of the renewable insurance market.

Use Case 3  Insurance products for older and smaller renewable firms

Renewable energy innovation is progressing at a rapid pace and older legacy systems, especially small systems, now are facing little or no insurance coverage. This is partly due to manufacturer insolvency, lack of parts or the ending of manufacturer warranties. 

Uninsured assets could potentially be abandoned due to the heavy financial burden caused by maintaining breakdowns. These abandoned assets can be costly to remove and most of the materials will end up in landfills according to Inside Energy. What’s more, they could risk becoming a potential blot on the landscape, adversely influencing people’s view towards renewable systems

For example, small onshore wind farms older than 5-7 years in the UK can struggle to get any insurance cover, despite the average lifespan of a wind turbine is 20-25 years. The cause for this issue may be linked to the warranties of the wind turbines. In the UK, 12% of the total 737 operational onshore wind farms are over 10 years old and with less than 1MW capacity. This problem is not just limited to wind turbines. Many older biomass energy systems located in British farms are facing similar challenges. There is an urgency to resolve this problem.

A solution lies in a government-backed scheme or insurance product that encourages small renewable project operators to upgrade components such as new wind turbines and more efficient power generators. If system components are upgraded then system warranties can then be extended. 

Use Case 4 – Government Policies to spur long-term growth

Both the renewable energy sector and renewable energy insurance industry structure their business and underwrite policies within the legal framework shaped by government policy and regulation. Long-term policies, therefore, have the power to secure the future of the sector.

We hope our work on data infrastructure and data sharing standards can provide a better insight into the mechanisms of both the renewable energy sector and the insurance industry and how they interact.

This insight can inform the UK government and aid it in forming more effective long term policies to sustain the growth of the renewable sector. Reciprocally, the renewable energy sector will assist the UK government in delivering its net-zero targets in a safe and productive manner.

We are currently collecting use cases in the renewable energy sector. If you can help us with our research or would like to learn more about Icebreaker One’s SERI project please contact us: partners@ib1.org

In response to the Paris Agreement, the UK has pledged to bring greenhouse gas emissions to net-zero by 2050, becoming the first major economy in the world to pass net-zero emission laws. The UK’s ability to reach its goal will be highly contingent on its ability to reduce emissions stemming from homes and offices, driving cars, growing food and energy generation.

 Figure 1 by the Energy Saving Trust provides an understanding of the scale of this goal, with the heating of buildings through the burning of fossil fuels and use of natural gas being the greatest contributor to current UK housing emissions. The transport sector is the second largest emitter. 

At present, carbon capture, utilisation and storage (CCUS), is an important emissions reduction process but with carbon removal technology showing slow progress, CCUS is seen as less effective than rapidly progressing and scalable forms of renewable energy such as wind and solar.

 But, for the 2050 net zero targets to be reached, renewable energy needs to be used on a much larger scale, providing a sustainable source of heating for homes whilst reducing heating emissions and increasing energy efficiency. What’s more, renewable energy should play a wider role in the electrification of vehicles as well as transport fuelled through hydro and biofuel. 

In this blog we will delve deep into renewable energy, with a focus on wind energy and its main uses. We will assess the underlying funding and insurance mechanisms before finally looking into the potential risks and barriers to adoption. 

The “Build Back Greener” targets

Last month, the Prime Minister set out new plans to Build Back Greener with a vision to make the UK the world leader in wind energy. An investment of £160 million will be made available to upgrade ports and infrastructure across communities in England, Scotland and Wales in a bid to expand the UK’s offshore wind capacity, which is already the largest in the world. The funding is intended to create tens of thousands of jobs both directly and indirectly, while reducing carbon emissions. 

In the new plans, the government’s previous 30GW wind energy capacity target is proposed to raise up to 40 GW by 2030 to fulfil the Prime Minister’s ambition to power every home in the country with wind energy (calculation based on current household electricity usage). In response to the target, a few days ago, a multimillion-pound underwater energy “superhighway” was agreed to be built by Scottish Power, National Grid and SSE to bring Scottish renewable energy to homes in England. 

According to the UK renewable energy planning database, there are 737 onshore wind farms in operation across the UK with 13,327MW electricity capacity plus 41 operational offshore wind farms with 9,693MW capacity – the largest in the world. This gives a total maximum operational capacity of over 23 GW of electricity in the UK according to Statista.

The 1.2GW Hornsea One offshore wind farm, comprising 174 large 7MW turbines, is currently the largest in the UK. In order to achieve its 40GW offshore wind capacity target, the UK needs to build at least 25 more Hornsea sized offshore wind farms, or 60 more 500MW capacity medium sized offshore wind farms. In other words, more than 2,400 large turbines with 7MW capacity have to be built in the next 10 years, a huge feat.

The ‘world’s largest wind farm’, Dogger Bank Wind Farm is currently under construction off the Yorkshire coast. With the world’s largest wind turbines (Figure 2), its capacity can reach 3.6 GW.

Government policies and initiatives

Over the last decade, the UK government has set up a series of funds and policies to support the renewable energy industry, such as renewable energy innovation funds,  smart energy systems fund, Clean Growth Fund, Urban Community Energy Fund. To encourage domestic small renewable energy generation, the UK government has also opened a number of incentive schemes such as Smart Export Guarantee,  Feed-in Tariffs (now closed) and the Domestic Renewable Heat Incentive (RHI) which offer homeowners money towards the electricity they generate as well as towards the renewable heating costs of their home. 

As a result, the UK has made great progress in its low-carbon energy transition. In the first two quarters of 2020, 47% and 44.6% of the UK’s electricity generation have been from renewable energy sources, a 10% increase from the same period in 2019 (Figure 3), within which wind energy occupied 20.6% contribution, nearly half of total renewables.

Where is the industry?

A map showing distribution of various renewable energy technologies that are either active, in construction or awaiting construction in the UK, based on the 2018 Renewable Energy Planning Database Monthly Extract from the Department for Business, Energy & Industrial Strategy (BEIS) can be found here (created by Andrew Crossland). On the map, renewable energy technologies are grouped into wind, solar, hydro, geothermal, energy storage and other renewables.

Challenges in the sector

Growing public awareness of climate change issues and the emergence of net zero targets, rapid advancement of technologies, favourable government policies, incentive schemes and rising investment interests have largely spurred on the growth of renewable energy on a global scale. However, the renewable energy sector is still facing significant challenges from political, financial, environmental and social pressures.

●Renewable energy sources are mostly dependent on natural resources that are not controllable by humans such as solar radiation, wind, and waves. For example, the strength of wind and sun may change quickly and are not always available. This leads to energy availability and power stability issues.

●Very specialised new technologies at various development phases are involved in all stages of renewable systems. They can be very expensive. Some projects remain vulnerable to mechanical and electrical breakdown in a period of continued technical innovation.

● Renewable energy plants are often sited in areas more exposed to natural disasters, e.g. offshore with greater frequency of wind and waves in coastal environments. These sites can become increasingly vulnerable under the impacts of climate change.

● Long-term growth of the renewable energy sector relies on consistent long-term government incentives to encourage investment.

Insurance to transfer risks and support investment

Unlike low carbon, renewable energy is not risk free. Insurers are experts in measuring and managing risks. With their unique insight into the challenges and opportunities facing the industry, they play a crucial role in providing effective risk management, manufacturers’ support and security for investment in the renewable energy sector.

Take wind energy. Through providing financial protection to risks from ocean transit, delays or damages during the fabrication, transport and construction stages, breakdown or business interruption during operation to liability associated with third parties, the insurance industry supports investment for the renewable energy industry to maintain its long term sustainable development. 

The research team at Icebreaker One have been investigating the use of remote sensing across the SERI project and potential benefits these techniques can bring to stakeholders and beneficiaries. Focussing our immediate work on the insurance sector we’ve seen examples of the use of remote sensing in the field of catastrophe modelling, exposure management and risk engineering to event response and claims control. Some of these examples can be used to guide our work to define climate-ready financial products within the SERI project for property insurance, e.g. 4EI used remote sensing data to develop a building heat index across the UK. Could such a dataset be used in addition to existing data sets (such as flooding hazards, landslide susceptibility) and help better define financial products such as mortgages and home insurance? We don’t know yet if climate change is causing more weather weirdness but a project to use supercomputers to re-run climate models has been proposed by the Met Office.

Figure 1: some uses of remote sensing within property catastrophe insurance

Other examples include Skytek, a technology company that uses remote sensing technology to support shipping insurance businesses. They use earth observation data to monitor storms and severe weather events, to track ships offshore and assess their proximity to potential disastrous storms. They also use data to guide insurance underwriting and post storm claims. Combining the ship’s tracking system (AIS which also uses Global Positioning System (GPS) to define the ship’s location and satellite imagery of upcoming weather events allows insurers to identify ships which may be at risk and monitor their response to storm alerts (Skytech, 2020). The shocking events in Lebanon have been well documented in the mainstream media and there are a number of before and after satellite images published and offered as free data by major satellite image providers (e.g. Maxar). That data is very useful for damage analysis for post-event insurance claims which may be used following man-made disasters or natural catastrophes.

From extreme weather events and disaster response to ship emissions, a topic which is of high importance to the International Maritime Organisation and their recent focus on cutting sulphur oxide emissions. The use of UAV (unmanned aerial vehicles) remote sensing is evolving. Companies such as Martek Marine uses drones to assess emissions from ships. Another example is EMSA that uses UAV remote sensing with gas sensors to monitor sulphur emissions on the coast of Denmark. One way the shipping industry is looking to reduce emissions is by moving to LNG (Liquified Petroleum Gas).

As the IMO (2016) states, “the use of LNG is considered to have significant environmental advantages. An LNG fuelled ship reduces the emissions of NOx by 85% to 90% (using a gas only engine), and SOx and particles by close to 100% compared to today’s conventional fuel oil. In addition, LNG fuelled ships may result in a net reduction of greenhouse gas (GHG) emissions”.

Decarbonisation of shipping is one of the product ideas of the SERI project – we are exploring how remote sensing and related technologies can be used to develop financial products.

The agriculture sector is one of the heaviest greenhouse emitters and remote sensing can be used to estimate emissions. One example by SEGES using Web Map Service (WMS) imagery highlights how machine learning algorithms were applied to remote sensing imagery to detect in an automated way over 26,000 slurry tanks and assess ammonia emissions across 34,000 farms and over 42,933 km2 land in Denmark in 2019.

From the studies mentioned above we can see that remote sensing data is usually used within each sector as derived data, i.e. it’s not the raw data outputs that are most useful but those obtained by processing and analysing imagery information to gain climate and environmental insights, monitor and detect changes. Creating climate-ready financial products offers an opportunity to use or develop derived information,  e.g. thermal or greenhouse gas emissions calculations, flood hazard mapping, land-use etc.

Through our research and collaboration with SERI project partners and stakeholders, we hope to be able to use remote sensing to inform our development of climate-ready financial products in a sandbox/test-bed environment over the coming months. We are currently collecting use cases from other fields that may contribute to climate-ready financial products innovation. This will be an exciting journey –please reach out if you’d like to learn more. We’d love to hear from you!