(Yicai) April 24 -- China's new energy sector is expanding at speed, with solar, wind, and energy storage installations all ranking among the top in the world. Yet large volumes of green energy assets are still operating without adequate insurance coverage, according to experts.

"The green transition is fundamentally an energy transition, and an energy transition requires enormous capital investment," Jack Yuan, chief executive officer of Generali China Insurance, told Yicai at a forum held during the Shanghai Climate Week. "A critical issue is bankability, and an essential prerequisite is insurability."

However, more than CNY270 billion (USD37 billion) high-risk energy storage assets in China lack effective insurance protection, according to a white paper jointly released by Generali China and Fudan University. The value of uninsured assets is expanding at a pace of more than CNY160 billion a year.

While the Chinese new energy insurance market is large, technological innovation has been lacking, particularly among domestic insurers that rarely venture into areas where reinsurers are unwilling to go, Wang Hui, general manager of Shanghai Electric Insurance Brokers, told Yicai.

The problem is not just about the willingness, but about pricing tools, especially the lack of reference data, Yuan noted. "There is market demand, there is a protection gap, but insurers lack data." 

Energy storage technology has gone through three to four iterations within five years, meaning that data from historical claims, on which traditional actuarial models rely, is nearly worthless for assessing the latest generation of technology, Yuan explained.

Moreover, China has yet to introduce mandatory energy storage insurance requirements on the national level, so the market remains in the exploratory pilot stage.

The huge volume of data is another substantial difference from traditional insurance lines. In fact, a mid-scale storage facility generates several terabytes of operational data per day, which is equal to the entire 50-year historical record of a conventional insurer, Yuan said.

In his view, this is precisely why artificial intelligence is needed. "We should change our thinking from just looking backward in the traditional way to looking forward to perform dynamic risk projection and dynamic risk pricing," he pointed out. "This is where the opportunity lies."

Green insurance now accounts for about 15 percent of Generali China's portfolio, up from 3 percent five years ago. McKinsey projected that green insurance will account for 42 percent of China's property and casualty insurance market by 2030.

China added 373 gigawatts of renewable energy capacity in 2024, up 23 percent from the previous year, accounting for over 60 percent of global additions, according to the National Energy Administration.

The new energy industry is going in the direction of Risk-as-a-Service, where clients purchase a financially backed, clearly quantified operational outcome, such as a committed lifetime energy throughput.

The global energy storage RaaS market is projected to grow from about USD10.9 billion last year to USD177.6 billion by 2035, according to the white paper.

No single institution can complete this transformation alone. "We hope to be explorers," Yuan said. "More broadly, we are talking about building an ecosystem and expanding our circle of partners within that broader ecosystem."

Green Insurance for China's Overseas Push

The green insurance gap widens further as Chinese new energy companies expand internationally. Eight of the world's top 10 energy storage system suppliers by volume are Chinese, according to the white paper from Generali China and Fudan University.

The risks these companies most commonly underestimate are not technical but operational, such as underestimating local regulatory requirements and labor market conditions in the host country, Yuan said.

He explained that the value insurers can provide in overseas markets goes well beyond post-loss indemnification. "Our greatest hope is that nothing goes wrong," he noted. "Insurance companies should not only use technologies for pricing and risk forecasting, but also apply them to loss prevention and risk mitigation, bringing the probability of a claim to its lowest possible level."

At the product level, many countries require that insurance policies be issued locally, which poses a substantive barrier for Chinese insurers without established local networks, Wang believes. "This is a key reason why businesses end up with overseas insurance companies."

As an international company, Generali can leverage its global network alongside its understanding of the Chinese market to help clients bridge that gap through Generali China, Yuan pointed out.

Editor: Futura Costaglione