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Renewable energy project delays are exposing a mismatch between how projects are financed and insured and the risks they face during construction, according to short-term insurance firm Hamtern Financial Services.The issue is becoming more pronounced as supply constraints, geopolitical instability, and grid infrastructure limitations slow project execution, placing pressure on already tight development margins, Hamtern said.Most large-scale renewable energy projects are debt-financed, with funding released only once strict conditions are met. Lenders typically require engineering, procurement, construction and insurance structures in place before financial close, creating a sequenced process in which setbacks can quickly cascade through a project.“Funding has deadlines attached to it. Equipment does not always arrive when expected. What looked straightforward during planning starts to shift once construction is under way,” said Hamtern Financial Services account manager Matthew George.“Insurance is often treated as a compliance requirement rather than a risk management tool, despite being central to financing structures.”Hamtern Financial Services account manager Matthew George (Suppl) An important challenge, according to George, is that most insurance policies — particularly “Delay in Start-Up” and “Loss of Profits” coverage, which provide financial protection for project delays or operational disruption — only respond to physical loss or damage. As a result, common causes of disruption, including supply chain breakdowns and geopolitical shocks, frequently aren’t covered.“Cover only responds to very specific events,” George said. “There needs to be a physical loss or damage event to trigger a claim under a Delay in Start-Up or Loss of Profits policy.”Exposure to uninsured losses often emerges when expectations are not aligned early in the project lifecycle, he added. Supply chain disruptions refer to delays or shortages in the movement of essential renewable energy components such as wind turbines, solar panels, and transformers, typically driven by manufacturing bottlenecks, shipping delays, port congestion and trade or geopolitical tensions.George said delay pressures aren’t isolated and often compound during construction, particularly as global sourcing networks become more fragmented. “You see it when equipment arrives late, or when something in transit does not arrive when it was meant to,” he said. “The project slows down, and the assumption is that insurance will absorb that impact. In practice, it does not work like that.”As that happens, George said the financial impact extends beyond timing, increasing financing costs, contractor claims and operational inefficiencies, much of which is not recoverable through insurance structures.“Insurance cannot be approached as a static line item; it needs to be part of the project conversation early, alongside financing and procurement,” George said. “The focus should be on aligning protection with how projects evolve rather than treating it as a fixed input.“The real value lies in structuring cover to reflect how the project is expected to evolve.”As renewable energy investment continues to expand, particularly in developing markets such as South Africa, industry participants caution that project execution risks are becoming more structural as supply chains fragment and financing conditions tighten.“Disruption is increasingly part of baseline project risk rather than an exception. In that context, delay is not an exception. It is a probability,” George said.“The issue is whether financing and insurance structures are built to absorb that reality.”
