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					</table>Weather vagaries like inadequate wind speeds and decreased irradiance can adversely impact wind and solar generation. Weather-based parametric risk insurance is gradually gaining ground in India&#8217;s renewable energy sector. Insurance companies have been tailoring their products to meet the needs of the renewable energy sector.
In an exclusive interview with Mercom India, Sarathy Srinivas, Head of International Projects, <a href="https://wrmsglobal.com/index.html" target="_blank" rel="noopener">WRMS</a>, shares his insights on parametric insurance and his company&#8217;s insurance offerings for the renewable energy sector.
What is weather index-based insurance, and how does it protect renewable energy projects against the vagaries of weather?
Weather index-based insurance plays a pivotal role in safeguarding renewable energy projects from unpredictable weather conditions that directly impact power generation. Solar projects, dependent on consistent sunlight, and wind energy projects, reliant on stable wind conditions, face significant risks from weather variability. This innovative insurance solution provides financial protection by offering pre-specified payouts when predefined weather parameters, such as insufficient sunlight or inadequate wind speeds, are met.
This streamlined process enables renewable energy projects to secure quicker payouts and manage financial risks. Weather index-based insurance supports resilience, enhances risk management, and ensures the sustainability of renewable energy investments by addressing the operational challenges posed by climate variability.
By incorporating parametric insurance, renewable energy projects can better navigate the uncertainties of climate change, reducing revenue volatility and ensuring the long-term stability of clean energy investments.
How does parametric insurance help mitigate the adverse financial impact of weather-related events in the renewable energy sector?
Parametric insurance helps mitigate revenue volatility and ensures operational resilience by providing swift payouts during extreme weather events, reducing the financial burden and risk associated with power generation interruptions. Using advanced data technologies, such as real-time monitoring and historical data analysis, parametric insurance delivers timely, dependable financial responses that enhance the viability and resilience of renewable energy investments, making the sector more resilient against climate challenges.
Renewable energy installations in the overall power capacity mix are increasing in India. How are insurance companies with traditional service offerings adapting to the changing dynamics of climate-related risks and incorporating insurance solutions tailored to the renewable energy sector?
With the increasing share of renewable energy installations in India&#8217;s power capacity, insurers are evolving by offering climate-specific solutions tailored to the sector&#8217;s needs. At WRMS, we contribute to this shift by designing innovative parametric insurance products that directly address weather-related risks affecting renewable assets. By leveraging advanced data analytics and technologies like remote sensing, we offer solutions that enhance financial resilience against climate risks.
We focus on developing solutions that protect assets like solar and wind farms from flood and wind losses, particularly during construction, and ensure insurance values are accurately reflected as projects transition from construction to operation.
WRMS also addresses the growing demand for insurance solutions in innovative business models, such as hydrogen generation from renewable sources, helping businesses mitigate evolving climate-related risks and secure long-term success. 
 
Renewable energy projects in India are branching out from vanilla wind and solar projects to wind-solar hybrid and wind and solar plus energy storage projects. Are insurance companies keeping pace with these developments and tailoring their offerings suitably?
Wind-solar hybrid systems (WSH) are attractive because of optimized land usage, improved grid stability, and increased energy output by complementing the intermittent nature of wind and solar power.
However, these new configurations bring their own set of <a href="https://www.mercomindia.com/insurance-prominence-wind-solar-hybrid-projects-centerstage" target="_blank" rel="noopener">challenges.</a> WSH developers face difficulties such as lower tariffs, policy uncertainties, integration hurdles, system sizing, and weather-related risks like wind variability and solar radiation inconsistency. Additionally, market tariff fluctuations can create financial uncertainty, affecting the economic viability of these projects. Managing intermittency, weather variability, and tariff volatility is critical for the success of such projects.
Recognizing these evolving dynamics, insurance providers are stepping up by offering parametric insurance and weather index-based solutions. These products are designed to mitigate risks associated with energy production variability due to weather conditions, ensuring that renewable energy projects remain financially viable. Insurers are using advanced data analytics, real-time monitoring, and risk modeling techniques to provide more accurate coverage and faster payouts, addressing the operational and financial risks of WSH systems in the face of tariff fluctuations.
Do you think there is sufficient awareness of the concept of weather index-based insurance among renewable energy companies in India? How does a renewable company justify this additional expense?
Awareness of weather index-based insurance among renewable energy companies in India is gradually increasing but remains limited across the industry. While traditional insurance models continue to dominate, focusing on physical damage, parametric insurance is still relatively new to many. Renewable energy developers and investors are slowly beginning to recognize the strategic benefits of such insurance, particularly in mitigating weather-related risks. However, adopting these innovative solutions is slower than the growing climate challenges demand.
For renewable energy companies, especially those that operate in weather-dependent sectors like solar and wind, weather index-based insurance should be viewed not as an additional expense but as a crucial financial safeguard. This type of insurance provides certainty in the face of climate risks that threaten energy production and revenue streams. Quick payouts during adverse weather conditions offer much-needed financial cushion, which justifies the cost of the policy. Furthermore, the financial resilience these insurance products bring is critical for securing new investments and ensuring project bankability. With investors increasingly seeking risk mitigation strategies, companies can justify these costs by showcasing them as an integral part of their long-term risk management and sustainability efforts. In short, weather index-based insurance is a strategic investment that ensures operational continuity and enhances the financial health of renewable energy projects. 

How can renewable energy companies benefit from WRMS&#8217; services? What has been your company&#8217;s exposure to the renewable energy sector in India?
Renewable energy companies face increasing climate risks that affect both the viability and operational stability of projects like solar and wind farms. By leveraging WRMS&#8217;s technological and insurtech advancements, such as satellite imagery for risk assessment and AI-driven analytics and Actuarial Sciences, we are providing tailored weather index-based insurance solutions that address the unpredictability of weather patterns. By providing tailored parametric insurance, we help companies manage revenue volatility caused by low irradiance or sunshine or wind variability, ensuring financial stability.
At WRMS, we&#8217;ve partnered with a few of the leading energy companies in India to design customized solutions for their global renewable energy projects. Our solutions integrate data from hyper-local weather stations, Remote Sensing with cloud-based technologies, and weather index models to provide coverage that aligns with the specific needs of individual projects in various geographies.
Whether for solar farms, wind energy, or hybrid projects, we help these companies protect their investments, improve project bankability, and ultimately contribute to a greener and more sustainable energy landscape.

Parametric Insurance for Weather Risks Gains Traction in Renewable Energy: Interview

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