Pressures on workforce availability and maintaining supply chains arising from COVID-19 are proving challenging to the power sector, according to re/insurance broker Willis Towers Watson (WTW).
In a new report, WTW highlighted key risks such as reduced electrical demands, moratoriums on construction projects, availability of personnel and travel restrictions which are impacting access to operating assets for maintenance.
However, it also noted that some clients have actually taken advantage of the decrease in electricity demand and lower pricing to proactively advance scheduled maintenance operations forward, contrary to insurer expectations.
Additionally, ESG and the changing climate risk landscape are becoming increasingly significant for the power sector, as companies look to attract and maintain the support of key stakeholders in the future.
WTW further observed that global capacity for power business has reduced as some insurers withdraw from the sector entirely and others reduce their available capacity.
“In these unprecedented and uncertain times, the issue of COVID-19 remained uppermost in all our minds as the power industry and their stakeholders begin to analyse the effects on their balance sheets and on their overall risk landscape,” said Graham Knight, Head of Global Natural Resources at WTW.
“As the power generation sector and its insurance partners adjust to conducting business during the COVID-19 pandemic, all parties must remain disciplined in assessing and managing risks,” he continued.
“Risks that are magnified by the pandemic, including the availability of plant and vendor support personnel and any disruption to operation and maintenance tasks, should be managed with the joint goal of ensuring plant reliability. At a time where plant resources might be limited, open and transparent communications with their insurance risk consultants should leveraged to the benefit of all.”