nuclear energy

Pros and Cons of Nuclear vs Renewable Energy – and the Insurance Implications

The government is currently considering the construction of a new large-scale nuclear plant, despite misgivings following delays in ongoing projects. Ministers say this initiative represents the most significant expansion in the sector in 70 years, aiming to reduce dependence on foreign supply and quadrupling energy production by the year 2050.

This blog will take a look at the pros and cons of nuclear energy compared to other energy sources, and their associated insurance risks.

Nuclear Energy


  • Low greenhouse gas emissions

Nuclear power produces minimal greenhouse gas emissions during electricity generation, contributing less to climate change compared to fossil fuels.

  • High energy density

Nuclear reactions release a significant amount of energy per unit of fuel, providing large-scale power production with relatively small fuel inputs.

  • Reliable and stable power supply

Nuclear plants can operate continuously for long periods, offering a stable and reliable power supply.


  • Nuclear accidents

Catastrophic events, such as meltdowns or leaks, pose significant environmental and health risks, exemplified by incidents like Chernobyl and Fukushima.

  • Radioactive waste

Managing and disposing of radioactive waste is a long-term challenge, requiring secure storage and careful handling to prevent environmental contamination.

  • High initial costs

Building nuclear power plants involves substantial upfront costs, making them economically challenging compared to some renewable alternatives.

Renewable Energy Sources


  • Low environmental impact

Renewable sources like solar and wind have minimal environmental impact during operation, with no greenhouse gas emissions.

  • Abundant resources

Renewable energy relies on naturally replenishing resources, such as sunlight and wind, which are abundant and sustainable.

  • Distributed generation

Many renewable sources enable decentralised power generation, reducing vulnerability to large-scale failures and promoting energy resilience.


  • Intermittency

Solar and wind power generation are dependent on weather conditions, leading to intermittent energy production that may require backup solutions.

  • Land use

Some renewable technologies, such as large-scale solar or wind farms, may require extensive land use, impacting ecosystems.

  • Resource limitations

The availability of certain renewable resources, like rare minerals for batteries, can create supply chain challenges.

Nuclear Energy Insurance Risks

What are the main insurance risks when it comes to nuclear power?

  • Property damage

Nuclear accidents can lead to extensive property damage, affecting not only the power plant itself but surrounding areas. The cost of repairing or replacing damaged specialist infrastructure, equipment and facilities can be immense.

  • Liability

Nuclear liability is a major concern as accidents can result in long-lasting and widespread harm. Liability insurance is crucial to cover the costs of bodily injury, property damage and environmental contamination. The potential for third-party claims, such as those from individuals or communities affected by radiation exposure, adds complexity to liability considerations.

  • Regulatory compliance

Nuclear power plants must adhere to strict regulatory standards and requirements. Failure to comply with these regulations can result in fines, penalties and increased insurance costs. The evolving nature of nuclear regulations means that operators must continually adapt to new safety and environmental standards.

  • Business interruption

Nuclear incidents can lead to prolonged shutdowns, causing significant business interruption for both the power plant operator and related industries. Insurance coverage for loss of revenue during downtime is crucial to ensure financial stability, with contingency planning and risk mitigation strategies essential components.

  • Political and regulatory risks

Political and regulatory environments can impact the insurance landscape for nuclear energy. Changes in government policies, public opinion or international relations may influence the availability and cost of insurance. The potential for changes in liability limits and government support mechanisms adds an additional layer of uncertainty.

  • Reinsurance challenges

Due to the enormous potential liabilities associated with nuclear accidents, primary insurers often seek reinsurance to spread the risk. However, finding reinsurers willing to cover nuclear risks can be challenging, and the cost of reinsurance can be substantial.


Renewable Energy Insurance Risks

How do the risks of renewable energy compare?

  • Extreme weather and natural disaster

Renewable energy relies on natural resources, including sunlight, wind, water and biomass - all influenced by weather conditions, climate change and natural disasters - that can result in damage or destruction of both infrastructure and equipment.

  • Technology and innovation

Renewable energy technologies are in a continuous state of evolution and improvement, making current technologies perpetually in danger of becoming obsolete – and threatening the performance, reliability and profitability of projects and assets. Insurers must stay abreast of the latest innovations in renewable energy technology and their impact on existing and future policies and contracts.

  • Supply chain

The production and delivery of equipment and materials depend on factors like weather, transportation, geopolitics and trade policies. Disruptions can lead to delays, shortages or price fluctuations, impacting the availability and affordability of renewable energy sources.

  • Cyber security

Renewable energy systems rely on complex networks of sensors, controllers and communication devices that can be highly vulnerable to cyberattacks – resulting in physical damage to equipment and the compromising of data integrity and grid stability. Insurers must collaborate with risk engineers to ensure detailed procedures.

  • Political, policy and regulatory

The frequent and unpredictable changes in diverse regulations and policies across government levels means uncertainty and complexity for developers, investors and insurers. Insurers need to remain vigilant, continuously monitoring the applicable regulations and policies.

  • Long-term environmental implications

While renewable energy is pivotal for mitigating climate change, insurers must not lose sight of its potential environmental risks. From the extraction and processing of raw materials for solar panels and wind turbines, to the disposal of decommissioned equipment, insurers have to incorporate these into their risk assessment and underwriting processes.

Navigating our Energies of the Future

Striking a balance between the benefits and drawbacks of nuclear and renewable energy requires comprehensive risk management strategies, informed by advancements in technology, regulation and insurance practices. Insurance companies will need to assess, price and manage these many and complex risks effectively and be nimble in navigating them.

At the same time, the insurance industry as a whole must play an important role as an investor in nuclear energy, analysing its investments as contribution to climate change, loss of biodiversity and pollution, etc, and maintaining a medium and long-term vision.

Regulatory risks are also fundamental. It’s clear we’re in a transition period when it comes to energy, and that regulatory changes occur more rapidly than a few decades ago. It’s essential, therefore, for insurance companies to have well-trained teams in matters of climate change and energy transition, who can stay prepared by foreseeing all changes and implications on the horizon.

Other Blogs that may be of interest:

Why all businesses require Directors and Officers insurance (

New minimum standards for energy efficiency in properties - Ascend Broking Group

Any questions? Please don’t hesitate to contact one of our team. Mobile: 07842 021430

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