FM Report: With Power and Renewables Risks Evolving, Engineering Must Move Upstream

LONDON, UK, 5 Oct. 2026 – The systems used to design, operate, manage and insure energy infrastructure are struggling to keep pace with the rapid buildout of new power capacity, according to a new report by commercial property insurer FM.

The FM Power & Renewables Report examines how the rapid expansion of power infrastructure, driven by AI, data centres, electrification and the energy transition, can create risk across the full lifecycle of energy assets. The report covers technologies ranging from battery storage and renewables to gas generation and potentially small modular reactors.

Taken together, the results underscore the need for strong engineering insight from the very earliest stages of a project: 89% of UK respondents agree that this insight can improve stability, insurability and investor confidence.

“The UK power generation sector is expanding at a scale and speed which has never been attempted before, but speed cannot come at the cost of long-term resilience,” said Riaz Thanduparakkal, vice president and senior underwriter for renewable energy at FM. “With emerging risks and ever-evolving technology, relying on traditional insurance transfer after an asset is built is no longer enough. To keep critical infrastructure bankable, engineering insight must move upstream to the earliest stages of site selection, design and procurement.”

The power buildout is moving faster than the risk playbook

FM surveyed 750 energy sector risk decision-makers, 150 insurance brokers and 150 financiers globally. The research found that globally, 59% of energy companies identify new-technology adoption as a leading cost-of-risk driver. At the same time, one-third (33%) of UK energy companies plan to increase small modular nuclear reactor (SMR) capacity over the next three years.

Many emerging technologies have limited operating history at scale, creating uncertainty about how they will perform under operating conditions. Nearly half (44%) of energy companies surveyed in the UK are uncertain how new technologies will perform under real-world stress, particularly in hybrid applications.

The resilience gap is becoming a financial problem

Uncertainty about resilience is affecting project economics. UK energy providers say it results in increased construction costs (59%), increased insurance costs (51%) and reduced return on investment (47%), while 40% say it makes projects less attractive to investors.

Notably, financiers also estimate the cost of risk higher than energy providers across a range of categories, suggesting that those financing the power buildout perceive greater risk than those developing it.

Engineering needs to move upstream

Many of the decisions that determine an asset’s resilience are made before traditional insurance placement. Four-fifths (80%) of UK energy companies say site-selection decisions frequently create downstream exposures that were not anticipated at the time.

These findings point to a broader role for engineering as power systems change. For brokers and their clients, the value of an insurer increasingly extends beyond transferring risk after a project has been designed. Engineering expertise can help identify, quantify and reduce risk while critical site, technology and design decisions can still be changed.

Globally, brokers see particular value where uncertainty is greatest. They say insurer-provided engineering expertise is most valuable for new or first-of-kind technologies (71%), construction projects (67%) and projects in catastrophe hazard regions (67%), areas where historical loss data and established risk models may be least reliable. This is echoed by UK energy companies, nearly three-quarters (72%) of which report that new technologies are currently underinsured, and 72% cite construction-phase supply chain delays as a major driver of asset disruption.

Find the report online.

About FM

Established nearly two centuries ago, FM is a leading mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its policyholder-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organisations, including one of every four Fortune 500 companies. They work with FM to better understand the hazards that can impact their business continuity to make cost-effective risk management decisions, combining property loss prevention with insurance protection.

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