When permit litigation becomes an investment risk for renewable energy projects
The biggest obstacles to Europe’s energy transition are no longer just limited to technology, funding, or political ambition. Legal uncertainty is also emerging as a key challenge, write Marieke van der Werf and Axel Geers from Marsh.
We’ve seen renewable energy projects across the Netherlands face more frequent and complex appeals against environmental permits. Even projects that have secured financing and are ready for construction can be delayed for months or longer while legal proceedings are on-going. These types of project delays are examples of how permit litigation can create uncertainty long after major investment decisions have been made.
For developers, investors, and lenders, the consequences go beyond legal costs. Delays can postpone revenues, increase financing costs, and disrupt carefully planned project timelines. What was once considered primarily a legal issue is increasingly becoming a financial and investment risk.
A new category of project risk
Renewable energy projects have become larger, more complex, and more capital intensive. While construction and operational risks are generally well understood, permit litigation is much harder to predict or quantify.
This matters because investors need certainty. Capital is committed well before a project starts generating income, and prolonged legal proceedings can affect both financing conditions and investment decisions.
Insurance as part of the solution
As the risk landscape evolves, so too must the tools available to manage it. Marsh recently introduced a new insurance solution in the Netherlands designed specifically to protect renewable energy projects against the financial consequences of permit litigation. The solution can cover losses resulting from project delays or cancellation following permit appeals, including lost income, debt obligations, and certain contractual costs.
The insurance solution reflects a growing recognition that legal uncertainty is now an investment risk that deserves a similar level of attention as construction, operational, or market risks.
Unlocking investment confidence
Insurance will not eliminate permit disputes, nor should it replace efforts to improve permitting processes. It can however reduce financial uncertainty and provide developers, investors, and lenders with greater confidence to move projects forward despite ongoing legal challenges.
The energy transition requires more than ambitious climate targets; it also needs financial resilience. As legal risks continue to evolve, innovative risk transfer mechanisms can play an important role in helping capital continue to flow into the renewable energy projects that are much needed to meet energy ambitions.
About the authors: Marieke van der Werf is Climate & Sustainability Leader at Marsh in the Netherlands, where Axel Geers is Leader of the Energy & Power practice.
