Renewable energy: A new growth market for the surety sector

With hot weather on the way, energy use will be top of mind as we all try to stay cool. In recent years, as our awareness of the environmental impact of energy production has grown, we’ve seen renewable energy production on the rise from sources that can be regenerated or replenished, such as water, wind, solar and geothermal.

According to the Center for Climate and Energy Solutions, renewables are the fastest-growing energy source in the United States. They increased 100% from 2000-2018. Renewables made up more than 17% of net U.S. electricity generation in 2018, with the bulk coming from hydropower (7%) and wind power (6.6%). By 2030, the percentage is expected to rise to 24%, with this growth coming mostly from wind and solar.

The future of renewable energy & surety

Thanks to the growth in eco-conscious energy demand, more renewable businesses are emerging, and more green projects are being started, creating an increase in surety needs in this space. With more corporations and individuals concerned about adding to their carbon footprints, we see the renewables sector as a growth opportunity in our commercial surety segment. The next generation is more attuned to finding ways to produce and use clean energy, and we are here to stand behind reputable companies that have emerged to support this demand.

Opportunities for surety innovations

Solar energy has been big in the Western region of the United States for some time, and now we’re seeing it proliferate across the entire country. There’s a fair bit of diversity in the solar and wind surety space, with a variety of bond needs that could arise. There are performance and payment bonds for the design and construction of a solar project, bonds that support the sale of power generated by solar or wind systems, and even bonds that ensure the safe removal of the solar or wind structures at the end of a project’s lifecycle.

Quite often, we will work with companies developing large solar projects. We recently worked with one client on a project in North Carolina that involved the engineering, design and construction of a $100 million solar facility. Our bond guaranteed that the client would complete the entire job per the specifications of the underlying agreement.

Surety continues to evolve

The first known surety contract was written on a tablet in ancient Mesopotamia nearly 5,000 years ago. It was a guarantee that a farmer, who was called to serve in the army, would share his profits with another farmer, who agreed to work the fields while he was away. The essence of surety agreements carries on into modern society. As long as the renewable energy sector continues to grow and innovate, the surety industry will evolve to find creative ways to support its multifaceted bonding needs.

Ben Murnighan is an assistant vice president at Argo Surety and is based in San Francisco. Ben has been with Argo for eight years and has spent time in a variety of underwriting roles, where he currently leads the Commercial Surety practice for the West region.

The opinions expressed here are the author’s own.

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