Artificial intelligence is the buzzword of the year, affecting nearly every industry with its limitless potential. It’s even reshaping energy markets, causing climate tech investments to surge. As AI adoption accelerates, so does its appetite for energy, particularly for the data centers that serve as the backbone of its operations. This dynamic has opened up new opportunities for climate tech startups and, by extension, insurance agents supporting clients in these cutting-edge fields.
Energy Startups: A New Leader in Climate Tech
For the first time since 2020, energy startups have overtaken electric vehicle and battery manufacturers as the top recipients of global climate tech investment. According to a recent “Insurance Journal” article, venture funding for energy startups hit $9.4 billion in 2024, a 12% increase from the previous year. Funding is fueled by a pressing need to develop greener, more sustainable energy sources for AI-driven operations, given just how much energy they require.
Geothermal energy and nuclear power are particular standouts, with investments nearly tripling and doubling, respectively. Companies like Amazon and Meta are pioneering efforts to generate power on-site for their large AI data centers, which demand immense energy to process data while striving to avoid reliance on traditional grids. “We’re seeing an increased level of activity with battery energy storage systems and power generation storage systems in relation to large AI data centers,” says Loren Henry, Vice President of Jencap’s Environmental and Energy Practice. “It’s growth that’s moving very quickly and reshaping the energy market.”
How Insurance Plays a Pivotal Role
The shift toward renewable and self-sustained energy sources creates unique opportunities for insurance agents. Unlike traditional construction projects, building facilities like AI data centers or geothermal plants require specialized insurance knowledge. “These are very different exposure types that require coverage from construction through operation phases,” Henry explains. “You need experts who understand both the technology and the purpose behind these projects.” He points to several nuances, including:
- Specialized Underwriting: From battery energy storage systems to self-sustained hydroelectric power, these projects often involve advanced technologies that traditional construction underwriters may not be familiar with.
- High-Value Projects: Many of these facilities have total insured values ranging from $250 million to $500 million, necessitating policies like Owner-Controlled Insurance Programs (OCIPs) or Wrap-Up policies.
- Technological Risk: The evolving nature of AI and energy storage introduces a learning curve for insurers, making partnerships with experienced wholesale brokers essential.
Trends to Watch in AI Energy Usage and Insurance
As climate tech investment stabilizes at lower levels post-2023, energy startups are poised to remain a hotbed of innovation, which aligns with the growing demand for localized power generation to support AI facilities. “It goes beyond cost savings — it’s about efficiency, sustainability, and dependability.,” says Henry. “Weather, wildfires, and other events cause disruptions to the electrical grid. Generating their own power gives those facilities the ability to have a dependable power supply and deliver consistent product performance to their clients.” Despite political uncertainty and slower funding growth, long-term projects already in development are likely to continue, underscoring the importance of equipping agents with the expertise to navigate these evolving markets.
Supporting Agents in a Rapidly Changing Landscape
For agents, partnering with an experienced wholesale broker can make all the difference. “If agents don’t have the knowledge base to know where to go for these types of risks, that’s where a strong wholesale partner becomes invaluable,” Henry emphasizes. Jencap’s Environmental and Energy Practice is uniquely positioned to guide agents through these challenges, offering specialized solutions tailored to the needs of AI-driven energy projects. With expertise in nuanced underwriting, policy placement, and risk management, Jencap empowers agents to seize opportunities in this transformative space. Contact the Energy Team today.
The Jencap Environmental Insurance Team
Jencap’s team of environmental underwriters have dedicated their entire careers to the environmental sector — they are environmental professionals that happen to sell insurance. Our brokers have backgrounds as environmental consultants and geologists, which gives you and your clients a significant advantage. When it comes to
environmental coverage, you don’t want a generalist broker. With the Jencap team, you can trust our brokers have worked every angle of the environmental industry and can customize our exclusive program capabilities for any environmental coverage need.
