What Is Energy Insurance?
Energy insurance provides physical damage and business interruption cover across the full energy value chain. It is a specialist line distinct from standard commercial property insurance, designed to address the particular exposures of assets that generate, transmit, process or store energy.
Upstream exploration and production assets — wells, wellheads, drilling equipment and offshore platforms — face blowout, well-control and pollution exposures that standard property wordings do not address. Midstream pipelines, LNG terminals and compression stations require tailored material damage and business interruption structures. Downstream refineries and petrochemical plants carry high-value machinery breakdown and consequential loss exposures. Power generation assets — from thermal stations and combined cycle gas turbines (CCGT) to hydroelectric facilities (HES) — require all-risks operational cover that extends to machinery breakdown and natural catastrophe.
In Türkiye's rapidly growing renewable energy sector — driven by the YEKDEM feed-in tariff mechanism and the YEK-G green certificate scheme — appropriate coverage is essential from the construction phase through long-term operation. Solar power plants (GES), wind farms (RES) and hydroelectric stations (HES) each present distinct engineering, weather and revenue risk profiles that demand specialist underwriting attention. Neolife places these risks through Lloyd's and European energy markets, drawing on relationships built specifically for Turkish energy accounts.
Coverage Areas
Energy insurance is not a single policy but a family of wordings matched to asset type, lifecycle phase and risk appetite. The principal coverage areas are described below.
Upstream Oil & Gas
Well control cover (operators' extra expense / OPD — Operator's Additional Expense) responds to blowout and well-control events, covering costs of regaining control, re-drilling and seepage and pollution liability. Property damage covers physical assets at the wellhead, gathering system and processing facilities. Removal of wreckage and pollution liability extensions are standard in the upstream market.
Downstream & Midstream
Material damage cover for refineries, petrochemical complexes, pipelines, LNG and CNG terminals. Policies extend to machinery breakdown and loss of profits (business interruption). Petrochemical plants require careful consideration of business interruption indemnity periods given the complexity of restart procedures following a major loss.
Power Generation — Conventional
All-risks property cover for thermal power plants, combined cycle gas turbines (CCGT) and hydroelectric facilities (HES). Covers machinery breakdown, natural catastrophe, flood and earthquake (significant considerations in Türkiye's seismic zones), and testing and commissioning. Business interruption / MLOP extensions are available for revenue protection.
Solar Power Plants (GES)
All-risks cover for photovoltaic panel arrays, inverters, step-up transformers and tracking systems. Weather-related perils — hail, storm damage, flooding — are primary concerns. Policies can include gradual deterioration endorsements for panel efficiency loss and MLOP (Machinery Loss of Profit) to protect feed-in tariff revenue under YEKDEM or bilateral power purchase agreements (PPAs).
Wind Power Plants (RES)
All-risks cover for wind turbines including rotor blades, nacelles, towers, substation and grid connection infrastructure. Mechanical and electrical breakdown cover is critical given the moving-parts nature of turbines. Revenue loss under MLOP / business interruption protects cash flow when turbines are offline due to insured machinery breakdown or grid failure attributable to an insured event.
Battery Energy Storage (BESS)
An emerging and rapidly developing coverage segment for utility-scale and behind-the-meter battery systems. Key underwriting concerns are thermal runaway (battery fire cascade event), battery degradation (capacity loss over time), cell supplier warranties and fire suppression system adequacy. Market capacity remains specialist — international placements are required for larger or higher-risk BESS portfolios.
Business Interruption — MLOP
Machinery Loss of Profit (MLOP) is the business interruption extension specifically designed for machinery, engineering and energy risks. It is distinct from standard property BI: whilst standard BI responds to revenue loss following physical property damage (fire, storm, flood), MLOP responds to revenue loss arising from machinery breakdown or delay in start-up — events that may not involve fire or conventional property damage at all.
For renewable energy plants, BI and revenue protection under MLOP is commercially critical. Unlike a manufacturing business with finished-goods inventory, a power plant's sole output is electricity — there is no stock buffer. When a turbine, inverter or transformer fails, revenue stops immediately. The tariff structure governing that revenue — YEKDEM feed-in tariffs, spot market prices or bilateral PPA rates — determines the financial exposure and therefore the appropriate MLOP sum insured.
Setting the MLOP Limit
The MLOP sum insured is typically calculated as:
- Annual revenue — installed capacity (MW) × capacity factor × applicable tariff (TL/kWh or USD/MWh)
- Indemnity period — typically 12 to 24 months, reflecting realistic repair or replacement timescales for major components
- Maximum foreseeable loss scenario — e.g., total loss of a main transformer or rotor blade with extended lead time
Neolife assists clients in modelling appropriate MLOP sums, taking account of tariff type, grid connection terms and plant-specific repair histories.
For new plants under construction, Delay in Start-Up (DSU) — sometimes termed Advance Loss of Profits (ALOP) — covers the financial loss to the project owner when physical completion is delayed due to an insured construction event. DSU is a pre-revenue equivalent of MLOP and is addressed in detail on the Construction & Erection Insurance page.
Offshore Energy
Offshore energy insurance covers physical assets and liabilities associated with maritime energy operations. This includes fixed and mobile offshore platforms, jackup drilling rigs, semi-submersible rigs, FPSOs (Floating Production Storage and Offloading units), subsea pipelines, wellheads and associated marine spread of operations.
For Turkish operators with offshore interests — principally in the Black Sea, Eastern Mediterranean and Aegean — coverage requirements span physical damage to structures and equipment, operators' extra expense (OPD) for well-control events, marine liability, and pollution liability. Lloyd's and the European energy markets (including the Norwegian market) are the primary sources of capacity for offshore risks connected to Turkish operations. Neolife coordinates placements through these markets on behalf of Turkish energy companies and their international joint-venture partners.
Subsea pipeline cover — including risks arising during laying operations and during long-term operation (third-party damage, corrosion-related incidents) — requires specialist engineering underwriters familiar with the seabed conditions and regulatory framework applicable in Turkish waters.
Underwriting Information
Energy underwriters require detailed technical information to assess and price a risk accurately. Providing comprehensive submission documentation at the outset avoids delays and demonstrates the quality of risk management to the market. As a minimum, submissions for operational energy assets should include:
- Full asset description and geographic location (including GPS coordinates where applicable)
- Installed capacity (MW) and annual generation history
- Year of construction / commissioning and current operating status
- Operator details and organisational structure
- Five-year loss history (claims paid and outstanding)
- OEM service and maintenance contracts in place
- Existing warranties and manufacturer performance guarantees
- Grid connection agreement and offtake / tariff terms (YEKDEM, spot, PPA)
- For BESS: cell chemistry (e.g. LFP, NMC), cell supplier and fire suppression system specification
- For upstream: well-control and blowout preventer (BOP) test records