Co-Location Revolution Reshapes Global Clean Energy: Storage, Power-To-X And New Risk Models Emerge—Report

A new report by Tokio Marine GX shows that the global clean energy sector is moving into a new phase where the focus is no longer just on building renewable energy capacity, but on how different technologies can work together in the same project. Earlier, renewable energy development mainly depended on selecting good locations for solar or wind projects. Now, developers are increasingly focusing on co-location, where multiple energy systems are combined at one site to improve reliability and performance.

This change is mainly driven by rising electricity demand, especially from data centers, and the challenge of managing intermittent power from renewable sources like solar and wind. To solve this, companies are pairing renewable energy projects with battery energy storage systems (BESS) and new technologies such as Power-to-X, which converts electricity into other forms of energy like hydrogen or e-fuels. This approach helps create more stable and continuous “firm” power, making renewable energy more dependable for large-scale users.

However, the report highlights that combining different technologies also creates new risks and operational challenges. Battery storage systems introduce complex revenue structures, such as earning money through energy price differences in the market or short-term trading. This makes it more difficult to calculate financial losses when systems are not working. There are also concerns about single points of failure, especially at grid connection points, along with supply chain issues and rising risks from extreme weather events.

Another concern for investors and insurers is the lack of long-term performance data for large-scale battery systems. While early performance results are positive, some large projects have started to show issues related to battery efficiency and degradation after around two years of operation. This uncertainty makes it harder to fully assess long-term risks.

The report highlights two major global projects as examples of how these risks can be managed. One is a large facility developed by Masdar in the Middle East. This 1GW round-the-clock project combines 5.2GW of solar power with a 19GWh battery storage system. To reduce risk, the project is split across two separate locations with different contractors, independent grid connections, and wide spacing between assets to avoid shared failure points.

The second example is the Kassø project in Denmark by European Energy. This facility combines a 304MW solar plant with electrolysers that produce e-methanol for industrial use. The design allows the solar plant and fuel production unit to operate independently, so if one part fails, the other can continue working and generating revenue.

Overall, the report suggests that insurers and developers must adapt to this new energy model by focusing more on data sharing, operational transparency, and flexible project design. It also emphasizes the need for customized insurance solutions that match the complexity of modern hybrid renewable projects. As clean energy systems become more interconnected, collaboration between developers, insurers, and technology providers will be essential to ensure long-term stability and growth.