Emerging Risk Trend Talk 5: Biomass power plants 

Biomass power generation is playing an increasingly important role in the global energy transition. By converting organic materials into heat and electricity, biomass plants offer a renewable alternative to fossil fuels – and, unlike solar or wind, they can provide stable, baseload power around the clock. As a result, they are now a mainstream renewable energy source in Europe, Asia-Pacific, and North America.

As countries seek to improve energy security, reduce their reliance on fossil fuels and meet climate targets, investment in biomass power generation continues to grow.

The sector is evolving rapidly. New developments include higher-efficiency combustion systems, greater use of artificial intelligence (AI) for predictive maintenance, increasing digitalization of plant operations, and growing interest in bioenergy with carbon capture and storage (BECCS). BECCS has attracted significant attention because it offers the potential to generate electricity while removing carbon dioxide from the atmosphere, creating so-called carbon-negative energy generation.

However, growth comes with challenges. Biomass facilities combine the fire and explosion hazards of fuel handling with the mechanical complexity of power generation, with additional risks related to feedstock handling, combustible dust, sustainability requirements, emissions management, supply chain dependencies and increasingly sophisticated digital systems. The sector is also facing greater regulatory scrutiny regarding sourcing practices, carbon accounting and environmental performance.

For risk managers and insurers, effective engagement with biomass facilities requires understanding both the operational realities of power generation and the unique characteristics of biomass as a fuel source.

Early involvement in project design, robust loss prevention measures and specialized insurance products – such as feedstock supply insurance for example – can help manage exposures while supporting the sector’s continued growth.

As the energy transition accelerates, biomass will remain an important part of the renewable mix. Managing its risks effectively will be essential to realizing its potential.