Last year we saw considerable changes made to the regulatory and investment landscape for onshore wind. The UK Government committed to doubling onshore wind energy by 2030, increase subsidies by 50% to £1.5 billion via Contracts for Difference (CfDs) and remove the de-facto ‘ban’ against onshore wind developments. The changes have been very well received by wind farm developers and investors alike, and they translated into a considerable uptick in deal-flow for early-stage developments at the end of 2024.
As these new opportunities emerge, buyers will increasingly look to Warranty & Indemnity (W&I) Insurance to manage the risks associated with onshore wind investments. To maximise the benefits of W&I, buyers will need to conduct a thorough due diligence process that’s tailored to the individual project and the sellers’ warranty suite.
The impact of the Labour Government’s changes and US developments
Back in 2015, changes introduced to the National Planning Policy Framework resulted in local opposition effectively preventing approval being given to onshore wind farm developments. The Labour Government’s changes have removed this element from being the deciding voice. The Government has also recently announced its intention to bring large onshore wind projects back into the Nationally Significant Infrastructure Project (NSIP), giving central government (rather than councils) the final say on approvals for wind farm projects larger than 100MW.
The Government’s ambition to double the UK’s onshore windfarm output to 30GW by 2030 is being aided by a reduction red tape to unlock large onshore wind farms across the UK. This has brought great optimism to the sector, and it is already driving increased M&A activity. In tandem, the new US Government’s renewed support for fossil fuels and removal of clean-energy incentives has pushed US investors to look abroad in search of a diversified global portfolio. At the Global Private Capital Conference (opens a new window) in April 2025, energy executives highlighted growing opportunities in regions like Eastern Europe, the Balkans, and North Africa, where renewables thrive without subsidies.
Warranty requirements for onshore wind projects
W&I Insurance is a key tool in managing the risk allocation between the various stages of development of a wind farm. Insurance is critical in ensuring that buyers have sufficient recourse against sellers; by having the insurer assume the liability of all seller warranties under the sales and purchase agreement (SPA), buyers are given certainty that they can claim for any breaches warranty. Sellers, meanwhile, do not have any capital locked in escrow, nor are they required to provide a parent company guarantee, or similar form of guarantee. This greatly reduces the financial burden on selling developers and allows them to utilise their capital on future projects.
Due diligence requirements
For a buyer, the due diligence exercise is critical to ensure that all warranties under the SPA are fully covered by W&I. The level of diligence required will depend on the stage of the project under purchase.
The below chart provides an overview of the required due diligence for each stage of an On-Shore Wind project:
Due diligence workstreams | Project stage: right to build | Project stage: mid-construction / pre-commissioned |
|---|---|---|
Legal | - Advisor: external or partially internal - Land ownership - Rights and permits - Easements and access - Material contracts (grid connections) | - Advisor: external or partially internal - Land ownership - Rights and permits - Easements and access - Material contracts (grid connections) - Employees - Regulatory - Health, Safety, Security and Environmental (HSSE) |
Finance | - Advisor: external or internal - Review of annual financial statements and management accounts: accounting policies and practices, financial performance and irregularities (Approx. 3-4 pages) | - Advisor: external - Full financial diligence report (Approx. one page) |
Tax | - Advisor: external or internal - Limited to a brief review of VAT returns and tax return | - Advisor: external - Full tax review |
Technical | - Not required | - External - Condition of assets |
While the above represents a general guide, each project is unique, and will often have its own specific diligence requirements. For example, for ready-to-build sites where the target is a non-trading special purpose vehicle (SPV), there is likely to be limited tax and financial information available. Given the nature of the target, insurers will not expect much by way of due diligence in these areas. By contrast, a power producer with employees, off-takers, and operational turbines will demand a full suite of diligence to match the warranty suite.
Coverage considerations
Specific onshore wind projects may also raise further coverage considerations for buyers, in addition to those listed above. These may include:
Tax – capital allowances, and the existence or use of tax assets, can comprise a significant portion of the target’s value. These tax assets can be protected under W&I (opens a new window), subject to certain due diligence.
Title – obtaining a Certificate of Title (COT) for every site is desirable, albeit not compulsory. A detailed report on title can often suffice. Dedicated Title Insurance (as a separate cost to W&I) remains another option for buyers, providing coverage for title and capacity based upon the provision of information to the insurer, with limited diligence.
Planning and permits – carrying out a detailed review in respect of all rights of use and planning approvals is crucial to obtain coverage for the relevant warranties. This is key area, requiring fulsome due diligence.
Environmental – for greenfield sites, where historical use can be evidenced, or a desktop search has bene conducted, it is possible to obtain coverage for all environmental (and sometimes pollution) warranties. For brownfield sites, a phase 1 environmental report is required as a minimum. Subject to the findings, a phase 2 report may also be required.
W&I pricing
While early 2024 saw the market soften and rates were at their lowest historic levels, with the increase in deal activity in this sector prices have risen. The table below shows the available rates at the time of writing:
Visit our Warranty and Indemnity (opens a new window) page for more information, or reach out to a member of our team.
