Shifting federal policy over the past year has forced the energy sector to adapt, and the rising energy demand driven by data centers and more is not stopping investment and new project development, insurance specialists say.
In the summer of 2025, Congress passed the One Big Beautiful Bill, jolting the renewable energy space by significantly scaling back green energy tax credits established under the 2022 Inflation Reduction Act.
So far, the bill has led to an uneven impact on renewable projects. Private investors have stepped in to support wind and solar, while nuclear energy continues to receive continued support, according to Katherine Gerber, head of energy and energy transition, AXA XL.
“It’s maybe not at the level of what the tax credits could have done over time, but it is still quite significant,” Gerber said.
The new federal policy hasn’t stopped planned developments in the renewable energy space, and experts say that new projects are still coming through the pipeline.
The offshore wind market, meanwhile, has come to nearly a complete halt, and has also seen a major downshift, said Katie Burke, U.S. energy and power growth leader at Marsh.
However, many renewable projects that were already under late-stage development at the time of the bill’s passing are now under construction, Burke said, and several new projects are underway.
Data Centers Fuel Power Demand
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One area that keeps fueling the energy sector is the demand for new data centers. Companies that build and operate data centers are willing to pay a premium price for power, which has offset some of the investment fallout from the One Big Beautiful Bill.
“Energy demand is at such a high level right now, so any sort of power generation is going to be highly valuable,” Burke said.
Digital infrastructure, which includes the development of data centers and the energy sources that such facilities rely on, is a “huge growth area” for most insurance companies, said Gerber.
“Data centers and digital infrastructure need a lot of capacity,” Gerber said. “Most insurers are really thinking about their strategy around this, and I’ll say most of us are focusing on it.”
Gerber said AXA XL has received a lot of requests for support on the energy construction side, with support for the operational side expected to pick up soon, too.
The biggest ask is for property and builders risk coverage, Gerber said. “A lot of the support comes for covering catastrophe risks on the property side,” she said, adding that CAT exposure plays a role in what’s available in capacity in terms of the overall market.
Owners and operators of data centers are also in the market for outage insurance, a type of parametric coverage, said Burke. The product provides coverage for any liquidated damages because of an outage that’s not otherwise covered by a standard property/casualty policy.
