News & Insights

The skills gap in renewables

At the 2023 United Nations Conference of the Parties (COP28), governments pledged to triple renewable energy output by 2030.¹ Achieving these ambitious targets rests partly on the availability of substantial numbers of people with the appropriate skills.

"The transition to renewable technologies requires experienced professionals and the right understanding," says Ian Picton, executive partner, Energy Retail Worldwide, Gallagher Specialty.

Many industries are struggling to find the talent they need. In Europe, the construction industry workforce, for instance, hasn't recovered from the impacts of shocks such as the global financial crisis and global pandemic. Demographic factors are at play, with greater numbers of workers retiring than entering the industry. This issue will become even more pronounced as demand for skilled workers grows.

Construction is at the heart of achieving the EU's European Green Deal, with the need to fill an estimated 4.2 million job openings by 2035, according to European Centre for the Development of Vocational Training (Cedefop).²

Investments in energy transition, transportation decarbonization and the circular economy, where resources are reused and recycled, are just some of the areas competing for talent as the race to zero gathers pace.

One of the biggest current skills gaps is in the renewable energy sector, which is primed to undergo substantial growth over the next decade. Tackling the growing skills shortages through training initiatives is a crucial element in de-risking the journey to net zero.

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Financial concerns and lack of job opportunities are seen as key barriers to reskilling, according to Gallagher's study, Workforce Attitudes to the Net Zero Transition 2024, a survey of over 1,500 semi-skilled workers around the world across the sectors most exposed to the green transition.

As economies transform and investments in today's workforce increase, several key statistics highlight the current and future landscape of the renewable energy sector and its associated job market:

• Solar photovoltaics is the largest employer within the renewable sector globally, accounting for 4 million jobs.
• Electric vehicles (EVs) and batteries are the fastest growing sectors, adding over 1 million jobs since 2019, according to the International Energy Agency.
• Green hiring consistently outpaces overall hiring for all other jobs.³
• By 2030, there is an estimated global shortage of 7 million skilled workers needed for climate and energy projects, including installing solar panels, heat pumps, EV charging stations, and wind farms.⁴
• In 2024, there were approximately 395 projects in the carbon capture and storage (CCS) facilities pipeline worldwide, with North America accounting for half of all commercial facilities globally.
• The level of policy support from governments for CCS facilities reached a historic high in 2023, with the project pipeline growing more rapidly than ever before.

The wide-ranging cost of a skills gap

Failing to find solutions to tackle competence levels within the sector will hinder progress, create uncertainty around investment, and add to operational expenses, including the cost of insurance. Ultimately, governments' efforts to stay on track as economies decarbonize hinge on the ability to secure talent at scale.

"While digital technologies can be easily scaled up at low cost, the energy transition requires significant changes to physical infrastructure," says Lorcán Hall, advisory member of the SDG Academy of the Sustainable Development Solutions Network of the United Nations.

Global business leaders are emphasizing the need for government policies that support both the infrastructure and the jobs needed in areas affected by the energy transition. While some jobs may be lost due to automation, there will also be new opportunities for employment in clean energy projects.

The impact of a skills gap on the insurance industry

From an insurance industry perspective, a skills gap is a potential source of claims. For insurance underwriters, the link between a lack of competency in the workforce and the frequency and severity of claims directly impacts how much capacity they're willing to deploy and the total cost of that capacity.

A lack of skills can lead to operational inefficiencies, as workers may lack the expertise to operate and maintain advanced machinery and technology. This can result in increased downtime, production delays and greater expenses.

Safety and wellbeing are another key concern. A lack of workers with advanced skills and experience increases the chance of machinery being used incorrectly and procedures not being followed, increasing the likelihood of more accidents at work.⁶