Power generation infrastructure is coming under increasing strain as rising electricity demand, ageing equipment and long replacement lead times heighten the risk of costly outages, according to a report by commercial property insurer FM.

The report found that mechanical and electrical breakdowns account for more than 70% of all loss events and more than 80% of the sector's annual financial impact. Gas turbines are the largest source of property damage, while gas turbines and transformers are major causes of business interruption as replacement lead times can stretch to years.

FM found that between 2021 and 2025, its clients recorded 427 power generation losses with gross losses of about US$3.7bn. Steam turbines and gas turbines accounted for the most severe losses.

The insurer also identified fire, pressure on transformers, switchgear and cooling systems from AI datacentres, and dependence on single pieces of critical equipment as key sources of risk. It found that around 27% of losses came from the 2% of sites previously identified as being most at risk.

“Power generation is a pillar of national and global security,” said Stuart Keller, chief engineer at FM. “Losses within this sector reverberate beyond individual facilities, affecting macroeconomic performance, energy availability, the resilience of critical infrastructure and local communities. As demand increases and system complexity grows, maintaining operational efficiency and proactively managing risk are essential.”

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