Risk Management for solar has become a hot topic in recent years as extreme weather events become increasingly more common, threatening damage to solar arrays. In 2020, there were 22 separate billion-dollar weather and climate disasters that impact the United States. According to a new report from insurer GCube, the average solar loss due to traditional natural catastrophes or extreme weather was almost 2400% higher than the average non-weather-related solar loss in 2019.
Not unrelated, buyers are seeing increased premiums for coverage, with asset owners reporting increases of up to 400% over the past two years. There is a renewed focus on the performance and profitability of solar sites as they relate to reducing risk.
Solar businesses need insurance just like any other, but specialized coverage offers protection unique to those in the solar industry.
Brown & Brown (B&B), an insurance brokerage firm in White Plains, NY, has a team of professionals focused on insurance solutions for renewable energy businesses and assets. B&B provides a long-term plan to reduce total cost of risk which in turn will significantly lower premium costs over an extended period of time.
Rob Freeman is the Leader of the alternative energy group at B&B. His team specializes in insurance and risk management for solar developers, energy efficiency contractors, consultants and technology providers.
“A large percentage of my clients are involved in the solar industry,” Freeman tells us. “We help make sure that solar companies have the right insurance, so they are not at risk of being on the wrong end of the claim.”
RECOMMENDED POLICY FOR SOLAR
Freeman’s customers carry general liability and umbrella insurance of varying limits. General liability insurance is essential to safeguarding the financial health of the solar business because they protect a business from claims of 3rd party bodily injury and property damage. Umbrella (or excess insurance) is there if the underlying GL limits are exhausted in a claim.
Property insurance is also important because it protects solar assets, the income from solar assets, and the applicable tax incentives.
“There are a variety of property insurance types that may be appropriate for solar systems that are owned by a contractor or developer and whether coverage for business income is needed,” Freeman says.
Umbrella policies provide an extra layer of coverage and are an important part of the risk management portfolio, while business income insurance protects against loss of income.
Business income can be either income from the business or income from the solar array, should something happen to the system whether from fire, wind, hail, flood or earthquake. According to Freeman, not all of his customers opt for insurance covering catastrophic perils.
EVALUATING AND REDUCING THE RISK FOR SOLAR
As an insurance broker, part of Freeman’s job is working closely with insurance carriers to get the best coverage for the clients. Carriers need to be able to reduce the frequency of losses and manage risk in order to be able to offer comprehensive insurance to Freeman’s clients at low premiums. A big part of lowering risk for both parties is to protect the solar plant production.
One of the best ways to manage risk is with professional solar plant monitoring.
Solar-Log® offers comprehensive, professional solar plant monitoring and energy management solutions. Detailed performance insight compares inverter output and performance deviations before they can have a lasting negative effect on solar plant return. O&M providers can eliminate costly downtime by quickly detecting solar plant issues and malfunctions.
Under-performance can be due to a number of factors including but not limited to component failure, environmental, and weather conditions. When under-performance is detected, the solar O&M service provider can react quickly, initiating proper performance as soon as possible and reducing any possible claim.
Freeman’s team works with carriers who offer solar production guarantees for projects greater than 4MW. This policy guarantees solar production to 90-95% of projected performance. To be able to offer this product, the underwriter will review the expected output, the components like inverters and panels (including brands and models), location and other contributing factors. Next, the underwriter uses a solar production forecasting method like PV asset modeling software to determine the expected production.
Forecasted solar production values can be loaded in to the Solar-Log® software and monitored alongside the actual energy production. This side-by-side, real-time comparison can be used to immediately detect under-performance.
A unique advantage to Solar-Log® monitoring is its inverter independence. A study by IEEE found that inverters were the leading cause of failures in PV Systems and have the biggest impact on kWh loss. As an inverter-agnostic and neutral platform, Solar-Log® can detect inverter outages and failures, regardless of the inverter brand. As a result, O&M providers can monitor and manage all of their plants from one single software platform. This reduces solar plant downtime with accurate performance data.
Explore Solar-Log’s Inverter Compatibility
Real-time error detection and automatic alerts minimize solar plant downtime. Solar plant issues can be corrected quickly when they are detected immediately. The plant is back up and running correctly, in less time. More uptime means more power generation and a higher return on the investment.
Read more about the benefits of Solar-Log for insurance providers and investors.
