Navigating risk, insurance in the battery energy storage market

Originally published on PC360

As the world seeks to move away from fossil fuels and embrace renewable energy, Battery Energy Storage Systems (BESS) offer a crucial solution to one of the biggest challenges facing clean energy: Intermittency.

The renewable energy market has experienced explosive growth, with global capacity skyrocketing from 12 gigawatts (GW) in 2021 to more than 48 GW in 2023. The ability to store energy from sources like wind and solar and deliver it when needed has made BESS an essential component of modern energy systems.

Consequently, the need for BESS grid stabilization services is surging as renewable energy integration and the ensuing demand for energy resilience continues to rise. According to a Lloyd's article in the 2024 Solar Risk Assessment, BESS installations are expected to expand by 13 times in the coming years, with an additional 181 GW of capacity either planned or under construction.

While an important leap forward in the energy transition, the explosive growth in BESS also brings unique challenges, particularly in safety and risk management, which can impact the ability to insure installations.

Insurance is a necessary form of capital for the continued growth and adoption of renewable energy, and yet, the lack of data on the new and rapidly evolving technology, combined with a history of high-profile loss events have made insurers cautious in their approach to covering BESS. Battery storage asset owners will increasingly look to their insurance brokers for help navigating the complex insurance landscape.

There are a few critical ways that brokers can help asset owners position their BESS projects favorably in the eyes of underwriters, as carriers begin to look beyond mere compliance with safety practices and instead seek evidence of a comprehensive, proactive approach to risk management.

Mitigate thermal runaway risk

Thermal runaway, widely considered the most profound safety challenge to this asset class, occurs when a battery cell enters an uncontrollable self-heating state and spreads rapidly from one cell to the neighboring cells.

Electrical or mechanical abuse and internal failures can all result in thermal runaway events. If the risk is not properly managed, thermal runaway can result in fires, explosions, toxic gas releases, and system-wide failure. In large-scale BESS installations, a thermal runaway event can lead to catastrophic consequences, including extensive property damage, long system downtimes, and potential harm to first responders.

The first line of defense in mitigating thermal runaway is using a robust Battery Monitoring System (BMS). Asset owners should be using a BMS that not only remotely monitors for overcharging, overheating and other conditions that could lead to thermal runaway, but also provides early warnings of potential anomalies, and autonomously implements corrective actions before they escalate. Demonstrating real-time monitoring and rapid intervention capability to insurers is a must.

Fire suppression techniques have evolved but should be thought of as a backup line of defense to a BMS in the case of thermal runaway. As such, the industry is adopting a thorough, multi-layered approach to fire protection, combining suppression systems with advanced monitoring and control technologies.

Demonstrating comprehensive thermal runaway risk mitigation to insurers requires thoughtful design, a sophisticated monitoring system, adherence to evolving standards and safety codes, and thorough documentation of all preventative measures in place. Proving this level of active prevention measures and preparedness to insurers is paramount to receiving coverage at favorable rates.

Design for safety

The design and layout of BESS installations play a critical role in risk evaluation. Insurers pay particular attention to the spacing between enclosures. Although a minimum separation of eight feet, which is more conservative than the six-foot National Fire Protection Association standard, is commonly used as a guideline, asset owners must be ready to justify their configuration based on detailed risk assessments.

Given that thermal runaway results from internal chemical reactions, both gaseous and water-based suppression systems have inherent limitations. Therefore, fire suppression strategies must be multi-layered and customized to the specific installation. Asset owners should be able to explain the reasoning behind their chosen suppression system and how it is optimized for the setup and environment.

Insurers view projects that engage experienced Operations & Management teams who work closely with regional resources favorably. For example, commitment to safety should extend to cooperation and coordination with local fire departments to provide specialized training on the BESS installation.

Adhere to evolving standards

Complying with continuously evolving fire and building codes as well as fire suppression standards establishes a foundational level of safety and resilience. Regular updates are essential for mitigating risks and meeting regulatory requirements, things insurers will require.

Document! Document! Document!

Clear and thorough documentation of risk mitigation procedures is essential, as insurers expect to see well-detailed information across several key areas. This includes complete site plans, in-depth specifications for the BMS, and comprehensive details of the fire suppression system. Additionally, providing relevant testing certifications, maintenance procedures, and staff training programs is crucial.

All of this information should be presented in a way that highlights how each component plays a role in the broader risk mitigation strategy. By contextualizing these elements, asset owners can better demonstrate the overall safety and reliability of the installation.

Given the significant role BESS plays in our energy future, a focus on understanding risk and employing mitigation strategies and best practices is essential to ensure the safe and reliable deployment of clean energy, secure favorable insurance terms, and by extension, unlock the financing necessary for new projects.

kWh Analytics Wins Sustainable Insurance Initiative of the Year Award

Climate Insurance leader recognized for innovative property insurance solution that incentivizes resilience in renewable energy assets against increasing natural catastrophe threats

SAN FRANCISCO, October 22, 2024 - kWh Analytics, the market leader in Climate Insurance, has been awarded the Sustainable Insurance Initiative of the Year by InsuranceERM at their Climate and Sustainability Awards. This award marks the second consecutive year kWh Analytics has been honored by Insurance ERM, following their 2023 win for Climate and Sustainability Collaboration of the Year with capacity partner Aspen Insurance.

In 2023 alone, the U.S. experienced 28 natural disasters that caused $1bn or more in damage. In the face of increasing climate risks, exposed energy assets, such as solar, wind, and battery storage, require resilience against these perils to stay online. Renewable energy assets that are ‘resilient’ are specifically designed to withstand regional exposures, utilizing equipment tailored to local conditions. These projects actively prevent exposure to risks through proactive measures such as advanced monitoring systems, strategic siting, and robust maintenance protocols. As natural catastrophes become more frequent and severe, insurers and asset owners alike are recognizing the urgent need for solutions that not only protect investments but also encourage the development of more clean energy. kWh Analytics' approach directly addresses this growing industry concern by incentivizing and rewarding these resilience measures.

"By combining our unparalleled data, underwriting insights, and deep industry relationships, we're not just assessing risk – we're actively incentivizing resilience and sustainability in renewable energy projects," said Jason Kaminsky, CEO of kWh Analytics. "We’re honored to be recognized by InsuranceERM and our peers for our commitment to push the boundaries of what's possible in climate insurance."

Launched in 2023, kWh Analytics' property insurance solution for renewable energy assets has already expanded capacity limits and secured partnerships with five of the top ten global (re)insurance companies. The program leverages a proprietary database of over $100B worth of renewable energy loss data to conduct precise risk assessments and make informed underwriting decisions.

The program's unique pricing model incentivizes asset owners to implement climate-resilient practices. A recent case study demonstrated that a utility-scale solar project in hail-prone Texas achieved a 72% decrease in their property insurance natural catastrophe rate by implementing strong hail resilience measures, such as stowing panels against hail and using thicker, heat-tempered glass panels.

The continued growth of the renewable energy industry relies on collaboration across all stakeholders. By incentivizing resilience, kWh Analytics is playing its part alongside resilient equipment manufacturers, diligent operations and maintenance providers, and forward-thinking asset owners. Together, these stakeholders are creating a more sustainable future and accelerating the transition to clean energy.

ABOUT KWH ANALYTICS

kWh Analytics, a leading Climate Insurance provider, underwrites property insurance and revenue firming products for renewable energy assets. Our proprietary database of 300,000+ zero-carbon projects and $100B in loss data fuels advanced modeling and insights, enabling precise underwriting decisions. This data-driven approach incorporates resiliency measures in risk evaluation, promoting sustainable practices in the renewable energy sector.

Trusted by five of the top ten global (re)insurance carriers, we've insured over $30 billion in assets to date. Our tailored solutions further our mission of providing best-in-class Insurance for our Climate. Recognized by InsuranceERM Climate and Sustainability Awards, kWh Analytics continues to pioneer in the renewable energy insurance sector.

Learn more at https://www.kwhanalytics.com/, on LinkedIn, or X.

Media Contact 

Nikky Venkataraman 

Senior Manager, Marketing 

kWh Analytics 

E | nikky.venkataraman@kwhanalytics.com 

T | (720) 588-9361

PODCAST: Innovations in renewable energy insurance

Geoffrey Lehv, Head of US Accounts for kWh Analytics, joins the Crossroads podcast to discuss the role of insurance in the energy sector and how the industry is innovating to appropriately allocate risk.

Lehv speaks to how kWh Analytics has grown its business from handling risk transfer in the project finance sector to boosting access to financing, enhancing financing and supporting innovation.

Listen on Apple Podcast, Spotify, or wherever you get your podcasts.

Beyond the Spark: Insuring Battery Storage

Exploring Thermal Runaway, Risk Mitigation, and the Future of BESS Insurance

By: Adam Shinn, Data Science Manager, kWh Analytics; Michael Cosgrave, Principal, Renewable Guard; Ross Kiddie, Sr. BESS Risk Manager, Renewable Guard 

Originally Published on Energy Storage News

The energy landscape is undergoing a profound transformation, with Battery Energy Storage Systems (BESS) at the forefront of this change. The BESS market has experienced explosive growth in recent years, with global deployed capacity quadrupling from 12 GW in 2021 to over 48 GW in 2023. These sophisticated systems are revolutionizing how we generate, distribute, and consume electricity, offering unprecedented flexibility and efficiency to power grids worldwide.

The trajectory of BESS growth shows no signs of slowing. According to Lloyd's article in the 2024 Solar Risk Assessment, the industry is poised for a staggering 13-fold expansion, with an additional 181 GW either planned or under construction. This surge is driven by several key factors, capturing the attention of developers and investors alike. The intermittency of renewable energy sources like wind and solar power has created a pressing need for storage capabilities to balance irregular supply with demand. BESS offers crucial grid stabilization services and enables the delivery of more clean energy.

However, with these opportunities come significant challenges. The rapid growth of the BESS industry has outpaced the development of comprehensive safety standards and regulations. The technology itself, while advancing quickly, still faces issues related to energy density, cycle life, and overall performance. Perhaps most critically, BESS installations face a unique risk in the form of thermal runaway events, which can lead to fires and explosions if not properly managed.

Battery chemistry plays a crucial role in both the performance and risk profile of BESS. Lithium Iron Phosphate (LFP) has become the standard for commercial-scale energy storage due to its balance of cost, environmental impact, and safety characteristics. However, other chemistries like traditional lithium-ion, lead-acid, and flow batteries each offer different advantages and challenges depending on the specific application and use case.

Insuring BESS installations presents unique challenges due to the novelty of the technology and the potential for catastrophic events like thermal runaway. However, insurance is not just a cost of doing business—it's an enabling form of capital that's critical for the continued growth and adoption of BESS technology. Understanding how to protect these assets effectively is key to securing favorable insurance terms and, by extension, unlocking the financing necessary for new projects. Delving into the intricacies of BESS risks and mitigation strategies may help shed light on how asset owners, developers, and insurers can work together to foster a more resilient and insurable BESS industry, ultimately supporting the transition to a cleaner, more sustainable energy future.

Thermal Runaway: The Critical BESS Safety Challenge

The growth of global installed capacity of utility-scale BESS has naturally led to increased scrutiny of asset safety, particularly in light of high-profile fire incidents that have garnered significant media attention. However, it's important to note that despite these incidents, the overall rate of failures has decreased sharply. When failures do occur, they are often attributed to a phenomenon called thermal runaway.

Figure 1: Global Grid-Scale BESS Deployment and Failure Statistics

Thermal runaway occurs when a battery cell enters an uncontrollable, self-heating state. This process can rapidly escalate, potentially affecting neighboring cells and leading to a cascading failure across the entire system, often causing fire, explosion, and the release of toxic gases. It's crucial to understand that thermal runaway in lithium-ion batteries differs significantly from conventional fires. While conventional fires are sustained by fuel, heat, and oxygen[3], and can be extinguished by removing one of these elements, thermal runaway does not require oxygen. Instead, it is fueled by an internal chemical reaction that can continue without oxygen or visible flame.

Figure 2: The ‘traditional’ fire triangle and its relationship to Thermal Runaway

To fully grasp the complexity of thermal runaway, it's essential to understand its progression. The process typically unfolds in three distinct phases, each with its own characteristics and challenges:

1. Initial Instability: A voltage or temperature instability occurs, and the cell begins emitting gases.

2. Internal Short Circuit: The voltage drops to zero as internal cell materials fail, and the anode and cathode experience a direct internal short. The stored electrical energy in the battery flows through this short, causing temperatures to spike as high as 300-600°C. Importantly, visible flame may or may not occur at this stage.

3. Consumption of Cell Materials: As the internal materials of the cell are consumed, the thermal runaway event can transition to consuming the cell's encasing materials such as the electrolyte, polymers, and plastics surrounding the cell. The gaseous emissions at this stage are consistent with a plastic fire.

Understanding what triggers thermal runaway is equally important as recognizing its phases. Several factors can initiate this dangerous process:

1. Electrical Abuse: Overcharging or over-discharging batteries can lead to undesirable electrochemical reactions. When batteries are charged beyond their specified voltage range, it can result in electrolyte decomposition on the cathode surface, increasing battery temperature. Excessive lithium-ion migration during overcharging can destabilize the cathode, potentially initiating thermal runaway.

2. Mechanical Abuse: External damage to Li-ion batteries, such as impacts, indentations, or punctures, can compromise the integrity of the cell. If the casing is damaged, air can enter and react with the active components and electrolyte, generating heat. Severe internal damage can also lead to short circuits within the cell.

3. Internal Failures: Manufacturing defects or degradation over time can lead to internal short circuits, generating enough heat to initiate thermal runaway. These failures are particularly challenging, as they are hard to detect with external inspections.

Once thermal runaway begins in a single cell, it can quickly escalate into a cascading failure affecting neighboring cells and potentially the entire BESS installation. The heat generated by the failing cell can raise the temperature of adjacent cells, pushing them into thermal runaway as well. Additionally, failing cells can release flammable and toxic gases, further exacerbating the situation.

The consequences of a thermal runaway event in a large-scale BESS can be catastrophic. High-profile incidents have resulted in significant property damage, extended system downtime, and in some cases, injuries to first responders. These events not only pose immediate safety risks but also have broader implications for public perception and regulatory scrutiny of BESS technology.

Despite these challenges, it should be noted that the BESS industry has made significant strides in understanding and mitigating the risks associated with thermal runaway. As manufacturers, operators, and regulators gain more experience with large-scale BESS deployments, they have been able to identify common failure modes and develop more effective mitigation strategies.

Risk Mitigation Strategies and Best Practices

The BESS industry's approach to risk mitigation, particularly regarding fire protection and suppression, has undergone a significant evolution over the past eight years. This journey reflects the industry's growing understanding of the unique challenges posed by large-scale battery installations.

The landscape changed dramatically following a series of fires in Korea in 2017 and 2018. These incidents prompted a shift towards gaseous fire suppression systems in containerized units and dedicated BESS rooms. The theory was simple: remove oxygen from the environment to suppress fires effectively. However, the limitations of this approach became apparent with the APS Surprise, Arizona event in 2019, where quelled fires reignited upon the reintroduction of oxygen into the system.

In response to the Surprise, AZ incident, many fire departments and authorities began requiring water-based fire protection systems for BESS installations. Yet, several events since 2020 have revealed flaws in relying solely on water-based systems, particularly in remote locations where water availability can be limited.

Today, the industry has come full circle, returning to an approach that echoes the pre-2017 era but with pivotal enhancements, specifically the mandatory inclusion of Battery Management Systems (BMS). These systems are the nerve centers of modern BESS installations, playing a role in both performance optimization and safety management. BMS provides sensing and control of critical parameters, and importantly trigger protective or corrective actions if the system is operating out of the norm. These parameters include battery module over or under voltage, cell string over or under voltage, battery module temperature, temperature signal loss, and battery module current. In the event of any abnormal condition, the BMS will first raise an information warning and then trigger a corresponding corrective action should certain levels be reached.

While the Battery Mangement System is an essential component of BESS safety, a comprehensive approach to risk management includes several other best practices:

Spatial Separation and Explosion Relief: Effective explosion relief systems require design conformance to NFPA Standards and sufficient spatial separation between containers or structures to avoid collateral damage. The standard minimum distance for non-sprinklered LFP containers is 6 feet.

Multi-Layered Approach to Fire Protection: While the emphasis is on prevention, many installations still incorporate fire suppression systems as a last line of defense. This may include a combination of gaseous suppression, water-based protection, and emerging coolant-based systems.

Adherence to Evolving Standards: Compliance with applicable fire and building codes provides a basis for resilience. As these standards continue to evolve, BESS operators must stay informed and adapt their systems accordingly.

Conforming to these best practices is not just a matter of regulatory compliance; it's necessary for the long-term viability and growth of the BESS industry. As energy storage becomes increasingly central to our power infrastructure, the safety and reliability of these systems directly impact public trust, regulatory support, and investor confidence. BESS operators who prioritize these best practices not only mitigate their own risks but also contribute to the overall resilience and reputation of the industry. Moreover, as insurers and regulators scrutinize BESS installations more closely, those adhering to best practices are likely to find themselves in a more favorable position for insurance coverage and regulatory approval.

Beyond Compliance: Proving Resilience to Insurers

For battery storage asset owners, navigating the insurance landscape can be as complex as the technology itself. Insurers are looking beyond mere compliance; they seek evidence of a comprehensive, proactive approach to risk management. The following areas are critical for positioning BESS projects favorably in the eyes of underwriters:

Prove Preparedness

Insurers want evidence of active prevention rather than not just reaction to potential issues, but actively preventing them. This starts with your Battery Management System (BMS). Asset owners should be prepared to demonstrate how the BMS goes beyond basic monitoring, showing its capability to detect subtle anomalies that might precede a thermal runaway event and, crucially, how it autonomously implements corrective actions.

Remote monitoring is no longer a luxury—it's a necessity. Insurers are looking for systems that provide real-time, granular data on battery performance. The monitoring setup should allow for rapid intervention before small issues become major incidents.

Design for Safety

The physical layout of BESS installations significantly impacts risk assessment. Insurers are particularly interested in spatial separation between enclosures. While a minimum of 8 feet (already more conservative than NFPA code standards) is often cited as a benchmark, asset owners should be prepared to justify their chosen configuration based on specific risk assessments.

Fire suppression systems remain critical, but the approach must be tailored to the specific installation. Asset owners should be ready to explain the rationale behind their chosen system—whether gaseous, water-based, or an emerging technology—and how it's optimized for the specific setup and location.

Commitment to safety should extend beyond technology. Insurers look favorably on projects that engage experienced O&M providers familiar with regional specifics. Demonstrating coordination with local fire departments, including specialized training programs tailored to the BESS installation, is important.

Chemistry Considerations

Battery chemistry choice significantly impacts the risk profile. While Lithium Iron Phosphate (LFP) batteries are generally viewed favorably due to their stability, other chemistries may be beneficial depending on the use case.

Comprehensive Documentation

Thorough documentation is crucial. Insurers like to see:

• Detailed site plans

• Comprehensive BMS specifications

• Fire suppression system details

• Testing certifications

• Maintenance protocols

• Staff training programs

This information should be contextualized to demonstrate how each element contributes to the overall risk mitigation strategy.

The Path Forward

The BESS industry stands at the cusp of a transformative era, with rapid growth driven by technological advancements and the pressing need for sustainable energy solutions. As deployments scale up, emerging technologies like artificial intelligence and advanced data analytics are reshaping how we approach battery management and risk mitigation.

This technological revolution, however, must be balanced with a thorough understanding of the risks inherent to BESS. The industry's future hinges on our ability to build resilience into every aspect of BESS design, operation, and insurance. From innovative battery chemistries to sophisticated monitoring systems, each advancement plays a crucial role in enhancing safety and reliability.

As insurers and operators gain more experience and data, we’re seeing a shift towards more nuanced risk assessments and tailored insurance solutions. In this evolving landscape, brokers play a pivotal role. They should be proactively seeking detailed information and documentation from their clients and marketing these accounts across the insurance market. Not all insurers are equipped to make price adjustments based on resilience measures, making it crucial for brokers to work with those who have their arms around this risk class.

Looking ahead, there is reason for optimism for the battery energy storage. The industry has shown adaptability in the face of adversity, and the collaborative efforts between developers, brokers, and insurers are paving the way for safer projects. Carriers are only likely to become smarter and more comfortable with storage as the technology matures. By continuing to prioritize resilience, embracing innovative risk management strategies, and communicating with the insurance markets, we can ensure that BESS continues to play a vital role in our clean energy future, powering us toward a more sustainable and secure energy landscape.

[1] https://www.kwhanalytics.com/solar-risk-assessment

[2] https://www.epri.com/research/products/000000003002030360

[3] https://www.researchgate.net/profile/Edmund-Fordham/publication/359031670_Safety_of_Grid_Scale_Lithium-ion_Battery_Energy_Storage_Systems/links/62236da03c53d31ba4a9404b/Safety-of-Grid-Scale-Lithium-ion-Battery-Energy-Storage-Systems.pdf

kWh Analytics Leads $2.4M Initiative to Strengthen Solar Asset Resilience with the U.S. Department of Energy

San Francisco, CA – September 23, 2024 – kWh Analytics, a leading provider of Climate Insurance for renewable energy assets, is excited to announce a new, $2.4M partnership with the U.S. Department of Energy Solar Energy Technologies Office (SETO) through the Materials, Operation, and Recycling of Photovoltaics (MORE PV) Funding Program. This partnership aims to develop innovative approaches to solar PV resilience, focusing on introducing asset resilience measures against natural catastrophes earlier in the asset development lifecycle.

The increasing severity and frequency of damage-causing natural catastrophes, such as hail, hurricanes, and floods, pose a significant threat to solar assets, putting clean energy goals at risk. In today’s environment, developers lack the tools they need to make informed decisions on how to design, build, and operate more resilient facilities; kWh Analytics' project aims to produce tools to help asset developers address the specific perils their assets are exposed to at every stage in the project lifecycle.

“This award is a testament to both the long-standing partnership between kWh Analytics and the U.S. Energy Department, and our organization’s commitment to advancing the energy transition,” said Jason Kaminsky, CEO of kWh Analytics. “Our deep industry knowledge and unparalleled data give us unique insight into climate-resilient design, construction, and management of renewable energy assets – knowledge that we apply to our underwriting decisions and risk assessment. ” 

The funding will support several key initiatives, including aggregating real-world renewable energy physical loss data and developing standardized best practices. Project partners include the National Renewable Energy Lab, known for resilience best practice research; DNV, a prominent independent engineer; and lender's consultant STANCE Renewable Risk Partners.

In the context of solar energy, resilience refers to an asset's ability to withstand, adapt to, and quickly recover from disruptions caused by extreme weather events or other natural disasters. This includes features such as reinforced mounting systems, hail-resistant panels, and advanced monitoring and response systems. By focusing on resilience, the solar industry aims to ensure the long-term viability and reliability of clean energy infrastructure.

kWh Analytics is committed to connecting researchers and industry experts to the insurance market to foster a collaborative environment for sharing best practices and knowledge. Each year, kWh Analytics publishes its 'Solar Risk Assessment,' recognized as the solar industry's leading report on the evolving landscape of solar generation risk. The report has become a staple read for the solar insurance industry, serving as a guide for investors who recognize the importance of allowing data-based insights inform the deployment of capital. The MORE PV research award is a further opportunity to work alongside industry experts to advance resiliency measures to mitigate solar generation risks and collectively support the energy transition. 

kWh Analytics was selected as a part of the SETO Materials, Operation, and Recycling of Photovoltaics (MORE PV) Funding Program. MORE PV projects address challenges associated with the rapid deployment of PV systems in the United States, including the increasing demands on PV materials, system operation and maintenance, and recycling. kWh Analytics is one of several project partners that will support technology improvements to reduce these challenges with a holistic view of all stages of the PV lifecycle—from the material needs and installation to operation and end of life.

ABOUT KWH ANALYTICS

kWh Analytics is a leading provider of Climate Insurance for zero-carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for its data and climate insurance innovations. Property Insurance offers comprehensive coverage against physical loss, with unique recognition and consideration for site-level resiliency practices, and the Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms. These offerings, which have insured over $30 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on X.

About the Solar Energy Technologies Office 

The U.S. Department of Energy Solar Energy Technologies Office supports research, development, demonstration, and technical assistance to improve the affordability, reliability, and domestic benefit of solar technologies to support an equitable transition to a decarbonized energy sector. Learn more at energy.gov/solar-office. 

Contact 

Nikky Venkataraman 

Senior Manager, Marketing 

kWh Analytics 

E | nikky.venkataraman@kwhanalytics.com 

T | (720) 588-9361

Managing seasonality impacts and optimising O&M planning to secure favourable insurance terms

By Jason Kaminsky, CEO, kWh Analytics

Originally published on PV Tech

The increase in frequency, severity and range of severe weather events is having a growing impact on renewable projects year-round, affecting solar asset owners’ ability to secure adequate insurance coverage, let alone favourable terms. The stakes are high—severe convective storms resulted in over US$40 billion in global insured losses in the first half of 2024 alone.

To mitigate the risks posed by extreme weather events, project stakeholders need a comprehensive approach to risk management that includes careful partner selection, investment in defensive equipment capabilities and the development and implementation of well-defined operational and maintenance (O&M) procedures that take seasonality into account.

With the rapid rise in solar assets and an increase in severe weather, O&M planning has become increasingly critical to optimise the performance and longevity of solar installations, minimise downtime and ensure consistent energy production with the lowest operating expense costs.

Here’s what asset owners need to know to optimise O&M planning to mitigate risk and secure favorable insurance terms for renewable energy projects.

Recognise corrective action patterns

Solar PV systems are built to last 35 years or more, but the components within these systems often fail well before that. This early failure can result in expensive repowering and replacement costs, making it essential for asset owners to create a robust spare parts strategy and preventative maintenance plan.

However, with limited on-site storage and O&M resources, the ability to prioritise which components should be stocked and how to best plan for resource allocation is critical. Understanding corrective action patterns associated with seasonal impacts—or maintenance performed in response to a loss event—allows O&M teams to allocate resources efficiently over the year, boost system reliability and proactively implement preventative measures.

Inverter equipment

According to our research at kWh Analytics, inverters were the most frequent cause of corrective maintenance issues.

The research indicates that inverter failures have the greatest impact, accounting for the longest resolution time (55% of O&M ticket duration) and the most significant energy loss (59% of total energy lost). Inverter issues are typically addressed through repair attempts and involve numerous sub-components. Given their impact and complexity, inverter parts are particularly well-suited to an O&M spare parts strategy. Asset owners should tailor their spare parts strategy to align with their specific technology and operating budget.

DC distribution equipment

DC distribution equipment is another leading cause of corrective maintenance issues.

DC distribution problems have a disproportionately large impact on O&M time and labour, accounting for 28% of the total, even though they result in a comparatively lower energy loss (13%). These issues are primarily caused by connector mismatches, making it advisable to follow the OEM’s installation instructions and keep appropriately rated DC distribution components readily available.

Plan for seasonality impacts

Seasonality plays a key role in O&M planning for solar asset owners. Understanding seasonal variations in corrective action patterns allows asset owners to anticipate a rise in corrective actions needed for particular components throughout the year. Recent research from Univers on the impact of seasonality on corrective actions shows distinct patterns among various components including inverters, trackers, DC health, sensors, grid and data availability.

Interestingly, the research shows a 14% surge in corrective actions in the winter as compared to summer. DC health and inverter corrective actions again made up the majority of corrective actions. 43% percent of corrective actions related to DC health occurred during the winter, highlighting the impact of low temperatures, reduced sunlight and snow cover on DC inputs and strings.

In contrast, inverters required corrective actions more frequently in the warmer months—spring and summer—likely a result of higher temperatures causing cooling system failures and reducing inverter efficiency. Meanwhile, corrective actions for trackers showed a relatively even distribution throughout the year, indicating that these components are less affected by seasonal variations.

These insights highlight the importance of understanding seasonal variations in corrective action patterns. To prepare for an increase in DC health issues during winter, O&M providers should allocate additional resources for manpower and spare components during this season, ensuring they can manage a higher volume of DC-related problems per service visit. Additionally, solar asset owners should anticipate potential inverter performance issues in summer and reserve replacement cooling components as needed.

This awareness enhances O&M planning, enabling more targeted interventions and efficient resource allocation, ultimately helping to mitigate environmental challenges and optimise system performance year-round.

Seek experienced risk partners

Insurance is a critical component to securing financing for renewable energy projects, as well as protecting operational assets, and working with experienced partners matters. Unfortunately, substantial losses from increasingly frequent and severe weather events have cautioned many insurers away from the industry or led to more significant risk retention on the part of the owner, and forced solar project owners to look inwards to improve resiliency measures.

Asset owners that are implementing proactive hail stow programs, using resilient module designs and leveraging comprehensive O&M planning and risk solutions, are undoubtedly better positioned. These resilience measures are important to insurers and to the industry as a whole.

To receive the most favourable insurance terms, renewable asset owners should look for an insurer that understands the renewable energy space, is able to advise on best practices and mitigation strategies, and rewards the resiliency measures in place.

Jason Kaminsky is the CEO of kWh Analytics, which partners with renewable energy asset owners to provide tailored risk transfer solutions. Its mission is to reward resilience by ensuring investments in asset protection are accurately valued in property insurance risk assessments.

Case Study: Resilient Assets Command Better Coverage

A utility-scale solar developer saw a 72% natural catastrophe rate reduction for employing resilient site design and operation

The Challenge

In a market where insurance rates for renewable energy projects are climbing, especially in hail-prone regions, asset owners face increasing pressure to protect their investments. This is particularly true in North Central Texas, where one developer sought coverage for their 140MW solar project valued at $100MM in a high hail risk area.

The Solution: Proactive Resilience Measures

The developer implemented a comprehensive strategy to harden their asset against natural catastrophes:

Physical Hardening:

1. Installed 3.2mm tempered glass solar panels

2. Used high-quality components across modules, inverters, and tracking systems

1. Operational Protocols

   1. Implemented a verified 53-degree hail stow angle

   2. Developed comprehensive extreme weather mitigation plans

   3. Executed proactive stowing for over 90% of past hail events

Proving Resilience

What set this developer apart was the evidence of resilience provided to their brokers and carriers with thorough documentation and proactive approach:

• Provided photographic evidence of the hail stow angle

• Submitted stow logs for recent months, demonstrating consistent operational implementation

• Incorporated resilience planning from the project's design phase

The Result: Substantial Insurance Savings

kWh Analytics underwriters, recognizing the developer's commitment to resilience, were able to offer a 72% reduction in the natural catastrophe insurance rate for this project—this significant saving directly resulted from the developer's investment in physical hardening and operational measures.

The Takeaway

By combining physical asset improvements with smart operational protocols, developers cannot only protect their assets but also secure substantial insurance savings.

kWh Analytics values sponsor resilience measures and they do impact our premiums. We work directly with developers and brokers to ensure that investments in resilience translate into tangible financial benefits.

For more information on how your resilience measures can be factored into your insurance program, ask your broker for a kWhote.

Powering Progress: View from the Top

Brokers Respond to kWh Analytics' 2024 Solar Risk Assessment: Key Takeaways and Insights

The 2024 Solar Risk Assessment report has sparked a lively discussion among industry professionals about the evolving landscape of renewable energy insurance. To facilitate a deeper exploration of the report's findings, our team at kWh Analytics convened its inaugural Broker Council, bringing together leading brokers specializing in solar and renewable energy insurance. The council provided a platform for these experts to share their reactions to the report, discuss the implications for the industry, and identify actionable takeaways for stakeholders. The Broker Council meeting was hosted by geoff lehv of kwh analytics and consisted of the following participants:  Rob Battenfield (AmWINS), Todd Burack (McGriff), Mike Cosgrave (Renewable Guard), Stephanie Coveney (Brown & Brown), Matt Giambagno (Marsh), Sara Kane (CAC Specialty), and Alex Morris (WTW).

Emphasizing Equipment Resiliency in the Face of Extreme Weather 

The brokers at the council agreed with the Solar Risk Assessment report's emphasis on the growing impact of extreme weather events on renewable projects. Todd Burack from McGriff highlighted the importance of technological resiliency, stating, "Most of the recent discussions I’ve been a part of with asset owners have gravitated towards technological resiliency. Modeling plays a tremendous role, but I think many carriers who’ve written some of the marquee (hail) losses from the past few months will agree that the losses occurred on projects that actually modeled quite favorably. Many carriers are still playing ‘modeling catch-up,’ and the nature of extreme weather is that it’s hard to predict."

Takeaway: To mitigate the risks posed by extreme weather events, project stakeholders should adopt a comprehensive approach to risk management that includes careful partner selection, investment in defensive equipment capabilities, and the development and implementation of well-defined operational procedures.

Challenges for Pure Play Developers
Sara Kane from CAC emphasized the challenges faced by pure play developers, those looking to ‘flip’ assets to long-term owners, in understanding and managing insurance risks: “The biggest opportunity for better site resilience that we see is for pure play developers to incorporate insurance considerations in early-stage project development. These players, who will likely sell prior to construction, have not historically had a way to understand how the insurance market values different resilience measures in their underwriting decisions, and yet those decisions – site selection, equipment choice and design – will impact insurance costs and ultimately matter in their project sale. We as an industry would be collectively better off if all the projects coming to market had the benefit of insurance diligence at the early-stage development phase, as projects would likely be more resilient."

Takeaway: Developers who plan to sell their projects should be well-versed in potential insurability challenges and subsequent impacts on project sales. Developers who fail to adequately address natural catastrophe related risks may find it more difficult to secure favorable sale terms or even struggle to find buyers altogether. 

Navigating the Risks and Opportunities of Battery Energy Storage Systems (BESS) 

The Solar Risk Assessment report's coverage of the risks and opportunities associated with the rapid growth of Battery Energy Storage Systems (BESS) prompted a thoughtful discussion among the brokers. Commenting on the Lloyd’s article citing that the global battery storage industry is poised for 13x growth over the next few years, Mike Cosgrave from Renewable Guard shared insights from their in-house battery storage engineer, noting that battery construction and integration was the cause for 36% of system failures. “We’re seeing a lot of project delays due to a lack of transformers,” Cosgrave added. “If we’re getting cells from China and overseas, replacing those in a few years might be a challenge if tariffs are in play. While there may be some headwinds to achieve 13x growth, the prospect of achieving that milestone is very exciting for the industry.”

Stephanie Coveney from Brown & Brown added that there are still quite a few unknowns about BESS systems that can make insurance pricing and underwriting difficult: "We still don’t have consensus on how battery units should be spaced, and carriers are setting their own terms, some asking for 25 feet between units, and some manufacturers recommending a small gap around 3 feet between units. There are still a lot of questions to answer in this space.”

Takeaway: As the BESS market continues to expand, project developers should ensure that their projects are designed and operated following industry best practices, with a particular focus on fire safety, thermal management, and system integration. 

Exploring Alternative Risk Transfer Solutions 

The brokers at the council expressed interest in the Solar Risk Assessment report's findings on the growing popularity of alternative risk transfer solutions, such as parametric insurance and captives, in response to rising traditional insurance premiums. In the context of renewable energy insurance, parametric solutions offer an alternative to traditional indemnity-based policies. Parametric insurance provides predetermined payouts based on the occurrence of specific triggering events, such as a hurricane of a certain category or a hail event with hailstones exceeding a specified diameter, rather than the actual loss incurred by the insured project.

Alex Morris from WTW shared his perspective on the increasing viability of parametric solutions: "I think parametrics are getting close to being viable when they were simply not an option just four or five years ago. Excess catastrophe coverage is becoming extremely expensive, and now all types of solutions are back on the table. Sponsors are starting to see the value in higher, upfront investments into resilient equipment and defensive measures to protect their assets for the long term."

Matt Giambagno from Marsh shared his view that “parametric policies are still a gamble. It’s an untested market, unlike traditional property insurance. It’s hard to gauge the likelihood of extreme weather events, but the continuous price increase of excess natural catastrophe coverage is making alternative solutions like these more attractive.”

Takeaway: As the cost of traditional insurance continues to rise, project developers and asset owners are exploring alternative risk transfer solutions.

Addressing Variability in Pricing and Terms 

The Solar Risk Assessment report highlighted the variability in pricing and terms across the renewable energy insurance market, a finding that resonated with the brokers at the council. In response to an article by kWh Analytics highlighting that the use of industry-standard modeling assumptions in pricing can lead to an over- or under-estimation of solar risk, Rob Battenfield from Amwins noted, "The variability of pricing and terms and conditions widely varies across the broking world. We see this a lot when we are placing excess severe convective storm policies (hail) for example - different programs can have widely different results. Working with brokers and underwriters that are knowledgeable in the space is a recipe for success, and can make or break a project from the insurance perspective.” 

Takeaway: To navigate the complex and varied landscape of renewable energy insurance, project sponsors should partner with brokers and underwriters experienced with renewables early in the project planning process. 

The brokers' reactions to the 2024 Solar Risk Assessment report and the insights shared at kWh Analytics' inaugural Broker Council underscore the value of staying informed about the latest trends, challenges, and opportunities in the renewable energy insurance market. As the industry continues to evolve, close collaboration between brokers, sponsors, underwriters, and other stakeholders will be essential to effectively manage risks and drive the sustainable growth of the sector.

Read the 2024 Solar Risk Assessment here: https://www.kwhanalytics.com/solar-risk-assessment

Navigating Risk in the Renewable Energy Boom

The Inflation Reduction Act will accelerate the energy transition but also highlights the need for insurance solutions.

By Darryl Harding, Director, Technical Underwriting, kWh Analytics

As seen on propertycasuality360

The 2022 Inflation Reduction Act (IRA) is poised to spur massive growth in renewable energy projects across the United States.

The IRA includes more than $300 billion in funding and tax incentives aimed at catalyzing investments in clean energy infrastructure and accelerating the transition to net-zero emissions. While this substantial growth brings many environmental and economic benefits, it also introduces new risk considerations that must be addressed from an insurance perspective.

One of the key provisions driving renewable expansion is the IRA's extension of tax credits for renewable energy generation and storage. This includes a 10-year extension of the investment tax credit (ITC) for solar, wind, geothermal and other zero-emission energy sources. It also extends the production tax credit (PTC) for wind and solar projects.

In addition, the bill includes adders for building solar with domestic content and in support of low and moderate income areas. These subsidies provide strong financial incentives for developing new renewable electricity projects. As a result, solar installations are expected to increase by 48% in the next 10 years.

Given the rapid pace of new development, many renewable projects are emerging in areas with heightened exposure to natural catastrophe perils. Solar and wind farms in particular often get built in more remote locations to maximize generation potential. Unfortunately, some of these same locations are prone to severe weather risks like hurricanes, tornadoes, hail storms, and wildfires. And it goes without saying, the larger the project, the greater the potential for catastrophic loss.

"Certain U.S. states such as Texas, have quicker development timelines due to more favorable local regulations," says Brendan Fountain, vice president of Alliant Power. "When combined with the opportunities in that power market, this makes states like Texas attractive for site selection."

Unfortunately, Texas also is a state where insurers have experienced some of the most significant natural catastrophe claims to wind and solar projects, Fountain notes.

Some asset owners are venturing into even more unknown territories such as utility scale solar in Alaska. Insurers need more historical loss data and modeling capabilities in these emerging geographies, focusing more on in-depth engineering assessments and catastrophe research to properly evaluate risk.

The interaction of upsized tax credits and catastrophe exposure introduces challenges for insurers taking on these renewable energy risks. Since tax credits can represent a major component of the project's revenue and value, tightening natural catastrophe sub-limits and coverage limitations can have an even greater impact. This means that natural catastrophe exposures will be more highly scrutinized by the carriers not just for property policies, but when tax indemnity groups review the projects as well.

The good news is that project owners are aware of the severe weather risks, and are making great advancements to ensure projects are operating. Molly Lovelette, Vice President, Alliant Power notes that all project stakeholders recognize that building more reliable projects is in the best interest of this maturing power sector.

According to Lovelette, when it comes to mitigating risk, "Insurers are seeing excellent examples of proactive project owners pushing accountability on Original Equipment Manufacturers (OEMs) to develop better-performing technology in support of active development in these higher exposed regions of the U.S."

While the Inflation Reduction Act will clearly accelerate the energy transition, it also highlights the need for robust risk assessment and insurance solutions tailored to this changing renewable landscape. Insurers, brokers, and asset owners must collaborate to fully understand the shifting exposures and close coverage gaps.

Proper risk mitigation through resilience standards and loss control will also be critical to long-term success. By addressing these challenges head-on, the insurance industry can support the expansion of clean energy while protecting against natural catastrophe losses.

Darryl Harding is the director of technical underwriting at kWh Analytics, a renewable energy asset insurer.

kWh Analytics Pioneers First-of-its-Kind Parametric Wind Proxy Hedge for Greenbacker with Munich Re, MUFG

This innovative structure hedges wind speed utilizing the kWh Analytics Indifference Structure, enhancing the project’s P99 scenario and reducing the sponsor equity requirement. 

Originally posted on Business Wire

JULY 23, 2024, SAN FRANCISCO, CA - kWh Analytics, the market leader in Climate Insurance, today announced the successful close of a groundbreaking wind proxy hedge risk transfer product for a 59MW, 14-turbine wind project in Maine, developed by a Greenbacker Capital Management affiliated investment vehicle that invests in sustainable infrastructure assets. This innovative financial structure included the use of a wind proxy hedge, provided by global reinsurer MunichRe, advised by kWh Analytics, and utilizing the kWh Analytics Indifference Structure for debt sizing.  This implementation marks the first time a parametric wind hedge has been paired with the kWh Analytics Indifference Structure to reduce equity requirements for a project sponsor. The structure’s implementation enabled the project sponsor to raise roughly 20% more debt capital for this project, led by MUFG.

Wind is a notoriously volatile resource, resulting in distributions with tail events (i.e. P99) that can severely impact debt sizing. Wind speed variability far exceeds that of solar irradiance, presenting unique challenges for project financing. The wind proxy hedge paired with the kWh Analytics Indifference Structure addresses this volatility, significantly improving the project’s P99 scenario by adding investment-grade cash flow above the P99 wind speed. This credit enhancement makes the project more attractive to lenders, leading to increased debt capacity. By incorporating the wind proxy hedge and kWh Indifference Structure, each dollar of premium paid for the product resulted in ~$6 of additional loan proceeds.

Geoffrey Lehv, Head of US Accounts for kWh Analytics, commented on the innovation: “We provided a proprietary debt structure, applying modeling, analysis, and risk management expertise to assist MunichRe in incorporating its parametric solution to a project financing. The resulting credit enhancement not only mitigates downside risk but also optimizes capital structure. This is about more than just financial engineering – it's about accelerating the transition to clean energy by making wind projects more bankable and attractive to investors."

Bill MacLauchlan, CEO Munich Re Trading LLC, commented that: “Deep project finance knowledge was crucial in structuring this transaction. By leveraging our team's long-standing expertise in designing parametric risk-transfer solutions, collaborating closely with MUFG, and utilizing kWh Analytics' unique position in the market, we successfully implemented an innovative risk transfer solution for this Sponsor.”

Alberto Mihelcic Bazzana, Director at MUFG, said: “As a leader in project finance, MUFG is pleased to partner with Greenbacker, kWh Analytics, and MunichRe in developing new financing solutions that can expedite the energy transition process.”

kWh Analytics served as an advisor to Munich Re during the structuring process, drawing on their expertise in designing risk transfer products for renewable energy such as the Solar Revenue Put and Property Insurance. The engineering firm DNV provided a detailed analysis of the wind proxy hedge as part of their project review. MUFG acted as Sole Lead Arranger for the debt financing. 

For more information about the wind proxy hedge and/or the kWh Analytics Indifference Structure and its application for solar and wind, please contact Geoffrey Lehv, geoffrey.lehv@kwhanalytics.com.

ABOUT kWh Analytics

kWh Analytics is a leading provider of Climate Insurance for zero-carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. Property Insurance offers comprehensive coverage against physical loss, with unique recognition and consideration for site-level resiliency practices, and the Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms. These offerings, which have insured over $32 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on X. 

ABOUT Munich Re

Munich Re is one of the world’s leading providers of reinsurance, primary insurance and insurance-related risk solutions. The group consists of the reinsurance and ERGO business segments, as well as the asset management company MEAG. Munich Re is globally active and operates in all lines of the insurance business. Since it was founded in 1880, Munich Re has been known for its unrivalled risk-related expertise and its sound financial position. It offers customers financial protection when faced with exceptional levels of damage – from the 1906 San Francisco earthquake through Hurricane Ian in 2022. Munich Re possesses outstanding innovative strength, which enables it to also provide coverage for extraordinary risks such as rocket launches, renewable energies or cyberattacks. The company is playing a key role in driving forward the digital transformation of the insurance industry, and in doing so has further expanded its ability to assess risks and the range of services that it offers. Its tailor-made solutions and close proximity to its customers make Munich Re one of the world’s most sought-after risk partners for businesses, institutions, and private individuals.

About MUFG and MUFG Americas

Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with approximately 2,100 locations in more than 50 countries. MUFG has nearly 160,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to be “the world’s most trusted financial group” through close collaboration among our operating companies and flexibly respond to all the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges.

MUFG’s Americas operations, including its offices in the U.S., Latin America, and Canada, are primarily organized under MUFG Bank, Ltd. and subsidiaries, and are focused on Global Corporate and Investment Banking, Japanese Corporate Banking, and Global Markets. MUFG is one of the largest foreign banking organizations in the Americas. For locations, banking capabilities and services, career opportunities, and more, visit www.mufgamericas.com.

ABOUT Greenbacker Capital Management

Greenbacker Capital Management LLC is an SEC registered investment adviser that provides advisory and oversight services related to project development, acquisition, and operations in the renewable energy, energy efficiency, and sustainability industries. For more information, please visit https://greenbackercapital.com.

Media Contact

Nikky Venkataraman

Senior Marketing Manager

kWh Analytics

E | nikky.venkataraman@kwhanalytics.com

T | (720) 588-9361

Alexandra Weiss

Senior Communications Manager

Munich Re

E | alexandra.weiss@munichre.com

T | +41 (0)58 22 66 216

kWh Analytics Reveals Top 14 Risk Management Challenges in Solar Generation

2024 Solar Risk Assessment Report highlights the remarkable progress and resilience of the solar industry in the face of evolving challenges.

The renewable industry's ability to collaborate and innovate remains one of its greatest strengths.

Originally posted on Business Wire

SAN FRANCISCO--(BUSINESS WIRE)--kWh Analytics, the market leader in Climate Insurance, today announced the release of its 6th annual Solar Risk Assessment, a comprehensive report designed to provide an objective and data-driven evaluation of solar risk. The annual report includes contributions from leaders in the solar energy industry spanning technology, financing, and insurance.

In 2024, the solar industry continued its rapid growth trajectory, fueled by the Inflation Reduction Act and increasing demand for clean energy. This year’s report expands the analysis to include Battery Energy Storage Systems (BESS), recognizing the increasingly critical role that storage plays in the renewable energy ecosystem.

“We’re seeing burgeoning growth in solar, wind, and battery storage,” said Jason Kaminsky, CEO at kWh Analytics. “However, to meet renewable energy deployment goals, the focus needs to be on smart growth - relying on data to inform decisions and utilizing resilience measures to protect assets. We are grateful for the collaboration of the solar, BESS and renewable insurance thought leaders included in this year’s report, recognizing that the clean energy future requires mutual understanding between operators protecting assets and underwriters pricing risks.”

The 2024 report offers detailed research on top risks including extreme weather, operational risks, and battery risks to help industry organizations overcome market hurdles and expand lines of business. Top 14 risk findings include:

Extreme Weather Risk

1. kWh Analytics: Industry standard modeling assumptions can underestimate solar project losses from weather-related physical damage by 300+%

2. Kiwa PVEL: No modern module will experience power loss >3% when the cells are severely damaged by hail

3. Waaree: During hail testing, positioning glass/glass modules in hail stow mode resulted in only a 0.8% power loss, well below the 5% threshold permitted by IEC guidelines

4. Alliant Power: Renewable energy project owners can reduce insurance costs by up to 50% in high-risk zones by investing in resilient solar site design and maintenance

5. Longroad Energy and Nextracker: 75 Degree Tilt Can Decrease PV Asset Damage Probability by 87%

Operational Risk

6. kWh Analytics: Aggregating portfolios of 4 or more sites can cut the risk of extreme downside scenarios by 50%

7. Solarlytics: Voltage Collapse Can Reduce Production by More Than 20%

8. Univers: O&M corrective action statistics show a 14% surge in winter compared to summer in 2023

9. SolarGrade: Safety problems requiring partial or total de-energization found in 11% of PV systems inspected by auditors

10. Clean Power Research: Unmitigated soiling of PV systems can reduce annual energy production by 50%

11. kWh Analytics: Inverters cause 59% of lost energy, but DC distribution issues last 2.2x longer than they’re worth

Battery Risk

12. Lloyd’s: Global role of Battery Energy Storage Systems poised for 13x growth

13. Powin: Conventional State of Charge measurements are error-prone and can result in an average error of 7% in estimation of energy available for dispatch

14. SEVO IFP: 26% of Energy Storage Systems Face Fire-Detection and Fire-Suppression Challenges

“Overcoming these challenges will require ongoing collaboration and innovation among industry leaders,” said Isaac McLean, Chief Underwriting Officer at kWh Analytics. “In this dynamic landscape, asset owners play a critical role in protecting renewable energy investments by securing comprehensive insurance coverage and seeking multiple quotes from brokers to ensure accurate protection.”

To access the complete 2024 Solar Risk Assessment, please visit www.kwhanalytics.com/solar-risk-assessment.

About kWh Analytics

kWh Analytics is a leading provider of Climate Insurance for zero carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. Property Insurance offers comprehensive coverage against physical loss, with unique recognition and consideration for site-level resiliency practices, and the Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms. These offerings, which have insured over $27 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on Twitter.

Contacts

Nikky Venkataraman
Senior Marketing Manager
kWh Analytics
E | nikky.venkataraman@kwhanalytics.com
T | (720) 588-9361

Financial Times: Why insurance is key to speeding the energy transition

Full article available at Financial Times

As natural catastrophes such as wildfires and hurricanes have proliferated, insurers have begun to cancel coverage for property owners in vulnerable cities. The root cause of the uptick in weather-induced property damage is, of course, global warming - and to stop tragedy from spreading, we need to move rapidly to alternative energy sources. 
…
Today, a handful of start-ups - including kWh Analytics, New Energy Risk and Energetic Capital - specialise in aggregating information on energy assets for use in insurance policies. The coupling of real-time data with the predictive powers of machine learning could create a new paradigm for modelling risk.

kWh Analytics shortlisted for two Program Manager Awards

kWh Analytics is thrilled to announce that the company has been shortlisted for two prestigious Program Manager Awards - Program Launch of the Year and Innovation in Programs. These awards recognize excellence and innovation in the insurance industry, and being named a finalist is a testament to the hard work and dedication of the team in developing cutting-edge risk management solutions for the renewable energy sector.

The nomination for Program Launch of the Year highlights the successful launch of a Property Insurance program for renewable energy assets in partnership with Aspen Insurance. By leveraging a proprietary database of over 300,000 renewable energy assets and $80bn of loss history, kWh Analytics is able to bring much-needed capacity and sophisticated risk assessment to a rapidly growing industry facing challenges from recent natural catastrophe losses.

The Innovation in Programs award shortlisting recognizes the pioneering development of the Renewable Energy Adjusted Loss (REAL) model. This model represents a crucial advancement for the sustainable growth of the renewables industry, enabling carriers to insure projects commensurate with true risk profiles and rewarding asset owners for implementing resilience measures. By combining unparalleled data and analytics capabilities with deep renewable energy expertise, kWh Analytics encourages the industry to better manage risk in the face of climate change.

Location, location, location: how catastrophic risks can shape renewable energy insurance premiums

Originally published on PV Tech
By Bobby McFadden, kWh Analytics, and Keaton Carlson, Renewable Guard

As a renewable energy managing general agent (MGA) and a broker, one of the most common questions we hear from solar and battery asset owners is: “Why do my insurance premiums keep rising, even though I haven’t had a claim?” It’s a frustrating and often confusing situation for many in the industry, but the answer lies in the changing landscape of natural catastrophe (nat cat) risks.

For certain carriers, when a significant loss is incurred, the pricing approach for comparable accounts in the book could be affected as well, adjusting insureds’ rates with no claim activity come renewal. Over the past few years, however, nat cat events have taken a major role in driving insurance premiums across carrier’s books. Nat cat risks are changing, and locations with historically temperate weather are experiencing extreme disasters.

As global temperatures rise, we are seeing more intense hurricanes, prolonged droughts and heavier rainfall events. These changes in weather patterns are altering the risk landscape for businesses, specifically impacting industries with exposed assets, such as renewable energy. Climate change is affecting the frequency and severity of natural catastrophes, making it more difficult for asset owners to secure affordable insurance coverage.

Take the example of an asset owner who had a solar site in Georgia. In 2023, the Federal Emergency Management Agency (FEMA) updated the local Flood Insurance Rate Map (FIRM), and the insured saw their flood premium dramatically spike by 300%, as the site was now located directly in a high hazard flood zone.

With major hurricanes and flood events, the topography under established sites changes, creating higher risks in some areas. Further, land development and paving over natural terrain increases water runoff.  This is not an isolated story; tornadoes are ripping through the Midwest, hailstones are increasing in size, and even New York is experiencing earthquakes.

These events can cause significant damage to solar panels, wind turbines, battery assets and other equipment, leading to costly repairs or replacements. As the frequency and severity of these events increase, insurers are adjusting their rates to account for the higher risk. As the risk landscape shifts, admitted carriers are facing capacity constraints in regions with high catastrophe exposure, such as coastal areas or flood zones, limiting the options available to asset owners.

Some catastrophe risks, such as earthquakes in California, have gotten so severe that some carriers have pulled their coverage for the state completely. Non-admitted carriers, however, can provide flexibility around regulated rates. The losses from catastrophe events ripple through insurers’ books, leading to rate increases even for asset owners who haven’t experienced losses directly.

It’s a vicious cycle. Renewable assets are a large part of the United Nations Climate Action Plan, and every industry stakeholder, including carriers, has a vested interest in ensuring these assets are built to last. So, renewable energy asset owner, here is what you can do to manage your risk profile:

• The cheapest time to implement resiliency is during the design phase of a project. Consult with your broker and carrier on location, equipment type and catastrophe protocols before assets go in the ground.

• Invest in high-quality equipment from reputable original equipment manufacturers (OEMs) and ensure that specifications are appropriate for the site’s specific catastrophe risks. For example, 3.2mm heat-tempered glass is becoming the best practice in hail-prone Texas.

• Implement robust risk management practices, such as stow programs for hail, wind, flood and snow, as well as hurricane preparedness plans and spare parts programs. Have a fire suppression system and thermal runaway management plan ready for your battery energy storage system (BESS) projects.

• Partner with experienced operations and management (O&M) providers that can offer precautionary services tailored to the site’s catastrophe exposures. Location matters; rats in Nebraska chewing wires pose a different risk than lizards slithering through transformer boxes in New Mexico. O&M providers have noted that vegetation mix heavy in seeds can attract more rodents to accumulate used underneath panels.

• Collaborate with brokers that specialise in renewable energy and can effectively communicate the nuances of catastrophe risk pricing to carriers. Not all carriers are made the same, and asset owners deserve an insurance price that is based on the true merits of their risk. By addressing climate risk with thoughtful equipment selection and strong risk management practices, asset owners can experience reduced insurance premiums and loss activity. When these factors are contemplated, sites can benefit from improved resiliency and reduced costs.

In the face of increasing natural catastrophe risks and rising insurance premiums, it has become abundantly clear that the renewable energy industry must adapt and evolve to ensure its long-term success. This is not to say that insurance is out of reach financially, but to explain that there are plenty of tools in the belt that can help owners reduce these costs.

Asset owners should take a proactive approach to risk management, not only to protect their investments, but also to contribute to the global fight against climate change. Insurance carriers and brokers can help by conducting their own research, collecting data and giving actionable feedback to the industry on designing, constructing and maintaining the best, most resilient renewable energy assets.

We cannot afford to let the vicious cycle of climate change and rising insurance costs hinder the deployment of renewable energy infrastructure. There’s an industry-wide incentive to share our knowledge and expertise, and to find innovative solutions that will allow us to build a more resilient and sustainable future.

Bobby McFadden is an underwriter at kWh Analytics, which manages a comprehensive database of renewable power assets in the US. Keaton Carlson is a risk manager at Renewable Guard, an insurance broker servicing the renewable power sector.

Big Interview: kWh Analytics’ Jason Kaminsky on managing risk amid extreme weather events

Full article available on PV Tech

Earlier this year, the Fighting Jays solar project in Texas was battered by “golf ball-sized” hail, an out-of-season weather event that cut into the project’s functionality, and drew attention to the risks associated with developing large-scale solar projects.

While weather damage itself is nothing new in the solar sector – the Fighting Jays incident rekindled questions about the risk of hail damage at solar projects – the widespread surprise at the extent and damage of the hailstorm suggests that this is a risk that has not been fully considered by the solar industry. As the Earth’s climate worsens, out-of-season weather events are more likely to take place, raising the prospect of a greater range of extreme weather incidents that will have to be considered by developers and financiers of solar projects.

Surveying the Risk Landscape of an Emerging Solar Sector

By: Bobby McFadden, kWh Analytics; Chris Bartle, Ciel & Terre; James Markos, Willis Towers Watson

Originally published by PV Tech Power

Solar power is expanding rapidly, accelerated by incentives like the U.S. Inflation Reduction Act. With land constraints near populated areas, clean energy growth is occurring in floating photovoltaics on bodies of water, also called FPV or floatovoltaics. This novel technology functions much the same way as traditional solar, but instead of installing racking in or on the ground, panels are set atop floating platforms, with tethers from the platform to the bottom and/or shoreline of lakes, reservoirs, or quarries.

Though, FPV today only make up around 2% of new global solar installations, the fleet is growing with projects coming online rapidly. While this emerging  technology presents exciting opportunities, it also brings new, previously unconsidered risks that insurers need to understand. 

Floatovoltaics could be an ingenious way to generate necessary clean energy while saving precious land space. Some advantages of FPV include:

• Makes Use of Unused Space: These projects are installed on non-recreational reservoirs, quarries, and ponds, utilizing areas that would otherwise be unused.

• Increased Solar Panel Efficiency: Positioning panels on water enables natural cooling that increases efficiency and output, especially during summer peak demand.

• Grid Connection Benefits: Co-locating projects with hydroelectric dams simplifies grid connections to export the solar power generated.

• Repurposing Contaminated Waters: Contaminated quarries and mining ponds can be repurposed for clean energy production.

• Water Conservation: Covering water surfaces with floatovoltaics reduces algae growth and evaporative water losses.

Image courtesy of Ciel & Terre International

However, floating solar has its challenges. The remote positioning of floating solar arrays in the middle of a water body can impact how a battery energy storage system might be utilized for additional revenue, depending on whether a DC or AC connection from the FPV is chosen. Current systems also do not employ trackers, whereby panels are tilted to the optimal production angle throughout the day. The nature of these systems requires specialty handling, equipment, and maintenance, which can be time-consuming and costly.  

Floatovoltaics, as an emerging technology, presents unique risks and opportunities that insurers, asset owners, and their brokers should fully comprehend. The unique benefits of repurposing non-recreational bodies of water also provide motivation. Beyond land constraints driving adoption, floating solar maximizes usage of available surface area to expand renewable energy generation potential compared to acreage-limited ground-mount developments. As further innovation addresses initial challenges, insurers can expect floatovoltaics' share of new solar installations to grow. 

Technology Overview & Project Development Considerations 

Fundamentally, floatovoltaics utilize similar photovoltaic panels, inverters, and other components as conventional ground or roof-mount solar installations. The differentiation arises in supporting these electrical assets over bodies of water instead of terrestrial real estate. This approach enables harnessing more surface area for solar resources without land constraints or clearing habitats. However, effectively designing equipment and infrastructure to withstand an aqueous environment also introduces unique engineering challenges.

Floatovoltaic systems comprise three primary elements - the floating platform, the electrical system, and anchoring/moorings. A common floating structure typically uses modular HDPE or composite plastic floats connected via polypropylene pins to assemble into a unified array. Strings of PV panels along with wiring, converters, and combiner boxes mount atop this buoyant platform, elevated safely above water. Underwater or floating Direct Current (DC) cables then transmit generated electricity to shoreside inverters and switchgear equipment, typically located near existing transmission infrastructure, or can be fastened to a floating equipment barge. If inverters are on floats near the arrays, an AC cable would then connect to the shore tie. The extensive anchoring and moorings keep this floating island securely fastened through waves, winds, and water level fluctuations. The system utilizes spreader bars (where the mooring line assemblies attach to the floating asset site, or ‘island’) adjustable chains, galvanized steel cabling, and elastic rope shock absorbers all corrosive-resistant and expertly tensioned. Site selection and system design confront additional considerations compared to traditional solar developments. Typically, water bodies are chosen based on technical limitations and functionality. Sites with limited recreational use, such as hydro dams, quarries, and reservoirs, make ideal placements for FPV. The water body itself must meet the following technical limits:

1. Max wave height: 1 meter

2. Max surface flow rate: 1 m/s

3. Lowest temperature: -40 F/C

4. Max ground snow load: 60 psf

5. Max water level variation achieved to date: 100 ft

Choice waterbodies limit sediment accumulation and depth changes while avoiding valuable recreational or commercial navigation routes. The bottom of the waterbody must be reachable in case maintenance activities or cleaning is required. The choice of site is extremely important: islands can be moved around on the water surface but are not intended to be removed or disassembled until decommissioning. If moving them, there needs to be secondary sets of anchors installed so the island(s) are always anchored.

The project development process for floating solar is the same as it would be for ground mount or rooftop with the following differences:

• Bathymetric surveys are utilized to map underwater bottom terrain to inform array placements and necessary cable slack. 

• Decisions occur on walkway access versus service boats for ongoing operations and maintenance needs. 

• Key design factors revolve around water conditions and weather resilience in the chosen location, and anchoring and float spacing adjustments are made accordingly with allowable wave heights and surface currents. 

Floatovoltaics are not immune to the effects of weather and natural catastrophes. As water levels periodically drop or seasonal ice thaws, low-sitting floating platforms that are properly moored can come to rest securely on exposed lakebed, as long as the tilt angle between floats does not exceed 15 degrees. These assets are not installed with trackers and do not typically have hail stow capability. To better protect from hail, enhanced tempered and thick glass is utilized. Integrated lightning rods and fire suppression equipment provide further safeguards.

Recent major global projects include the 8.9MW Canoe Brook installation in New Jersey. Meanwhile, Dezhou, China now hosts the world’s largest operational floatovoltaic site at over 320MW, exemplifying rapid adoption across Asia as the industry matures.

Risk Management & Loss Control

For covering unfamiliar technologies like floatovoltaics, clearly explaining the engineering basis and focusing on embedded risk mitigation strategies is key for securing insurer participation across critical property, equipment breakdown, and other coverage lines. Once a project receives the go-ahead, collaboration with clients is to outline potential equipment breakdown (PEB) risks is an important step to address how project risks were addressed from the design phase through the operational life of the asset. This collaborative communication ensures all stakeholders understand preventative preparations enabling performance.

Since there is no generally accepted engineering standards or guidelines specifically for  designing FPV, one should look at what current standards are utilized by the supplier, how they were applied specifically considering site requirements, followed by a review of how third-party certifications confirming the system will perform and survive for the expected life of the project. Examples of some standards references or guidelines that might be useful to review when pursuing a floating solar project includes:

• Bureau Veritas’ NI 605 DT R00, which was developed for use with foundations and anchoring of offshore structures.

• DNV-GL has developed a Recommended Practice, DNVGL-RP-0584, for the design, development and operation of floating photovoltaic systems

• World Bank’s Where Sun Meets Water, Floating Solar Handbook for Practitioners

• American Society of Civil Engineers (ASCE) design codes, while not pertaining to floating solar do provide guidance for structures to withstand wind, snow load, and similar conditions.

In preparing for a recent client’s initial floatovoltaic project, Willis Towers Watson’s renewable energy team held discussions with various insurers’ underwriters and risk engineers regarding their perspectives on this asset type. It became evident that floating PV was considered a new and unfamiliar solar application for most domestic insurance companies, especially at the utility-scales seen globally. Most US projects are below 10 MW, with some less than 1 MW, while Asia has commissioned over 300 MW in floating solar capacity.

Concurrent with the insurer dialogues, conversations also occurred with several floating solar system providers to understand their engineering, testing, and installation approaches. Perspectives were shared around the important role brokers and insurers play in supporting project developers to obtain appropriate insurance coverage and how system vendors can facilitate that process.

To further the understanding of floatovoltaic system risks, below is a review potential equipment breakdown exposures floating solar presents.

The mooring or anchoring system is the primary risk differentiator compared to conventional solar installations. The design and component materials must be tailored to characteristics unique to the site, including modeling conservative wind, wave, and flood assumptions when engineering mooring and anchor durability specifications. In-depth geotechnical studies help determine the optimal anchoring approach, whether submerged moorings, shoreline attachments, or a combination. Numerous techniques exist - such as deadweight anchors, driven screw piles, anchored perimeter pillars - each with merits and downsides. The flexible lines linking to these anchor points face exposures too, with options like steel wire cable, chains, and high-performance ropes to select appropriately. The modular floatation system warrants similar context-specific planning, with materials ranging from high density polyethylene to composites forming the bases that ultimately underpin the solar arrays. Hardware and connections must prove corrosion resistant while supporting loads. Even access walkways and equipment transport barges require deliberation to enable ongoing operations and maintenance. By tailoring these foundations to the conditions at hand, the resultant reliability fundamentally impacts overall system viability.

Image courtesy of Ciel & Terre International

The photovoltaic panels themselves resemble models utilized for ground-mounted installations, although tailored racking, mounting, and support hardware attaches instead to the floating platforms. Those component materials must withstand corrosion from the surrounding environment, with options including marine-grade aluminum, stainless steel, coated carbon steel, fiberglass reinforced plastics, polypropylene, and HDPE. Trackers and hail stow capability are generally not an option with this system type, which introduces some increased weather vulnerability. However, FPV is generally constructed in areas with low hail risk. 

The electronic components resemble standard ground-mount solar but warrant customizations for aquatic conditions. Inverters, transformers, junction boxes, combiners, monitoring systems, and most wiring use comparable components, albeit with specialized enclosures and connectors. Central inverter stations and transformers can float on equipment barges, and string inverters can be placed on the array. Particular considerations apply for routing cables - options include cable trays suspended above water or underwater marine-grade cables. While the layout mimics land-based equipment, the nuances of transmitting electricity from floating generation assets to distant interconnections require thoughtful adaptations without compromising safety or production.

Risk Considerations

Natural catastrophes pose immense threats to floatovoltaics that proper siting and engineering design strives to withstand. Detailed hazard models determine expected peak wind, precipitation, seismic activity, and flood levels that establish structural specifications. Still, failures leading to detached arrays or connecting cable breaks trigger revenue and equipment loss potentials. Innovation continues to protect this asset class: anchoring improvements continue to better adapt to rising waters, while ongoing surge suppression advances seek to limit lightning-sparked fire risks. Working with insurers as the technology continues to evolve will help create customized terms for this asset class. 

Ongoing operations and maintenance proves equally vital for preserving floatovoltaic functionality, albeit aquatic conditions introduce complications. Technician access usually necessitates boats or floating bridges, adding costs and weather-dependent delays. The lack of trackers avoids some moving part repairs but static positioning increases weather exposure. Reliable performance necessitates remote monitoring enables rapid diagnostics and response coordination for identified faults. Insurers can further aid resilience by requiring ample replacement component stocks and technician training programs.

General corrosion and erosion risks also multiply with FPV, necessitating durable materials selections and coatings. Pre-deployment water analysis determines precise chemical properties to model deterioration rates over decades and specify appropriate panel compounds and protective sealants. Ultraviolet radiation steadily degrades plastics, cabling jackets, and rubber without proper additive shields. Regular cleaning and scheduled underwater surveys can help confirm minimal accretion or insulation damage. Insurers complement via policy terms stipulating these inspection, testing, and replacement frequencies contractually. 

Insuring Floatovoltaics

New and rapidly evolving technologies are still niche in the PV industry, and dealing with the associated emerging risks has become an accepted cost of progress. This has proven to be quite challenging for the insurance industry, however, especially in predicting the loss profiles of new technology which has not had substantial time in the field. With any asset, the carrier’s mandate is to understand the losses that should be expected in a given year, and what losses are in extreme events, such as 1 in 500-year flood or fire events. This presents challenges, especially in the use of natural catastrophe, or ‘nat cat’ modeling software, which only support modeling of certain types of constructions, and are slow to incorporate new technologies. Without historical loss data and predictions from modeling, insurers have to get creative in the way they think about these emerging risks. The brightest and forward-thinking insurers turn to existing research, and sometimesconduct their own. 

Battery Energy Storage Systems, or BESS, serve as a great example of how carriers get their arms around cutting-edge continuously evolving technology. Diligent underwriters have worked with the industry and modeled data to understand what factors lead to thermal runaway events and how certain chemistries are more prone to thermal events than others. As another example,  hail stow trackers were introduced to the industry as a hail risk mitigator. Considering this resilience effort in underwriting included calculating the kinetic energy reduction due to the tilt angle of the panel when hail strikes, taking this into account along with lab testing results on different modules’ glass thicknesses. Each new type of technology requires new methods to evaluate the risk, which can be used in conjunction with any loss data available. 

kWh Analytics employs data scientists, some with engineering and physical science backgrounds, to work with underwriters to consider all the data and evidence as a whole when writing these risks. This method is applied to floatovoltaics as well, in understanding the effects of natural catastrophes on these systems, extrapolating loss data from other parts of the world to apply to US assets, and determining maintenance, replacement, and business interruption costs. 

Insurance policies for floatovoltaics projects diverge in critical ways from standard solar development coverage given the distinctive nature of these water surface based systems. As an emerging technology, inadequate historical data on damage frequency and claims experience further complicates reliable risk assessment. Insurers must collaborate closely with developers and equipment manufacturers to institute loss control stipulations and craft policy terms that balance premiums with adequate protections.

The effect of major natural catastrophes on these systems is an important consideration in underwriting floatovoltaics. From the anchoring and moorings securing arrays on the water surface to the transmission cables underneath, insurers must evaluate a range of site-specific perils. 

Flood: The anchoring and mooring systems are designed to adjust to varying water levels, providing resiliency against flood damage. This enables more favorable flood coverage compared to ground-mount solar sites. The anchorings also account for lateral wind and water flow forces.

Earthquake: The anchoring system's capacity to handle changes in water levels also provides secondary protection against lateral seismic activity and horizontal loads. This resiliency can allow for enhanced earthquake policy terms.

Hail: Most floatovoltaic installations utilize fixed-tilt racking, which leaves arrays more exposed to hail strikes since stow capabilities are not available. Hail coverage may need to account for this increased vulnerability.

Fire: Accessing floating arrays far from shore poses challenges for fire response, containing outbreaks, and controlling spread across water. Some sites employ a bridge to the island, allowing for easier access. Insurers may limit fire coverage or impose specific loss control measures to mitigate this risk.

Insurers can also reference other marine projects when evaluating floatovoltaics since certain characteristics overlap. This includes assessing resilience measures for floating platforms and docks, elevation tolerances for electrical components, and specialized considerations for fire protection and O&M services. As the floatovoltaics insurance market matures in step with broader industry growth, compiling data around actual losses will clarify how these assets perform through extreme weather and lifecycles. This will enable fine-tuning underwriting guidelines as challenges are conquered but new vulnerabilities also inevitably emerge with any pioneering technology.

As an emerging technology, education around the intricacies of floatovoltaics is imperative for insurance brokers and underwriters new to this sector. With rapid global growth projected in floating solar installations, gaining understanding now prepares stakeholders for the wave of new projects seeking insurance policies customized to their distinctive needs.

Proactively engaging with asset owners and manufacturers allows brokers and carriers to best advise clients on properly structuring risk management programs. For carriers, understanding the nuances enables appropriate policy terms, conditions, and pricing that matches the risk profile. While risk mitigation measures around priority perils continue maturing, the diligence today will allow insurers to incorporate best practices.

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CASE STUDY: CLAIMS SCENARIO

While advances continue improving durability against damage, floatovoltaics still present unique claims scenarios. Defective anchoring systems make arrays susceptible to panel detachments from high winds or large waves. Usually occurring during storms, they can also fail gradually over time from undiagnosed flaws and unnoticed corrosion. kWh Analytics currently insures a floating solar project utilizing high-quality equipment from industry leader Ciel & Terre. The anchoring system specs were reviewed to gain comfort over the system’s resilience to wind load and changes in water level. Site-specific considerations were also made for the anchoring and mooring system implementation. The anchoring utilizes galvanized steel shackles, cables, chains and stabilizers to prevent corrosion and account for water level changes.

Another vulnerable period is maintenance activities when accessing equipment on the water, which exposes technicians and parts to greater environmental hazards. Even theft, vandalism, or negligence, also known as attritional risks, increases during construction before safeguards are fully implemented. Other scenarios like snow load accumulations stressing structural integrity or cabling destruction from extended UV radiation exposure underscore the importance of insurance protection. The kWh insured site includes a floating bridge for routine maintenance access to the floating-ballasted array and supported PV equipment.

Overall, the insured’s robust design and installation, coupled with the manufacturer's expertise, provided strong resiliency measures that enable comprehensive underwriting analysis. Insuring this risk is an opportunity to cover best-in-class emerging technology and support the future growth of floatovoltaics.

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Floatovoltaics represent an exceptionally promising market expansion opportunity for solar energy. By siting photovoltaic systems on non-usable bodies of water rather than premium real estate, this technology can unlock additional renewable generation capacity critically needed for sustainability targets, often close to where the electrical demand is needed. Though floatovoltaics only make up a small portion of today’s renewable energy fleet, rapid cost improvements coupled with supportive government incentives position this sector for immense growth in suitable regions worldwide.

Yet as an emerging field still maturing, risks remain that may deter uptake if not adequately addressed. Insurers play a vital role not just in comprehensively evaluating floatovoltaic vulnerabilities, but also collaborating closely with developers to promote safety and resilience through loss control stipulations. Leveraging data science, engineering expertise, and lessons from analogous assets enables shaping prudent underwriting guidance during this formative market phase. Adoption of best practices will allow progressive improvement of insurance terms as statistical credibility accumulates over time.

The long-term outlook remains bright for floatovoltaics contributing materially to de-carbonization. However, maintaining sustainable expansion requires asset owners, brokers, and carriers to collaborate on the growth of this technology frontier. The efforts undertaken today to understand the intricacies of floatovoltaics will establish foundations for successfully scaling this innovative solar domain, unlocking its immense potential to combat climate change.

kWh Analytics Raises Property Insurance and BESS Capacity for Renewable Energy Projects with Leading Carrier Aspen Insurance

Capacity supports renewable energy growth to fight climate change

San Francisco, CA, [DATE] - kWh Analytics, Inc., the industry leader in climate insurance, announced today a significant increase in its capacity agreement with Aspen Insurance (“Aspen”) to support its property insurance offering for renewable energy projects. With this increase, kWh Analytics is able to underwrite up to USD$75 million per renewable energy project location and has full delegated authority to cover accounts compromising up to 100% of operational solar and/or battery energy storage systems (BESS) projects and up to 50% of wind and/or construction accounts.

kWh Analytics’ capacity increase comes one year after the company partnered with Aspen to launch property insurance underwriting and capacity for renewable energy assets in January 2023. In addition to this increase, kWh Analytics and Aspen now have four of the top ten global (re)insurance partners on their panel.

Jason Kaminsky, CEO at kWh Analytics, said: “This capacity raise is a strong indicator of confidence in our company’s data and sophisticated modeling capabilities and the industry’s desire to encourage resilient renewable assets. Adding capacity enables us to expand coverage options for responsible asset owners, supporting renewable energy growth amidst worsening natural disasters by incentivizing resilience and bridging the protection gap.”

Josh Jennings, SVP and Head of Inland Marine at Aspen Insurance, said: "kWh Analytics' data-driven approach is consistent with Aspen’s future-focused underwriting strategy, and we’re delighted to continue our collaboration to meet our clients’ evolving needs with innovative renewables solutions. This increased capacity provides additional options for asset owners who are proactively designing, building and maintaining resilient assets, and it further strengthens our commitment with kWh Analytics to offer solutions for the growing demands of the renewable energy market.”

Recent years have seen reduced limits and substantial cost increases for renewable asset owners, amidst a growing need for new solutions to manage and underwrite risk. kWh Analytics uses its proprietary database of over 300,000 renewable energy assets to accurately price and underwrite unique risk transfer products, as well as reward asset owners for resiliency measures. This year, kWh Analytics launched a microcracking endorsement for solar assets that simplifies the insurance claims process for this common but difficult-to-assess form of solar module damage.

In addition to its insurance products, kWh Analytics is leveraging data to encourage resilient design practices and to identify the most common failure modes among existing solar PV projects. The findings, which are incorporated in property insurance underwriting, are distributed to the company’s clients and broadly to manufacturers, operators, carrier partners and investors to reinforce the further development of sustainable renewable energy projects.

ABOUT KWH ANALYTICS

kWh Analytics is a leading provider of Climate Insurance for zero carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. Property Insurance offers comprehensive coverage against physical loss, with unique recognition and consideration for site-level resiliency practices, and the Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms. These offerings, which have insured over $23 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on Twitter.

About Aspen Insurance Holdings Limited 

Aspen provides insurance and reinsurance coverage to clients in various domestic and global markets through wholly-owned operating subsidiaries in Bermuda, the United States and the United Kingdom, as well as its branch operations in Canada, Singapore and Switzerland. For the year ended December 31, 2023, Aspen reported $15.2 billion in total assets, $7.8 billion in gross loss reserves, $2.9 billion in total shareholders’ equity and $4.0 billion in gross written premiums. Aspen's operating subsidiaries have been assigned a rating of “A-” by Standard & Poor’s Financial Services LLC and an “A” (“Excellent”) by A.M. Best Company Inc. For more information about Aspen, please visit www.aspen.co.

Media Contact

Nikky Venkataraman

Senior Marketing Manager

kWh Analytics

E | nikky.venkataraman@kwhanalytics.com

T | (720) 588-9361