This article is based on insights shared during a November 2024 webinar hosted by Solarplaza featuring experts from kWh Analytics, CAC Specialty, and Sol Systems.
The math behind solar project insurance has changed dramatically. What was once a routine line item is now a major driver of project economics, with insurance premiums rising 3-5x in the past few years, and deductibles reaching up to 15% of property damage limits. This shift, driven by increasingly severe weather events, is forcing the industry to fundamentally rethink how it approaches risk and resilience.
Before 2019, insurance on utility-scale solar projects was easy to secure, with ample supply of coverage throughout the United States. Since that 2019 mark, however, the insurance market has faced significant growth in premiums and reduction in coverage levels and coverage terms. This shift was catalyzed by several high-profile natural catastrophe events, including a severe hail storm near Midland, Texas that caused $70-80 million in damage in 2019.
However, project developers are finding a way forward. Through early collaboration between owners, brokers, and insurance carriers, developers are able to build more resilient projects from the ground up - and see more acceptable insurance costs and coverage terms as a result.
Take one recent utility-scale project in Texas. By implementing and documenting comprehensive resilience measures, particularly around hail mitigation, the project secured insurance rates 72% lower than a comparable site that does not employ hail resilience measures. More importantly, the owner was able to reduce the risk of hail damage to their site for a fraction of the cost of repair in an unmitigated event.
The key was starting early, rather than treating insurance as a final checkbox, or afterthought. Developers are now engaging with insurance brokers during initial site selection and equipment decisions. Brokers bring crucial insights from their experience with renewable projects and ongoing relationships with carriers.
"Decisions made early in the project development process can either negatively or positively impact insurability and pricing," explains Lauren Carroll-Allan, Vice President of Cirrus Advisers, CAC Specialty. "We want to diligence insurance the same way we diligence everything else for a project."
The impact of this early planning is evident in real projects. "We've made concrete changes based on insurance insights," shares Kate Brandus, Director of Asset Management at Sol Systems. "At one flood-prone site, early analysis led us to implement design changes to protect inverter equipment. We also rely heavily on data comparing probable maximum losses between different module technologies to inform equipment selection."
The most successful projects are implementing comprehensive resilience programs that span from development through operations. This includes sophisticated weather monitoring systems, strategic spare parts management, and detailed emergency response protocols. Perhaps most importantly, they're documenting everything - creating a clear record of risk mitigation that carriers can evaluate.
This documentation is crucial because insurance carriers are increasingly willing to reward proven resilience measures with better rates and terms. While establishing precise correlations between specific measures and premium reductions remains challenging, the industry is building better data on what moves the needle.
"Incorporating resilience measures into design, construction, and operation can represent millions of dollars in savings over the 35-year useful life of an asset," notes Geoffrey Lehv, Head of North American Accounts at kWh Analytics. "We're starting to build better data on what moves the needle in terms of risk reduction, and sharing those insights back with the industry."
The result is an emerging feedback loop that benefits everyone. Brokers help translate carrier requirements into practical design recommendations. Developers implement and document resilience measures. Carriers reward proven approaches with better terms. Each successful project adds to the industry's collective knowledge about what works.
This ‘solar success chain’ represents more than just better insurance rates - it's about building projects that can reliably deliver clean energy for decades to come. As extreme weather events become more frequent and severe, this type of industry collaboration may be the key to solar's long-term resilience.
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