Examining the Real Cost of Renewable Resiliency

Originally Published in POWER
By: Bobby McFadden, kWh Analytics; Brian Fitzgerald, WTW; Alex Morris, WTW

In the face of escalating climate challenges, renewable energy asset owners come to a critical crossroads: invest in resilient, hardened assets or opt for standard equipment to minimize upfront costs.

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 modules, and advanced monitoring and response systems. While the initial price tag of resilient assets may seem daunting, a closer examination reveals that these investments often pay off over a project lifecycle. Though insurance carriers ultimately benefit from these reduced losses through fewer and smaller claims, the true value of resilience flows to asset owners through lower premiums, better insurability, and most importantly, reliable power generation. Resiliency measures have become an increasingly smart business decision in the evolving landscape of renewable energy.

The Growing Threat to Renewable Assets

Climate change is driving an unprecedented increase in extreme weather events, posing severe challenges to renewable energy infrastructure. Among the issues:

Intensifying storms: Hurricanes and tropical storms are becoming more powerful, with higher wind speeds and increased rainfall, threatening both onshore and offshore renewable installations.

Expanding hail risk: Hailstorms are occurring more frequently and in regions previously considered lower-risk, with hailstones growing larger and more damaging.

Prolonged droughts and wildfires: Extended dry periods are leading to more frequent and intense wildfires, jeopardizing solar farms and transmission infrastructure in vulnerable areas.

Increased uncertainty: Changing rain patterns are causing floods in unexpected locations and shifting historical flood maps.

These escalating risks threaten not just individual projects but the entire sector’s growth. According to NOAA, 2023 saw a record-breaking 28 weather and climate disasters in the U.S., each causing more than $1 billion in damages. This trend is projected to continue.

Given these mounting challenges, the renewable energy industry must adapt to ensure its continued growth and sustainability. The solution lies in resilient design—but what does this entail, and at what cost?

The Upfront Cost of Resilience

Implementing resilient measures in renewable energy projects, particularly in solar installations, typically involves several key components:

• Enhanced panel design: Utilizing thicker (3.2 or 4mm vs. 2mm), tempered glass to withstand hail and other extreme weather events.
• Advanced tracking systems: Implementing trackers with higher stow angles and automated stow functionalities for better protection during severe weather. Today’s deployed trackers typically achieve maximum tilt angles of 52 to 60 degrees, with recent innovations allowing for even steeper angles to minimize hail loss. Recent research in the 2024 Solar Risk Assessment shows that angles up to 75 degrees reduce the probability of breakage by over 80%. Regular testing of hail stow systems is also advised.
• Robust mounting structures: Choosing durable racking with thicker steel and ensuring modulesare securely fastened to withstand high winds and other environmental stressors. Operations & Maintenance items such as torque audits, connector inspections, and spare parts collection are completed regularly.

While specific costs can vary based on project size and location, our research indicates that implementing these resilient measures can increase initial project costs by approximately 10% to 15% compared to standard designs.

Case Study: The Numbers Behind Resiliency

To illustrate the financial impact of resilient design, let’s consider a real-world example based on our models for a 100-MW solar project in a high hail-risk region. First, it’s important to understand the concept of Average Annual Loss (AAL). AAL is a key metric in risk assessment that represents the mean annual loss over the long term, considering the probability and severity of various loss events. It’s calculated using natural catastrophe models that are built on historical weather and loss data.

This approach simulates tens of thousands of years of weather events impacting an asset, and the resulting losses are then averaged across years. Project-specific factors are also taken into account to estimate the likely financial impact of these risks over time.

Standard Design (2mm untempered glass, no hail stow):

• Net Loss AAL: $1,062,720
  • Note: Deductible obligations are factored into net loss calculations. This case study’s severe convective storm deductible is 5% of the total property damage value at risk, subject to minimum and maximum requirements.
• 30-year aggregate AAL outlook: $31,881,600

Resilient Design (3.2mm tempered glass panels, robust hail stow protocol with 52 degree tilt):

• Net loss AAL: $307,790
• 30-year aggregate AAL outlook: $9,233,700

The implementation of resilient design measures results:

• $754,930 reduction in average annual loss (AAL)
• $22,647,900 reduction in 30-year outlook AAL
• 71% reduction in both annual and 30-year outlook AAL

Assuming the resilient design costs 15% more than the standard design, let’s break down the numbers:

• Standard design cost: $100,000,000
• Resilient design cost: $115,000,000
• Additional upfront investment: $15,000,000
• Savings over 30 years: $22,647,900
• Net benefit of resilient design: $7,647,900 ($22,647,900 savings – $15,000,000 additional upfront cost) over a 30-year outlook.

As severe weather events become more frequent, non-resilient sites face a challenging future: increased deductibles, higher premiums, and ultimately bearing a larger portion of losses themselves. Insurers have become increasingly discerning about sites that do not properly consider their geographic perils, often declining to quote entirely on projects that lack adequate resilience measures for their location.

In some cases, sites may become completely uninsurable. Moreover, the renewable energy industry’s reputation and growth depend on reliable power generation—projects that are frequently offline due to weather damage not only lose revenue but also undermine confidence in clean energy as a dependable power source. Resilient design creates a virtuous cycle where reduced losses lead to lower premiums, better insurability, and a more stable renewable energy sector.

The Industry Imperative

The message for decision-makers is clear: while upfront costs for resilient design are higher, the long-term benefits far outweigh the initial investment.

This calculation doesn’t account for additional benefits such as lower insurance premiums, improved uptime, or extended asset life, which could further increase the net benefit of resilient design. A recent case study by kWh Analytics revealed that a resilient asset owner who was able to prove that they operationalized hail stow for 90% of past hail events received a 72% natural catastrophe insurance rate reduction. (Editor’s note: Operationalized hail stow is a solar panel tracking system that automatically adjusts the position of solar panels to reduce the risk of hail damage.)

As environmental risks escalate, prioritizing resilience isn’t just about protecting assets—it’s about securing a competitive advantage and ensuring the future of renewable energy. The real cost of resilience? It’s the price we’ll pay if we fail to adapt. As we race to meet clean energy goals and combat climate change, investing in hardened assets isn’t just a smart business decision—it’s crucial for safeguarding our transition to a sustainable power system.

—Bobby McFadden is an underwriter at kWh Analytics. Before joining kWh Analytics, he worked at Chubb for eight years in the commercial marine division, writing multi-line middle market risks throughout the U.S. Alex Morris has been at Willis Towers Watson (WTW) for seven years, moving to New York City from the London, UK, office in 2022, where he was a member of the Downstream Energy Broking team. Alex specializes in conventional power generation and renewable energy. Brian Fitzgerald joined WTW in May 2023, bringing three years of natural resources property and nuclear insurance brokering experience, and a total of 10 years of power generation experience with him.