GCube says needs to invest time and resources to increase its tolerance to risk

The solar PV industry will need to invest time and resources in order to increase its tolerance to risk, particularly for losses resulting from extreme weather conditions. This is according to research undertaken by GCube Underwriting Ltd. (GCube), the leading underwriter for renewable energy, in a new report entitled Cell, Interrupted.

Annual growth in the solar market consistently exceeds 25%, with falling technology costs and sufficient scale and innovation driving development in new markets. In the last five years, for instance, the cost of solar panels has fallen from $4 million per MW to $1.3 million.

However, if the industry is to continue to develop at this rate – particularly in an age of declining subsidies – it will need to more adequately prepare for sudden and unforeseen risks, particularly as the market increasingly moves into areas prone to natural catastrophe and extreme weather conditions. Failure to do so will be to the detriment of investors and project stakeholders.

GCube’s Cell, Interrupted, a report produced exclusively for the firm’s international community of insured clients and supporting brokers, identifies the challenges faced by solar PV developers and owners around the world, the causes and cost of solar PV claims, and discusses how they can best be mitigated. It features detailed examples of incidents, key factors influencing their financial impact on project operators, and recommended failure prevention methods.

Crucially, the report finds that weather related losses are one of the most common causes of solar PV claims worldwide, accounting for just under half of all solar PV claims in North America, and over a quarter in the rest of the world.

These losses, which can include tornados, floods, windstorm and hail damage, have contributed significantly to the average severity of claims, which has increased by 87% over the past five years.

Additional contributing factors to this increase include electrical failure, lightning strike and theft of components including copper wire. The latter is a particular concern for operators in Southern Europe, and theft-related claims account for over a quarter of the total outside of North America.

While an increase in the total number and cost of claims is to be expected as the solar PV market expands, this overall increase in severity highlights a growing requirement for knowledge sharing and collaboration among project owners, developers and risk, insurance and claims managers.

“Until there is greater awareness among the investment community that risk and asset managers need more resources to adequately prepare for the sudden and unforeseen, the industry will continue to be caught off guard,” said Jatin Sharma, Head of Business Development, GCube, and author of Cell, Interrupted.

“As we’ve recently seen with the Californian wildfires, extreme weather-related conditions and their aftermath can pose a very real threat to solar energy assets and surrounding infrastructure, operating in increasingly testing environments worldwide. At the heart of Cell, Interrupted is the desire to promote collaboration and implementation of proven best practices that minimise balance sheet losses.”

“We hope this report encourages ongoing dialogue between GCube and our insureds, enabling us to make use our extensive market knowledge to the long-term benefit of this unique community.”

Cell, Interrupted is the sixth in a series of renewable energy claims reports published by GCube, following Breaking Blades, Grinding Gearboxes, Transformers: Age of BreakdownTowering Inferno and Down to the Wire.

The report draws on a blend of GCube’s proprietary claims data, technical expertise and publicly available market information, as well as in-depth interviews with key stakeholders. It further benefits from input and contributions by DNV GL, Lightsource, OST Energy, Quintas Energy, RES, Dulas and RELA.

News item from GCube