This article featuring John Sedgwick, president of VDE Americas, originally appeared in the 2022 edition of RETC's PV Module Index Report.
No one understands the natural perils associated with solar deployments better than renewable energy insurance specialists such as GCube Insurance. According to the company’s 2021 market report, Hail or High Water: The Rising Scale of Extreme Weather and Natural Catastrophe Losses in Renewable Energy, weather-related insurance claims have grown in frequency and severity as solar projects have increased in frequency, size and geographic distribution.
Given the rapid growth of the solar market globally, a commensurate rise in solar insurance claims is not entirely unexpected. However, the root cause of solar insurance claims has surprised some insurance industry insiders. Specifically, since 2015, insured losses associated with extreme weather events are roughly twice the magnitude of those stemming from natural catastrophes.
This breakdown of weather-related losses is enlightening. As a loss category, natural catastrophes are low-incidence, high-severity events, such as hurricanes and floods, that cause significant damage. Insurance policies often refer to these perils as “acts of God,” which speaks to the fact that reasonable care and foresight cannot prevent damages associated with these forces of nature.
While extreme weather events result in more insured losses than natural catastrophes do, insurance claims associated with the severe weather loss category are not unavoidable. Project stakeholders can prevent or mitigate many extreme weather losses by exercising reasonable care and foresight in product selection and system design. Moreover, risk mitigation specialists can help tax equity investors and insurance companies understand the financial risks associated with severe weather.
Strategic product selection is an essential first step for mitigating the leading causes of extreme weather losses. RETC’s bankability and beyond-certification testing results demonstrate how different PV module designs or combinations of modules and racking resist these different types of environmental stresses. These differences are mission critical in the context of extreme weather risk mitigation.
Examples of preventable extreme weather perils include wind, hail and snow. Based on claims frequency, high wind events are a leading cause of insured losses in fielded solar assets. Based on the severity of losses, a widely publicized hailstorm in West Texas damaged some 400,000 PV modules, resulting in the largest single solar insurance claim to date. Snow is a relatively lesser hazard overall but presents significant risks at specific elevations or latitudes.