Is it time to invest in renewable energy insurance?
August 11, 2014
What risk managers need to know before making the move to green technology and insurance.
Businesses across the globe are increasingly turning to green technology for lowering energy costs and reducing their own carbon footprints.
We’re all thankful for that.
But, it’s also important to understand the risks associated with the photovoltaic (PV) solar panel systems so many companies are installing to help with environmental issues and costs.
“Solar PV system use has increased three-fold over the last three years, which means more and more businesses need to understand the risks associated with them in order to help protect their property and business operations,” said Mike Widdekind, Technical Director — Property for Zurich Services Corporation.
Believe it or not, fire-related risks are among the top challenges associated with PV systems. They have more fire ignition sources and present more opportunity for fires to occur beyond the reach of standard fire protection and fire detection systems.
Well, when a building fire requires firefighting activities, firefighters typically turn off all sources of electric power to the building. However, when PV systems are involved, a complete shutdown of electric power may not be possible since the PV panels continue to generate current from either daytime sunlight or even night time fire service scene lighting.
Risk managers also need to be aware of unexpected structural loads not anticipated by codes and standards such as snow or ice loads that accumulate in shaded areas below panels. When PV panel systems are installed on low slope or flat roofs, snow accumulations on panels can melt, which can refreeze and may develop into unexpected ice accumulation. Over time, this could result in a building collapse.
Lastly, PV solar panel systems can be vulnerable to wind loads and susceptible to damage caused by wind borne debris.
Is Now The Time to Invest?
According to a report brought forth by Business Insurance, insurance premium volume for the renewable energy sector — including conventional insurance, derivatives and structured products — could more than triple from $850 million today to $1.5 billion by 2020.
Guy Turner, chief economist at Bloomberg New Energy Finance and lead author of the report, said the analysis in that article “shows that the demand for risk management solutions will increase partly because the renewable sector will simply get bigger, but also because of increasing uncertainty affecting power markets in general.
As the renewable sector matures and becomes part of the mainstream energy industry, it will need to evolve from an innovative sector where risks are taken on the chin to one where returns are predictable and there are fewer surprises.”
So, with prices and demand expected to rise, could 2015 be the year for your company to invest? Learn more here.