Insurance Protection for Solar Farms
Humans have relied on conventional sources of energy since the time immemorial- be it the coal, wood, gas or oil. We have used and over used these resources in order to fulfil our greedy ambitions and robbed the future generations of their rightful access and claim to these resources. Increased demands to meet the needs of over 7.5 billion humans has resulted in unparalleled levels of pollution in air, land, wetlands, water bodies along with depletion of forests. According to Global Footprint Network, by August 1 2018,humans consumed more resources than Earth could regenerate for the year. In simpler terms, we are now using the resources of close to 1.5 earths in a year.
Waking up to the this reality and seeing the repercussions of our deeds in everyday weather changes, people and more importantly, governments across the world, are talking in sustainable and ‘renewable’ terms. Renewable energy is energy that is generated from natural phenomenon / processes that are continuously replenished. This includes wind, tides, water, sunlight, geothermal heat, and various forms of biomass.
Renewable energy often provides energy in four important areas: electricity generation, air and water heating /cooling, transportation, and rural (off-grid) energy services.
Some of the very well-knownadvantages of Renewable Energy are as follows:
Authors Mr. Shubham Singh, Student, PGDM – Insurance , BIMTECH Prof. Manoj Kumar Pandey,Associated Professor, BIMTECH
- Green house gases do not get emitted by the use of renewable energysources. This makes it the cleanest form of energy & use of it o prevents environmental degradation.
- As the source is infinite like winds , sun light , tides etc. , it is very much sustainable & there is no threat for the next generation..
- These sources are available all across the globe hence it helps countries becoming “energy independence”. Dependence on fossil fuel imports compromise the security of energy supply.
- It helps in reduction of electricity bill, as it has the potential to save up to 20% of the energy cost.
- It can be used in remote locations where there is no access to the power cables. Best suited for the hilly areas .
Installed Solar PV as on 31st March, 2018
Risk Associated with a Solar Plant Like any other project , solar fams too faces the risk whih can broadly be categorize at erection & operational level. At Erection Stage Construction Risk Setting up of a solar project is a capital intensive project . There is a lot of movement of material & manpower & in that way itis the riskiest phase of the project . The constructionrequires interpretation and compliance with many laws, codes, and regulations. Arranging &movement of considerable resources, including labour, equipment, and material adds risk factor . There is always a possibility of property damage or liability caused from various kinds of error during the building of the new project. The frequent loss is reported also of the cracking of panels when being fixed into place. Breakage & theft in transit or during installation can also come under this category of risk. Sometimes start-up delays i.e., delay in construction works may lead to huge revenue loss to various companies involved in such projects. Investor’s Risk It relates to the financial uncertainty faced by an investor who holds securities in a specific firm. . Major political & economic events Can put threat to the expected return These risks are related to affecting the viability of the project developer as there are various risks related to key personnel, financial solidity, & technical ability to execute on the plans. Environmental Risk There are high risks of environmental damage as well due to the expansive size of these solar par, including any liability following such damage. For example, large solar parks can become one of the reasons for land degradation & habitat loss.Also, Thin-film PV cells contain a greater number of toxic materials than those used in traditional silicon photovoltaic cells which include, gallium arsenide, cadmium-telluride etc. If these materials are not handled properly then these could pose serious environmental or public health issues. Some other negative environmental effect are as follows:- Energy: The manufacturing process of solar panels is energy intensive .It is due to the transformation of raw minerals into usable photovoltaic. Manufacturing requires combining multiple materials with incredible precision to produce high efficiency panels. All these steps of manufacturing require lot of energy. This is one of the criticism which solar proponents have to face on regular basis
- Chemicals: To produce solar-grade silicon, semi-conductors processing typically involvesuse of hazardous chemicals. The proper disposal of these chemical is always under question by environmentalist .
- Recycling: As a normal solar panel expect to have a life span of 25 years or so solar panel recycling has not become a major issue yet. However it would be an issues in coming years.
- General Liability Insurance: General liability insurance covers policyholders for death or injury to persons or damage to property owned by third parties. General liability coverage is important for solar system installers, as risk is greatest during installation.
- Machinery Breakdown: Electrical & or machinery breakdown of any machinery or other equipment resulting in costly repairs or even replacement of the solar panel.
- Business Interruption: Cover for period of operational downtime i.e., covering the cash flow of the solar business as a result of an insured peril, for example fire or storm damage, machinery breakdown or equipment failure.
- Property Damage: The solar system owner usually purchases property insurance to protect against risks not covered by the warranty or to extend the coverage period. The insurance covers material damage due to external causes such as fire, theft, vandalism, sabotage, hail damage, snow load, lightning strike, overload, operational mistakes, clumsiness, negligence & theft.
- Contract Works: Protection against any loss arising from property damage caused during construction of the project. Cover starts while solar panel are in transit to the job site & ends once the job is completed or the owner accepts the work.
- Employers Liability: Provides cover against the risk of accident from usual workplace risks such as working at height & manual handling.
- Marine Cover: Covers include Marine Transit for any loss of goods & Marine Delay in Start up to protect from any consequential loss in revenue.
- Environmental Risk Insurance: Environmental damage coverage indemnifies solar system owners of the risk of either environmental damage done by their development or pre-existing damage on the development site.
- 5+ years product warranty
- 10 years on 90% performance output
- 25 years on 80% performance output.
- Faulty manufacturing
- Material defects
- Material ageing
- https://www.businesstoday.in/current/corporate/solar-industry-wishes-big-growth-next-year/story/302870.html
- https://sdg.iisd.org/news/solar-energy-installations-in-2017-topped-gas-coal-and-nuclear-combined-amid-steady-growth-in-renewables/
- https://www.hdfcergo.com/documents/downloads/policywordings/Solar-shortfall-policy-wordings.pdf
- https://www.solarinsure.com/solar-panel-extended-warranty
- https://www.icicilombard.com/insurance-information/travel-insurance-info/article/solar-panel-warranty-insurance-launched-by-icici-lombard
- https://www.thenational.ae/business/energy/renewable-energy-india-s-next-employment-boom-
Authors Mr. Shubham Singh, Student, PGDM – Insurance , BIMTECH Prof. Manoj Kumar Pandey,Associated Professor, BIMTECH
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