How Monitoring Can Help You Get Better Solar Insurance Rates

How Monitoring Can Help You Get Better Solar Insurance Rates

By: Adam Baker

The secret to utility-scale solar insurance for when the sun doesn't shine.

California's upcoming partial solar eclipse and its overblown reported effect on the utility-scale solar industry got me thinking about solar insurance. You may not be aware, but there’s such a thing as Solar Energy Shortfall insurance for solar projects. This is different from property insurance that addresses physical damage claims that steal expected energy from site generation (high-wind events,scada-insurance lighting, flood, lava, stampeding bison, etc.)

Solar Energy Shortfall insurance goes beyond property insurance to ensure revenue is met when unexpected things happen that affect performance (think: excessive cloud cover, wildfire smoke, accelerated degradation of modules, environmental watch group investigations, tax incentives lost due to slow projects, etc.)


The Challenge with Most Solar Insurance Companies

Utility-scale solar insurance is a hazardous business. There are so few PV plants that according to the National Renewable Energy Laboratory (NREL), underwriters don't have enough historical loss and operational data to clearly assess the risk of insuring a PV farm. After all, utility scale solar inverters have only been around 10 years or so, and with an expected lifespan of 25 years, the number of data points to prove reliability doesn’t exist.

But there are other challenges as well. No guidelines ensure solar PV installer competency, and with the involvement of so many different parties (investors, developers, utilities, installers, lenders, etc.), who knows what mistakes could happen?

Basically, long-term viability is difficult to predict. These uncertainties, and the general lack of data drive premiums up.

The NREL estimates the annual cost of insurance to be 0.25% of the total installed cost of the project, (0.5% in areas of extreme weather.) Over a 20-year contract in which premiums escalate yearly, that’s a pretty significant chunk of change.


PV Solar Energy Shortfall Insurance: How it Works

The basic process of utility-scale solar insurance is this:

A developer calculates how much energy the plant should make every day, month, and year after factoring in design, location, weather, number of inverters, irradiance, tilt angle, soiling losses, normal O&M activities, etc.

At the end of all that math and the PPA, the owner has a pro forma projection for an annual revenue basis… assuming only planned downtime events occur, and nothing else goes wrong.

If contractors follow standard industry practices, insurance companies like Hartford Steam Boiler Inspection and Insurance Company (HSB) sell a standard Solar Energy Shortfall policy that will true them up to a certain percentage of expected yearly revenue (typically 90%.) This means that in a typical scenario, if your farm only makes 89% of the pro forma's expected energy, you can claim 1% back. If it only makes 50% of expected revenue, you can claim 40%.

Being able to claim a maximum of 90% of projected revenue is good coverage, but the likelihood of reaching that threshold is pretty low, unless something drastic happens at your site.

For example, if you can prove module degradation is occurring faster than its warranty states, the odds are good you can claim a manufacturer's warranty replacement. But even if an entire combiner box goes faulty purely due to a design issue and you’re outside the warranty window, your loss might be 10% of one inverter, or 2% of all production loss at a 5MW site. You still have another 8% to go before you are eligible to claim any revenue shortfall. 8% would take a fairly comprehensive combiner failure, and this assumes it’s out of service for a full year.

Having a higher trigger could make a Solar Energy Shortfall policy a little more realistic.


How to Get More Than 90% of Your Pro Forma From Solar Insurance

A typical insurance policy has a 90% trigger. To my knowledge, HSB is the only company that offers a higher trigger on their energy shortfall policy, but only if you meet their strict requirements for construction and problem identification.

Quality construction companies
If an owner buys a policy from HSB, the contractor they select will determine the coverage they’re eligible for.

HSB interviews contractors to get a quantitative and qualitative understanding of the contractor's expertise in solar, what measures they've put in place to ensure quality labor, and how they identify problems before they escalate. Further, a comprehensive understanding of HOW to monitor the site is required to demonstrate understanding of plant areas that are not running to their full potential. Contractors are expected to go above and beyond industry standards. Quality is the name of the game.

Needless to say, only a few construction firms have been able to prove they qualify for the higher trigger policy. Even if they have a skilled labor force, most contractors don’t have a lot of experience in the second part: SCADA.

Quality SCADA and monitoring practices
The NREL states, "Greater access to data will allow the insurance industry to assess more accurately the risks associated with PV facility development and operation and will lead to more accurate insurance premiums."

A key part to a successful contractor interviewing process is demonstrating that the SCADA system monitoring the PV plant is developed, built, integrated, and maintained by persons with deep enough solar knowledge to identify problems before they happen.

To build credibility with HSB, contractors looking to qualify would probably need to partner with a highly skilled systems integrator specializing in utility-scale solar to deliver the presentation.

I've personally presented a SCADA program on behalf of a construction firm to six engineers at HSB (and I'm happy to help you do the same!) Here are some of their favorite parts of the SCADA system I presented:


  • Normalized performance data. All data was normalized to represent an accurate apples to apples comparison of performance in various parts of the plant.
  • Heat map site overview. From one main screen, how can operators look at relative performance of 520 inverters at the same time (bearing in mind that the operator may have 4 or more similar sites open at the same time)? Heat maps make it easy to visually identify the outliers in a sea of numbers.
  • Uncluttered HMIs and SCADA overview screens. Data for the sake of data can be counterproductive. Make sure the data presented is important, and impactful to site performance. By enabling operators to quickly and visually identify a site problem, resolutions happened faster.
  • Alarming. Alarm on energy impact, and only when there is a corrective action to be performed to quickly alert operators to trouble they can fix.


The methodologies Affinity Energy uses for SCADA design support insurance objectives like early problem identification and fast time to repair. By providing more accurate and actionable data, we can help companies qualify for HSB's Solar Energy Shortfall policy if they are also adept at driving quality into the construction process.


The Overall Importance of SCADA in Utility-Scale Solar

To me, the fact that an insurance company simply won't write a policy for over 90% coverage unless you have great SCADA speaks volumes about how crucial solar SCADA is to the industry. The experience gained in spending hundreds of hours in an operations center with 20 operating sites, and delivering more than 3,000MW of power gave me deep insight into the importance of enabling operators to perform their job well. Through several iterations of HMI development, and dealing with hundreds of thousands of data points, we developed a world class monitoring capability that Affinity Energy has embraced as a framework for the marketplace.


Adam Baker - Affinity EnergyAdam Baker is Senior Sales Executive at Affinity Energy with responsibility for providing subject matter expertise in utility-scale solar plant controls, instrumentation, and data acquisition. With 23 years of experience in automation and control, Adam’s previous companies include Rockwell Automation (Allen-Bradley), First Solar, DEPCOM Power, and GE Fanuc Automation.

Adam was instrumental in the development and deployment of three of the largest PV solar power plants in the United States, including 550 MW Topaz Solar in California, 290 MW Agua Caliente Solar in Arizona, and 550 MW Desert Sunlight in the Mojave Desert.

After a 6-year stint in controls design and architecture for the PV solar market, Adam joined Affinity Energy in 2016 and returned to sales leadership, where he has spent most of his career. Adam has a B.S. in Electrical Engineering from the University of Massachusetts, and has been active in environmental and good food movements for several years.