Solar modules are rapidly growing in scale as developers and investors increasingly demand maximum output and efficiency from utility-scale solar projects. But the development and installation of larger solar panels does not come without risk. We spoke to GCube Underwriter Rosa Van Reyk for her take on some the main messages for GCube’s Insureds who are looking to scale up their solar projects.
Could you tell us what new innovations GCube has seen in the solar market in 2020?
Since the turn of the year we have seen the scale of solar modules and supporting components increase, with the drive for increased output also reflected on the wind side too. A lot of noise has been made around the development of larger wind turbines but the growing demand for utility-scale solar farms has led to developers launching ever larger solar modules. JA Solar for example recently unveiled a module that could output over 800W. Though these are not yet in mass production, the speed at which these solar panels can be built and installed means that wider commercial deployment is inevitable.
The increasing appetite for larger solar modules has correspondingly led to increased competition between module manufacturers, with over 20 firms including Tongwei, Jolywood and Suntech all launching new module products with a power output of over 500 W at a recent photovoltaic exhibition and conference in China.
Another trend that we have seen in terms of technological innovation in the solar space is deployment of energy storage systems. Examples of co-location – where battery storage is integrated alongside a solar project – are on the rise and are swiftly becoming essential for solar projects in order to be viable and compatible with modern grid systems. Intermittent power output, albeit fairly predictable, is one of solar’s greatest drawbacks and battery storage is vital to ensuring that solar projects can export power around the clock to meet peak demand and ultimately help balance the grid.
What are the benefits to increasing the scale of solar modules in a solar project?
Large solar modules can, generally speaking, produce a higher output than their smaller relatives, enabling solar owners to generate more power and ultimately more returns. As manufacturing costs have significantly fallen in recent years developers have invested in larger solar panels to take advantage of economies of scale. The affordability of solar modules is particularly pertinent as the global market attempts to shifts towards a zero-subsidy environment and utility-scale solar projects remain in high demand.
As solar technology has evolved modules have also become more efficient, with the latest modules capable of absorbing more sunlight and producing a higher output per m2. In this way, solar developers can install fewer panels and increase the output of a solar farm simultaneously, bringing in a number of additional side benefits including faster installation.
Will the development of these larger solar panels create any additional supply chain risks to Insureds? How can these be mitigated?
There are several factors throughout the supply chain which will create additional uncertainty and risk around the final end product. For example, the greater dimensions and weight will require a more robust and costly substructure to support it, along with specialised installation techniques. There is also an increased risk of installation and construction error due to contractors initially having little experience working with this specification.
To help alleviate these risks, Insurers will assist in offering advice on how solar modules should be transported in a way that presents the least risk of damage, for example in secure shipping containers rather than just being roped on the back of a lorry as we have seen happen on occasion. It is not yet known if the larger next generation of solar panels are more vulnerable to internal micro-cracking in transit. Insurers should consider introducing marine warranty surveys which help to pinpoint where and when the damage occurred, who is at fault and where contractual obligations lie at the time of loss.
How can operational risks for larger modules best be managed?
Rapid innovation does come with a certain amount of risk, and upon rollout the insurance industry will need to work out the timeframes for contractual obligations should damage occur to larger solar panels. Downtime and business interruption costs may be inflated due to limited production capacity and long order books reducing manufacturers ability to rapidly replace solar modules. It’s extremely difficult to interchange solar panels and have different technology integrate effectively within the configurations of the existing site so identifying and agreeing upon timelines will be essential for the long-term success of new solar innovations.
GCube require that all wind assets are certified and have achieved a certain number of operating hours before coverage can be granted. Insurers would be wise to incorporate similar practices for prototypical solar. Insureds should focus on ensuring that the solar module is compatible with its supporting structure and that contractor training is of sufficient quality. Ultimately the risk profile for solar is different in different markets and solar project owners will need to be aware of the specific risks associated to individual projects, particularly Natural Catastrophe events, for example their ability to withstand high wind speeds.
In addition, with each solar panel providing greater output, any individual faults will also have a greater impact on revenues. Ensuring the highest standards of operations and maintenance will therefore be vital for solar projects to minimise asset downtime and meet expected revenue generation.
How vulnerable are these larger solar panels to Nat Cat events such as wildfires and hailstorms? How can Insureds protect themselves from these events?
It depends on the inherent suitability of the panel and on the type of Nat Cat risks most likely to impact a specific site. Larger does not always mean better from an Insurers point of view, though efforts can and have been made to increase solar modules resilience to Nat Cat events.
From a flood perspective, panel elevation is crucial, and Insureds need to use historical data to calculate potential flood levels when choosing a development site and elevate panels accordingly. In terms of wildfires, the extreme heat we have seen in California in recent months means that even stray cigarettes and pieces of glass now represent a potential fire hazard and project maintenance, and especially brush maintenance, is essential to mitigate fire risks.
As projects continue to grow in size project maintenance becomes more costly and time-consuming but solar owners must ensure that they maintain high standards. Operations and maintenance teams will need to regularly inspect assets and maintain a robust damage cataloguing process to identify imperceptible damage such as micro-cracking following a hailstorm.
Investing in trackers and other equipment that can react in real-time to changing weather conditions such as wind speed will also help protect assets from damage when Nat Cat events occur.
With grid connection still a challenge in many markets, what advice would you give to developers looking to integrate projects with larger solar modules?
Grid connection remains a significant challenge in a number of markets where solar projects are being developed. One new development is the shift away from integrating projects with complex national grid infrastructure and conversations are now focusing on the development and installation of solar projects into microgrid systems.
As we have seen in the US in recent years the grid has struggled at times to meet periods of high demand, this means some projects are unable to export power during peak times. Integrating solar projects with microgrids can more help to more effectively meet local demand and support the wider national grid when energy demand fluctuates, and we expect to see more decentralised solar projects moving forward as a result.