Insurers Offer Coverage for Solar Developments

Photo by theregeneration. Some rights reserved.

Challenges to “green” energy developments abound. Compared to traditional companies even in the energy sector, means of financing projects are fast-changing, subsidies and tax credits are unpredictable, and data on projects’ returns are sparse. We wrote about trends in venture capital and IPOs for clean technology companies in February in a post recently linked to by The Atlantic, seeing energy storage and generation companies faring well in 2011. The wind industry is still waiting for Congress to vote on extending its production tax credit, and as we covered here, if it is not passed, the industry’s capacity might fall by three-quarters.

However, it is becoming easier for “green” developers to secure private financing in a functioning market. In January, we posted about a Deutsche Bank study aimed at providing data on the accuracy and reliability of energy audits associated with building retrofits, to encourage private investment in retrofits, the “low-hanging fruit” of carbon reduction. Now, insurers Assurant and GCube Insurance Services are offering an insurance product to help solar developers navigate the risks of mid-size projects, aiming to fill a gap in coverage that has often prevented developers from securing financing.

In particular, Assurant’s product uniquely bundles property and liability coverage with equipment warranty management, allowing developers to move beyond their skepticism and uncertainty toward warranty management frameworks. They offer $10 million of coverage per location – initially limited to photovoltaic projects in the US – ranging from 100kW to 3MW in capacity. Environmental Finance has a detailed description of the insurance product here.

As those behind the Deutsche Bank building-retrofit study did, we can hope Assurant’s product will lay the groundwork for further comprehensive coverage products in other clean technology sectors that might open the floodgates of private financing, maybe making debates like that over the wind PTC unnecessary.

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