Q: What makes insuring renewable energy projects challenging? 

A: It’s the diversity and speed the technology moves at. Renewables covers a lot of ground, not just wind and solar, but clean-tech hydroelectric, battery storage, geothermal, carbon capture, tidal, biofuels… the list goes on. Then each area has many different technologies within it, all of them very specialised, and in some cases prototypical or unproven. Each advance can make a big impact on the risk profile of a project. So we work hard to keep up technically and stay at the vanguard. 

Q: What are the special risks?

A: Some of them are quite ordinary risks, actually, but have a big impact. For example, hailstorms are nothing new, but they can do serious damage to a solar project – it’s happened. The conventional cat risks like floods, storms, and earthquakes exist alongside risks that come with new technology, and with the renewables sector’s unusual revenue streams. Every project is different, with contractual nuances and geo-locational factors to consider, and technological details that can magnify risk even when it looks pretty standard.

Q: For example?

A: Solar farms are now very common, we see them everywhere and they all look much the same, but the way the photovoltaic panels are fixed in situ can have a big impact on their resilience during high winds.

Q: How does Miller help clients overcome such risks?

A: In general, through our expertise and experience. We are a globally recognised leader in renewables, and we’ve been in it longer than most – since the early days when Lloyd’s syndicates first started covering renewables about 15 years ago. We’ve been involved in so many projects that we’ve seen almost every kind of challenging risk the renewables sector may stumble across, from turbine reliability to subsidy failure. Part of our job is to help our clients identify those risks and manage them efficiently. 

Q: And specifically?

A: I mentioned hail risk earlier. That was highlighted by a loss of about $70 million on a project in Texas. A lot of insurers responded by excluding hail damage. We’ve been getting creative to develop a solution which will give clients protection against the threat. We’re currently working with some non-traditional insurance providers to create a parametric-triggered cover for the lower levels of limit, maybe the first five million. Then we’re building aggregate with conventional insurance further up the tower, since insurers seem more comfortable when the low-end risk is taken off their books. 

Q: What about the technology-specific risks?

A: One interesting area is battery storage. We’ve worked closely with clients and insurers to develop custom coverage and bespoke wordings for clients in this market, including cover for loss of revenue and under-performance. Battery storage systems can be deployed for many different reasons, from arbitrage of spark spread to mitigating curtailment, so their revenue models can be complicated and unique. Such protections are of particular importance to lenders, since they ensure a consistent revenue stream, and can be the difference to making a project bankable or not.