Insurance for when the sun doesn’t shine

In recent years there has been a surge in solar energy projects, mostly due to federal incentives. Investors understand the finances of these projects, but lack the engineering expertise needed to successfully evaluate the technical risks. To address this issue, and help derisk the uncertainty of the technical exposure, HSB developed a solution known as Solar Shortfall coverage.

What is Solar Shortfall coverage?

Solar Shortfall coverage is designed to account for “non-traditional,” non-physical damage related risks that solar projects regularly face. This protection supports the performance of the project at the system level to help sustain its intended revenue stream once that project becomes operational.

Solar Shortfall covers things not related to physical damage, such as the sun not shining, and the impact that would have on the performance of the project. It also protects against a system being installed in a way that was not intended in the design phase – and the impacts that has on the revenue models. It can even cover errors in the calculations of the projected yields that were created for projects before they become operational.

Solar Shortfall is designed to cover anything from utility-scale solar farms and green fields across the U.S. and around the world, to portfolios of rooftop installations for commercial and residential builds.

How does Solar Shortfall insurance cover lack of sunlight?

We use radiation data from sources such as NASA to project the amount of sun that’s going to shine on a given place at a given time. So, with relative certainty based upon historical data, we can determine whether or not the sun is going to shine to a certain level in a particular area to help protect the revenue stream of a solar project in that location. This includes the tax credit benefit and the general revenue that results from whatever agreements are in place to collect for the energy that is sent back to the grid; this is usually in the form of a power purchase agreement.

How is HSB’s solution different from other solar energy coverage plans?

  1. We bundle the shortfall product in with our traditional all-risk covers so the insured is able to see everything in one policy with one premium, and they have all the coverage that they need and all the support that HSB offers within that coverage suite.
  2. Our engineers use their expertise and career experience to fully analyze the projects that our coverage is designed for. We look at these projects in every level of detail we have access to in order to help identify what the operational issues are – and what the issues are that ultimately affect the revenue stream. We look to add that value back into the coverage once we are actually insuring the risk.


© 2015 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved. This article is intended for information purposes only. HSB makes no warranties or representations as to the accuracy or completeness of the content of this article.


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