We recently spoke with Delyan Iliev, managing director of Renewable Energy Insurance Broker (REIB), about the challenges of insuring solar projects around the world today, and turtle damage.
REIB is specialised in offering insurance products for solar power plants globally, through offices in New York, Berlin and Sofia. The company, an active member of SolarPower Europe, has more than 21 years of experience in Europe. It has been active in the US since 2017.
The list of REIB clients includes companies listed on the NASDAQ, NYSE and Euronext, and some of the top 10 module suppliers worldwide. The company holds a market share of around 15-20% in Bulgaria, 15% in Romania, 5% in Poland and of course some small shares in markets like Germany, the UK, France, Italy and the Netherlands. The solar power plants it has insured are located in Europe, Asia and Northern America and in the nearest future REIB expects to have customers on a fourth continent.
Q: What are the main differences between general business insurance products and renewable energy business insurance products?
A: In addition to the traditional All Risks and Business Interruption insurance, as an insurance broker focused on the renewable industry REIB offers some specific coverages. One of them is “Loss of income” instead of “Loss of profit” which most of the carriers provide. The difference is in the calculation of the compensation in cases of Business Interruption, where our clients would receive higher indemnification. It is a crucial point for investors' cashflow as we all know that most of the solar power plants globally are financed by a bank. The other specific risk we offer is “Reduced Yield Cover” or underperformance guarantee, i.e. an insurer with a minimum “A“ credit rating guarantees the performance of the installation. This is an extremely important tool for banks, financial institutions and investment funds. More and more carriers are providing special wording for renewable projects that helps for niche brokers like us to meet all of our clients’ requirements.
Q: Can you compare the specific risks solar farm operators face in different markets? Have you dealt with unusual claims in parts of Europe or the US?
A: Based on our more than ten years of experience in the solar insurance industry, I could say that the most common insurance events in Europe are due to thunderstorms and short circuits. The cause damages mainly to inverters and solar modules with business interruption of about three to four weeks.
When we are talking about claims in the US we see big issues with hurricanes, tornadoes and floods, especially in Southeast states like Florida, Georgia and South and North Carolina. These states are even out of the appetite for some of the insurers. Unfortunately some of these natural catastrophic risks can be seen also in Europe in the last few months. The EU understands very well the climate change emergency and is responding with a strategy for a climate-neutral Europe by 2050.
We had a really curious claim in Europe some time ago. A few solar modules were damaged like someone hit them with a stone. The panels were installed in the middle of a 10-MWp solar park. The fence was not compromised, there were no issues with the security guards and everything was fine with the security system. We were perplexed as to what had happened. It turned out that there are many turtles and eagles in the region. A few days after the claim an employee form the O&M operator saw an eagle in the sky, carrying a turtle. Suddenly the bird dropped its prey, which fell on another solar module, damaging it. Aha, so this is how the first damages occurred.
Q: Over the last decade we saw capacity addition drivers change from feed-in tariffs to tenders and now to corporate PPAs in key markets. How have insurance products evolved?
A: Yes, you are right that most of the financial models of solar projects nowadays are based on corporate PPAs. As a result more and more of the investors/asset management companies are looking for an insurance product which ensure the performance of their solar projects. Someone who can guarantee the prognosis energy, so they will not face any sanctions under the off-take contracts related to lower performance. The off-takers would like to see that their energy producer is reliable. Providing cover against Reduced Yield or Underperformance is what works here. Through our cooperation with worldwide insurance companies we guarantee the performance of these new photovoltaic installations and meet all bank and other financial institutions requirements.
Q: Do you plan to expand in new markets over the next few years? What about sectors like battery storage?
A: Through our NYC-based office we are able to provide cover globally. Usually we expand into new territories through our clients – wherever in the world they decide to invest we are next to them to support and provide the insurance service they are looking for.
Regarding energy storage, I may say that one of the German pioneers is among our clients. Three years ago they built three pure battery storage plants with a total installed capacity of about 50 MW. So we have gained significant experience in this field too. One of our current solar customers is discussing a huge expansion in this sector and we are ready to support their special and niche needs.
I believe that thanks to the team of specialists we have, Renewable Energy Insurance Broker will be able to maintain high professionalism and meet the specific needs of our partners in the solar industry.
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