Why Solar Energy Is a Huge Opportunity for Realtors | Insurance business America
The CEO says smaller brokers are getting involved
Environmentally friendly
By Daniel Wood
Noor Energy 1, an iconic solar power plant in the United Arab Emirates, likely suffered hundreds of millions of dollars in losses after a storm in April. Noor 1 is a concentrated solar power plant (CSP) with a 260 meter high tower – the tallest solar tower in the world.
In recent days, reports said AIG was one of the underwriters and the broker that placed the risk was Marsh.
However, one reason for this dramatic loss is that better risk management has made progress in the renewable energy sector in recent years, including in addressing hailstorm challenges. The sector is growing rapidly as demand for clean energy increases. Many industry experts see enormous potential in the solar industry – including for insurance brokers.
“We are seeing rapid growth in solar, wind and battery storage,” said Jason Kaminsky (pictured above), CEO of kWh Analytics.
Kaminsky’s US-based company is a renewable energy MGA that combines risk management and data analytics with insurance offerings. He said there are already a number of different brokers working in the solar industry.
More and more brokers are entering the solar industry
Kaminsky said one reason interest in brokers is increasing is that the financial hurdles that once stopped smaller brokerages from getting involved are starting to disappear.
In the U.S., he said, the availability of multimillion-dollar tax credits has encouraged the world’s largest brokerage firms to deploy renewable energy teams in the field. However, the investments required to take advantage of these loans are usually very high, Kaminsky said.
“This should, in theory, lower the barriers to entry for financing and democratize who brings these assets to market,” Kaminsky said.
From Europe to Australia, a similar mix of government incentives and investment opportunities offers potential opportunities for insurance brokers in this area.
“I expect brokers with commercial portfolios, corporate brokers, to source more and more solar and related technologies from their core customer base,” Kaminsky said.
Brokers help underwriters
He suggested that one factor driving brokerage opportunities is the role of risk advisors, who can help underwriters better understand the risks associated with natural disasters that solar operations face.
“What we’re seeing in the markets today is, quite frankly, not much of a difference to the underwriting community in terms of the quality of the underlying risk,” Kaminsky said.
He noted that kWh is unusual because it offers “a lot of differentiation” in terms of the specific location, technology and operating decisions of these renewable energy operations.
“The reason for this is that depending on each of these decisions, there is a very dramatic difference in the loss outcome,” Kaminsky said.
Brokers can be an important part of this value chain.
“We highlight the underlying risks for the asset operators and the financial people who pay a lot for insurance and help them adopt operational best practices that can then be adopted by the underwriting community,” he said.
Risks in solar operation
Kaminsky divided the risks facing solar operations into two categories.
“One is what we call resilience, which is resilience to natural disasters,” he said. “The other thing is what we call reliable, which is whether it produces the amount of power that you would expect.”
Kaminsky said his company’s risk management data includes information that shows what safety issues emerge during on-site audits. Also: Which parts of solar systems are “regular sources of error”?
He said the inverters that convert solar energy from direct current to the alternating current needed by power grids could be vulnerable to disruptions and downtime. He said such mistakes were known throughout the industry. However, having actual data on these outages is an important part of the preventative risk management and insurance process, he said.
“Then the resiliency side, the physical loss side includes hail, operational best practices and vegetation management,” Kaminsky said.
He said vegetation management was more about bushfire prevention than forest fires. He said the solar panels are usually located close to the ground, so it is important to ensure that sparks from them do not spread and potentially cause serious damage to the facility.
He noted that convincing investors to pay for this risk management work can be an uphill battle.
“People try not to spend money where they don’t have to, but we think there are benefits to insurance pricing from these risk management practices and, from our perspective, there are benefits as well,” Kaminsky said.
Insurance Business has contacted Marsh for comment on the losses at the Noor 1 solar power plant.
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2024-06-27 18:21:28
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