Renewable Energy Construction Insurance: Solar, Wind & Battery Projects

Key Takeaways

Renewable projects require EAR coverage with technology-specific extensions
Serial defect provisions are critical—one faulty component type can affect entire fleet
Battery storage (BESS) faces increasing underwriter scrutiny due to fire risks
DSU coverage is essential given PPA commitments and lender requirements
Offshore wind requires comprehensive marine construction programs

The Renewable Energy Insurance Landscape

Renewable energy construction is booming globally, with solar, wind, and battery storage projects attracting billions in investment. But these projects present unique insurance challenges that traditional construction coverage may not address.

Key differences from conventional construction:

Technology risk: Rapidly evolving technology with limited loss history
Serial exposure: Hundreds of identical components create concentration risk
Performance requirements: PPAs demand specific output levels
Weather sensitivity: Both risk factor and revenue driver
Remote locations: Access challenges and limited infrastructure

Coverage by Project Type

Solar PV Projects

Utility-scale photovoltaic installations, rooftop commercial solar, and concentrated solar power (CSP) facilities.

Key Risks

Panel defects and degradationInverter failuresHail and weather damage

Coverage Focus

EAR/CAR with technology-specific extensions, serial defect coverage, performance guarantees

Wind Projects

Onshore and offshore wind farms, from single turbines to multi-gigawatt installations.

Key Risks

Blade damageGearbox/generator failuresLightning strikes

Coverage Focus

EAR with LEG3 defects cover, marine coverage for offshore, serial loss provisions

Battery Storage

Grid-scale lithium-ion and alternative battery energy storage systems (BESS).

Key Risks

Thermal runawayFire propagationCell degradation

Coverage Focus

Specialized BESS policies, strict fire protection requirements, testing protocols

Green Hydrogen

Electrolyzer facilities, hydrogen storage, and associated infrastructure.

Key Risks

Electrolyzer technology riskHydrogen handlingIntegration complexity

Coverage Focus

Bespoke coverage, significant prototype risk evaluation, careful deductible selection

Essential Coverage Components

Erection All Risks (EAR)

Core construction coverage for renewable energy installations.

Typically Includes

Physical damage during construction
Testing and commissioning
Materials in transit
Temporary works

Key Considerations

Ensure coverage extends through performance testing period; verify serial loss provisions

Delay in Start-Up (DSU)

Lost revenue when projects are delayed due to insured damage.

Typically Includes

Gross profit/revenue
Fixed costs
Debt service
PPA penalties

Key Considerations

Critical for projects with PPAs; indemnity period should match delay risk exposure

Third-Party Liability

Protection against claims from injuries or property damage.

Typically Includes

Bodily injury
Property damage
Pollution liability
Products liability

Key Considerations

Higher limits for offshore wind; pollution coverage for battery projects

Professional Indemnity

Protection for design and engineering errors.

Typically Includes

Design defects
Engineering errors
Project management failures
Supervision issues

Key Considerations

Essential for EPC contractors; verify coverage extends to subcontracted design

Defects Liability (LEG3)

Covers resultant damage from defective materials or workmanship.

Typically Includes

Damage resulting from defects
Serial defect provisions
Improvement costs (limited)

Key Considerations

Critical for technology risk; understand exclusions for the defect itself

Marine Cargo & DSU

Protection for equipment in transit, especially for offshore.

Typically Includes

Turbine components
Cable laying vessels
Foundation elements
Installation vessels

Key Considerations

Offshore wind requires comprehensive marine program; transit delays can be critical

Technology Challenges for Insurers

Renewable energy technology evolves faster than insurance underwriting data. Key challenges:

Serial Defect Risk

A defect in one component (e.g., turbine gearbox, solar inverter) may exist across all identical units.

Impact: Potential for catastrophic loss if hundreds of components fail simultaneously.

Solution: Serial loss clauses limiting exposure; diversified supplier strategy; thorough testing protocols.

Prototype Technology

New technology generations (larger turbines, new battery chemistries) have limited loss history.

Impact: Underwriters cautious; higher premiums; restrictive terms.

Solution: Provide detailed technical documentation; engage with insurers early; accept higher deductibles for new tech.

Performance Guarantees

Projects must meet specified performance levels to satisfy PPAs and lenders.

Impact: Underperformance may not be physical damage—coverage gaps.

Solution: Specific performance guarantee insurance; careful contract drafting; realistic P50/P90 assumptions.

Battery Fire Risk

Lithium-ion battery thermal runaway can cause severe, difficult-to-extinguish fires.

Impact: Insurers increasingly cautious on BESS; some decline cover entirely.

Solution: Best-in-class fire suppression; thermal monitoring; cell-level protection; spacing requirements.

Supply Chain Concentration

Limited manufacturers for key components (turbine OEMs, inverters, cells).

Impact: Replacement delays; OEM warranty dependencies; lack of alternatives.

Solution: Contingent business interruption; long-lead item storage; diversified suppliers where possible.

Battery Storage: Special Considerations

Battery Energy Storage Systems (BESS) present unique underwriting challenges that have led many insurers to become cautious or decline coverage entirely.

Fire Risk is Paramount

Multiple high-profile BESS fires have made insurers extremely cautious. Expect detailed fire protection questionnaires, minimum spacing requirements, thermal monitoring mandates, and potentially exclusions for certain battery chemistries or configurations.

Insurability Requirements for BESS

Fire detection: Cell-level thermal monitoring with automatic shutdown
Suppression: Clean agent or water mist systems meeting NFPA 855
Spacing: Minimum distances between containers/units
Ventilation: Adequate airflow to prevent thermal buildup
BMS: Advanced battery management with proven track record
Testing: Cell-level testing protocols before installation

Offshore Wind: Marine Complexity

Offshore wind projects require comprehensive marine construction programs that go far beyond standard EAR coverage:

Installation vessels: Specialist jack-up vessels and cable layers are expensive and limited
Marine transit: Turbine components transported by sea face significant exposure
Foundation risks: Monopiles, jackets, or floating foundations each have specific risks
Cable installation: Submarine cables are costly to repair with long lead times
Weather windows: Limited installation seasons create schedule pressure

Real-World Claims

Utility-Scale Solar Farm

Incident

Hailstorm damaged 40% of installed panels during late-stage construction.

Loss: $12 million in panel replacement and project delays

Coverage Response

EAR policy covered physical damage; DSU covered 3-month delay to COD

Key Lesson

Weather exposure during construction is significant; consider protective measures for installed panels.

Offshore Wind Farm

Incident

Installation vessel grounding caused damage to foundation and delay in turbine installation.

Loss: $45 million including vessel, foundation, and delay costs

Coverage Response

Marine construction policy covered vessel and foundation; DSU covered revenue loss

Key Lesson

Marine risks are substantial for offshore; comprehensive marine program essential.

Battery Storage Facility

Incident

Thermal event in one container propagated to adjacent units during commissioning.

Loss: $8 million in equipment; facility required complete redesign

Coverage Response

Fire damage covered but claim disputed on design adequacy; eventually settled

Key Lesson

BESS fire protection must exceed minimum requirements; spacing and suppression are critical.

Onshore Wind Project

Incident

Serial gearbox defect identified across 15 turbines after commissioning.

Loss: $25 million in replacement costs and lost generation

Coverage Response

LEG3 defect cover responded for resultant damage; OEM warranty covered gearboxes

Key Lesson

Serial loss provisions essential; coordinate with OEM warranties carefully.

Market Trends

Trend	Insurance Impact
Offshore Wind Growth	Increasing demand for marine and offshore construction expertise; larger turbine sizes pushing technology boundaries
Battery Storage Expansion	Insurers developing specialized BESS products; strict underwriting requirements around fire safety
Floating Solar	Emerging technology with limited loss history; marine and anchoring risks add complexity
Green Hydrogen	Very limited insurance track record; prototype-level underwriting; significant technology risk
Repowering Projects	Replacing aging turbines/panels introduces demolition and interface risks
Hybrid Projects	Solar + storage + wind combinations increase complexity and coverage coordination needs

Best Practices

Engage insurers early: Complex renewable projects benefit from insurer input during design phase—not after contracts are signed.
Provide technical detail: Underwriters need component specifications, OEM track records, and testing protocols to offer competitive terms.
Address serial risk explicitly: Negotiate serial loss provisions that balance insurer concerns with project economics.
Coordinate with OEM warranties: Ensure insurance and warranties complement rather than conflict—avoid coverage gaps.
Plan for operational transition: Construction policies expire at COD; ensure seamless transition to operational coverage.
Document commissioning carefully: Many claims arise during testing; thorough documentation supports claims.

Developing a Renewable Project?

Our advisors specialize in renewable energy construction insurance. We can help you structure coverage that satisfies lenders, protects your investment, and addresses technology-specific risks.

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