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US Solar Industry Must Prepare its Assets for Wildfire Season - GCube Underwriting Limited

20 Jul 2021

The U.S. solar industry must take transparent action to mitigate wildfire risk over the coming months or face the possibility of significant losses this summer. This is according to GCube Underwriting Limited (“GCube”), the longest-running renewables underwriter, which has previously identified wildfire as a growing source of loss for both wind and solar power producers and insurers.

GCube’s recent ‘Hail or High Water’ report, analyzing a decade of industry claims data, found approximately 50% of all claims for solar asset damage due to extreme weather were caused by wildfire. GCube further estimates that wildfires alone have cost the solar industry tens of millions of dollars in losses over the course of the last decade.

The risk of further significant damage to solar panels is increasing as wildfires grow in size and severity across the Western U.S., driven by high temperatures and drought. Solar owners in this climate who do not appropriately manage this evolving fire risk leave themselves and their assets vulnerable to considerably higher losses, both through component damage, compromised operations, and in some cases, liability exposure to third parties.

Fraser McLachlan, CEO of GCube, said: “Obviously, solar projects need to be exposed to the elements in order to produce power, and while some may be robust to a greater or lesser extent in the face of most forms of extreme weather, they are all at high risk of damage during a wildfire event.

“As wildfires continue to grow in frequency and magnitude, exposing owners to much greater risk, better planning with regard to fire fighting and vegetation management must be taken into account.”

Current trade tensions further compound the risk of wildfire damage to solar infrastructure, exemplified by the recent U.S. sanctions against Chinese solar manufacturers. These strained supply networks mean damaged panels could take longer to be repaired or replaced, forcing whole arrays out of commission for months after the initial heatwave.

Moreover, a combination of insufficient fire risk management and record high temperatures as seen in Canada and the Northwest U.S. will increase the likelihood of fires spreading out of control. In addition to losses arising from damage to infrastructure, asset owners could face legal responsibility for any resulting property damage to third parties. As a result, many insurance companies have started to put blanket wildfire exclusions in place across policies to mitigate their exposure to this risk.

GCube is urging the solar industry to take the transforming nature of wildfires seriously, and to collaborate with its insurers to deploy the best means of reducing these risks. McLachlan commented: “At GCube, we recognize that wildfires are an increasing risk for solar, and as such, we take a more case-by-case, site-by-site, and above all, data-led approach to working out whether a project is significantly exposed to fire. Rather than enacting blanket exclusions, we want to work with our insureds to make sure they are taking appropriate action to prevent severe losses over the coming years, so that we can continue to provide them with cover.

“As we’ve seen in Texas earlier this year, the distributed nature of renewable energy has helped bolster the grid during catastrophes that would otherwise knock out individual power plants. For solar to continue to supply power to the Western U.S. through these crises, when the community most needs it, the industry must demonstrate that proactive measures are taken to address wildfire risk over the coming months.”

GCube | http://www.gcube-insurance.com.