PHOTOVOLTAIC INSTALLATIONS Equipment Overview / Property Insurance Exposures and Underwriting Considerations
November 8, 2011 Presenters Equipment Overview / Property Insurance Exposures and Underwriting Considerations
Robert Beck Rick Pizzella Senior Vice President, Engineering Principal Engineer Corporate Insurance Partners Emerging Technologies Munich Reinsurance America, Inc. The Hartford Steam Boiler Inspection & Insurance Company
2 Agenda
Introduction
Photovoltaic Equipment Overview
Property Exposures
Questions and Answers
3 PHOTOVOLTAIC EQUIPMENT OVERVIEW What are Photovoltaics?
Photovoltaic (PV) cells (or solar cells as they are often called) are semiconductor devices that convert sunlight into direct current (DC) electricity.
1950s era PV cell laid over a modern crystalline silicon cell
Photo Courtesy of DOE/NREL 5 PV Cell Types
PV Cells – Old and New
Thin Film . Crystalline silicon . Thin film Multicrystalline . Multi-junction . CIGS
Single Crystalline
Photos Courtesy of DOE/NREL 6 Crystalline Silicon
. Cells built on a silicon- wafer substrates ‒ Generally ~350 microns thick . Proven technology . More efficient than thin film ‒ Commercially used cells ‒ 13 - 19% efficient BP Solar’s Product Line of Crystalline Silicon Modules for Residential and . More expensive than thin Commercial Buildings film
Photo Courtesy of DOE/NREL 7 Thin Film
. Inexpensive substrates used – e.g., stainless steel coil stock . A thin layer of PV material is then applied to this substrate – Generally ~3 microns thick . Example PV materials include – Amorphous Silicon (a-Si) – CdTe Thin Film Solar Cell – CIGS . Commercially used thin-film cells are 7–14% efficient
Photo Courtesy of DOE/NREL 8 PV Configuration Definitions
. PV Cells are configured into modules . Modules are configured into factory sealed units called panels . Panels are connected in series into strings . Strings are connected in parallel to form arrays
A failed panel must be replaced with a panel having exact characteristics to avoid mismatch
9 PV System Configurations
Stand-Alone PV System
Grid-Connected PV System
Source: http://www1.eere.energy.gov 10 Standard PV Hardware
. Inverter (power conditioning unit) – Convert DC electricity to AC . Panel mount – keep the panel oriented towards the sun . Combiner boxes – consolidates strings . Storage – store extra energy (batteries) . Fuses, disconnects, and diodes
Photo Courtesy of DOE/NREL 11 PV Hardware Inverter (PCU)
<< Large Inverter
Microinverter >>
. Used to convert DC to AC . 10 year life expectancy . Should be at least 90% efficient . Microinverter alternative
Photos Courtesy of DOE/NREL 12 Mounting Systems Fixed
Fixed Position . Cost effective but inefficient . The racks & panels are set in one position (typically angled at 30o facing southward) Rack System . Ballasted Racks . Penetrating Racks
Fixed Position Flat Panel Ballasted Array
Photo Courtesy of DOE/NREL 13 Mounting Systems Tracking
Single Axis Solar Tracker Dual-Axis Solar Tracker
Single Axis Multi Axis . East to West . East to West . Horizon
Photos Courtesy of DOE/NREL 14 Building Integrated PV (BIPV)
. PV systems are being integrated into building components and materials . PV integrated into building awnings, windows and rooftop shingles
<< Awning
Windows >>
<< Shingles
Photos Courtesy of DOE/NREL 15 Energy Storage
Battery banks
Mainly used in stand-alone systems
Additional hardware required
Charge controller
Battery Bank Installations
Photo Courtesy of DOE/NREL 16 PV Cooling
. Heat degrades PV performance . Panels are cooled using: – Heat sinks – Specially designed aerodynamics that promote cooling – Hybrid panels with water jacket
Photo Courtesy of DOE/NREL 17 PHOTOVOLTAIC INSTALLATION EXAMPLES PV Installation Types
Residential
Non-Residential (Commercial)
Utility Type
19 Residential Installations
Single-family residential homes Multi-family residences
Photos Courtesy of DOE/NREL 20 Non-Residential Installations Hyatt Regency – New Brunswick, NJ
Rooftop PV Solar
. Fixed flush mounted panels . Peak power – 421 kW . Area – 32,000 sq. ft. . Tracking – none
21 Non-Residential Installations Munich Re – Princeton, NJ
Photo Courtesy of Munich RE
Solar Parking Canopy 2.5 MWp
Photo: Artist rendering of a SunPower Corp. solar power canopy similar to the one planned for Munich Reinsurance America, Inc.’s Princeton area headquarters. 22
Non-Residential Installations Other Stand-Alone Installations
Portable trailer PV generator Farm water pump PV system
Photos Courtesy of DOE/NREL 23 Utility Type Installations
Waldpolenz Solar Park, Germany Bavaria Solarpark
Peak Capacity: 40 MWp Peak Capacity: 10 MWp Area: 495 acres Area: 62 acres Panels: 550,000 - First Solar (72W) Panels: 57,600- Sharp (200W) Type: Thin Film CdTe Type: Crystalline Silicon Inverters: Siemens 24 FIRST PARTY PROPERTY EXPOSURES Solar Projects – Underwriting Considerations
Design Standards & Manufacturing
Insurance Coverage
Risk Management
Hazards and Insured Perils
Contractual Issues
26 Design Standards and Manufacturing
27 Design Standards and Manufacturing
Solyndra Files for Bankruptcy
28 http://www.solyndra.com/2011/09/solyndra-suspends-operations-to-evaluate-reorganization-options/ Design Standards and Manufacturing Considerations
. Use established manufacturers . Avoid experimental, prototypical PV . Understand equipment and warranty ‒ Inherent defects ‒ Serial defects (loss history?) ‒ Material degradation ‒ Errors & Omissions . Turnover in manufacturers . Ensure availability of spares or make replacements contingencies if spare parts are no longer available?
29 Bottom Right: Integrated Circuitry & Power Connectors Design Standards and Manufacturing Considerations
. Electrical standards (current?) Single Axis . Suitable designs for Solar Tracker emerging and rapid technology change . Properly designed for climate (temperature, Dual-Axis lightning, wind, snow & ice) Solar Tracker . Structural standards - static and dynamic loads . Site layout construction/ repair issues Photovoltaic . Age (old vs. new Concentrator equipment and parts)
Photos Courtesy of DOE/NREL 30 Insurance Coverage
. Production Tax Credit (PTC) renewed through 2012
. Investment tax credits = 30% . Modified Accelerated Cost Recovery (Tax Deduction) Federal . 50% depreciation bonus (tax deduction) . Federal grant programs . Federal loan guarantees
. Renewable Portfolio Standards (RPS) . Renewable Energy Certificates (RECs) . Feed-in-Tariff
State . Net Metering . State and/or Utility Loan Programs . http://www.dsireusa.org
The need for coverage is driven by the growth due to incentives.
31 Insurance Coverage Considerations
Existing Solar Installation
Retrofit Into Existing Property
New Construction Physical Damage, Delay in Startup, Testing
Special Covers
Photo Courtesy of DOE/NREL 32 Insurance Coverage Considerations
First Party Coverage Consideration
. Property . Equipment breakdown . Natural catastrophe ‒ Flood ‒ Earthquake . Time element
Not all policies cover all these risks.
33 Insurance Coverage Existing Solar - Property
Most commercial property policies will cover existing solar installations, however; 1.Must be owned or responsible for insurance 2.Must include values (replacement or ACV) 3.May not cover all perils a. Equipment breakdown b. Flood c. Earthquake d. Time element
34 Insurance Coverage Equipment Breakdown
Policies May Exclude Electrical Arcing
Advanced Protection Technologies 35 Insurance Coverage Equipment Breakdown
Policies May Exclude Mechanical Breakdown
Damaged pinions caused in a storm, however pictures below show potentially exposed mechanicals.
36 Insurance Coverage Retrofit Into Existing Property
What if a solar panel is added to an existing property?
1. Each policy is unique! 2. How will the policy respond? 3. There may be limitations/exclusions; a. Course of construction-COC b. Reporting c. Increase in hazard-risk change d. Testing e. Additional policies 4. Who is responsible for the insurance? a. Owner b. Contractor c. Utility d. Additional insured 5. What if existing property is damaged?
A separate policy may be needed to protect interests of project and insured as existing Insurance may be inadequate.
37 Insurance Coverage New Construction-New Location
Typically handled by a separate policy such as Erection All Risks-EAR Policy a.k.a. Builder’s Risk
Additional coverage options include: 1. Extension on an existing property policy a. Limits will apply 2. Endorsing to an existing property contract a. coverage may not be suitable for risk b. Adds additional exposure that may effect your permanent coverage
Outdoor swimming pool stadium under construction Photo Courtesy of DOE/NREL 38 Insurance Coverage New Construction - New Location
What is being covered? 1.Hard costs . Solar panels and related physical costs . Labor and materials 2.Soft costs . Directly related to construction project, no physical existence . Fees, permit costs, insurance premiums, taxes, debt service. 3. Time element considerations . Delay in start up . Advanced Loss of Profits (ALOP)
Photo Courtesy of DOE/NREL 39 Insurance Coverage Special Covers
1. “Lack of Sun” – coverage for investors to smooth results
2. Cover for availability and performance 3. Cover for carbon risks 4. Accumulation control – wind, flood, EQ, and terrorism
40 Insurance Coverage Special Covers
Solar Module Performance Warranty: 20 to 25 years 90% for years 1-10; 80% for years 11-20/25
210 Wp 200 Wp Annual degradation 0.2% 90% Claim Expected case Warranty claim: 80% Claim 1.1%
2011 2021 2036
Excessive annual degradation will may result in warranty claims.
41 Risk Management
. Material handling &transit . Emergency response – ‒ Standard operating procedures (S.O.P.) for the Installer ‒ S.O.P. for the operators or building maintenance . Experienced installers . Knowledgeable/trained operators . Errors & Omissions . Contingency plans . Maintenance and service agreements . Inspection requirements
42 Hazards and Insured Perils
. Fire, arcing, over current . Vandalism & theft . Earth movement . Frame or roof collapse . Terrorism . Weather ‒ Wind ‒ Flood ‒ Icing/Hail
Know your risks as you consider solar installations.
43 Hazards and Insured Perils
Examples of Wind, Cracking and Snow Exposures Source: Munich Re
44 Contractual Issues
. Time element exposures . Contingent exposures . Power company contracts . Service & maintenance agreement . Monitoring agreement . Jurisdictional incentive contracts
Knowing your contractual exposures helps ensure knowing your risk.
45 More Information
Robert Beck Rick Pizzella [email protected] [email protected] (609) 275-2172 (860) 722-5452
Contact your company’s Munich Re or HSB Client Manager for additional information.
46 THANK YOU FOR ATTENDING © Copyright 2011 Munich Reinsurance America, Inc. All rights reserved. "Munich Re" and the Munich Re logo are internationally protected registered trademarks. The Hartford Steam Boiler name is a mark owned by The Hartford Steam Boiler Inspection and Insurance Company.
The material in this presentation is provided for your information only, and is not permitted to be further distributed without the express written permission of Munich Reinsurance America, Inc., Munich Re or Hartford Steam Boiler.
This material is not intended to be legal, underwriting, financial, or any other type of professional advice. Examples given are for illustrative purposes only. Each reader should consult an attorney and other appropriate advisors to determine the applicability of any particular contract language to the reader's specific circumstances.