Too often banks are nervous about financing solar projects.  As a result, one savvy insurance company has found a way to create an insurance plan so all is not lost just because the sun doesn’t shine.

Walsh Carter & Associates Insurance services noticed that 19 out of 20 proposed solar projects requesting quotes for insurance never came to fruition, said Gordon Bowman-Jones, a principle with the company.

"The reasons projects weren’t getting financial approval is two-fold.  One, because institutions were worried the systems might not work.  And two, because solar systems lose value once installed," Bowman-Jones said. "You can’t tie-in used equipment to a grid and a bank wouldn’t want to own a solar system.  There was no way for the banks to collect if the project failed."

Walsh Carter & Associates Insurance wanted to find a way to make banks more comfortable in approving a project, allowing them to collect from the insurance company directly if anything happened.

The insurance company created SolarShield in response to the concern amongst financers about investing in commercial solar projects. It’s the first true performance warranty that guarantees minimum revenue generated by solar photovoltaic systems in the event of production shortfalls, a release said. Unlike other warranties, claims do not require proof of negligence or defect on the part of the system developer, the release said.

"Ours is a simple policy that acts as a backstop for financial institutions that are concerned about system performance,” said David Saisi, Vice President of Business Development within Walsh Carter’s solar practice. “Our policy will make up any lost revenue due to system underperformance and it names the bank or financial backer as the loss payee for any claims." 

The policy is for three years, and the financial institution is named as the “loss payee,” meaning the financier receives the check from the insurance company if there is a claim.

Covered losses include extended inclement weather, premature deterioration of system components, poor workmanship causing reduced output and any temporary sky obstruction like smoke from a forest fire. There is a vetting process for a project to get insurance, however.

Items not covered are regulatory actions requiring equipment be shut down pending safety checks or resolution of permitting or interconnect issues.

The SolarShield program covers up to 85 percent of the rated output with a 14 day time element deductible, meaning the sun has to not shine for 14 days before filing a claim.

Solar insurance is a booming business, Bowman-Jones said. Seven years ago it was unheard of.  Now there is a standard market and rates have gone down from 80 or 90 cents per total insured value to single digits of 8 to 9 cents, he said.