Ahead of the curve: anticipating risks in the next wave of renewable energy technology

The technology footprint of renewable energy providers will rapidly expand in the next three years, a survey of 400 decision-makers in the industry by commercial property insurer FM has revealed.

Of the 97% of solar generators who plan to grow their capacity in the next three years, the most important approaches are:

• Increasing the number of sites – 41%
• Increasing the size of sites – 33%
• Improving the yield of sites through technology upgrades – 26%

Onshore wind operators are just as ambitious, with 95% planning to expand by:

• Increasing the size of sites – 47%
• Increasing the number of sites – 38%
• Improving the yield of sites through technology upgrades – 15%

This points to a substantial rollout of new equipment in a short space of time. With innovation advancing rapidly in the sector, this means deploying new and often untested technologies.

Many are aware of the risk this poses:

• Over half (54%) are concerned about a lack of transparency from equipment manufacturers.
• And 47% express uncertainty at the pace of technology change.

“They are right to be concerned,” says Chris Kosloski, vice president and client service manager at FM Renewable Energy.

“Although the sentiment toward emerging technology is generally positive, some of it is very new and that brings uncertainty around how well and how long it will hold up,” he adds.

Researching the hidden risks in new technology

The sector is littered with examples of what can happen when technology is poorly designed, manufactured or fitted.

Anticipating these risks requires continuous research and evaluation, says Kosloski. FM currently has around 20 research projects underway, stress testing technologies across solar, wind and battery storage.

• In solar, the main focus is on hail damage, with FM testing panel resilience to the size and speed of hailstones.
• For wind, FM is examining mechanical failure by testing blade design and performance.
• In battery storage, FM draws on hundreds of years of fire-risk engineering to understand the cause and behaviour of thermal runaway fires.

The aim is to lift the resilience of the whole sector. “As we build our risk knowledge, we want to share it more broadly to help clients select, operate and maintain the best technology available to them,” Kosloski says. “If everyone has best practices, everyone will be in a better position.”

Progress through partnership

By rigorously examining the risk profile of renewable energy technologies, FM also hopes to address a growing capacity issue in the insurance market.

“There is plenty of appetite for renewable risks, and most programs are fully subscribed,” explains Kosloski. “But the appetite is specific so you might find it very hard to get cover for hail, for example. This puts owners and operators at odds with their contractual obligations.”

A deeper understanding of the technology allows FM to separate the best projects from the rest. Allowing FM's engineering consulting services to guide clients on how to design, build and operate best in class facilities, engraining long-term resiliency into their organisation. “When insurers understand the risks better, they can provide better terms and release more capacity into the market.”

Even so, FM will not turn away any operator that is committed to minimising the risks to its renewable energy operations.

“If a prospective client shares our philosophy toward risk and they have a willingness to work with us to improve their risks, we’ll be open to partnering with them. Our primary motivation, above all else, is to develop a real partnership.”

Staying ahead of technology risks

• Location and weather conditions significantly impact the short- and long-term performance of equipment, so technology risks must be assessed in context.
• Although new products might offer a compelling performance, only technologies that have been tested in real-world environments can guarantee long-term resilience resulting in better up-time and availability.
• Engage with risk experts at the earliest stages of project planning to better understand the risks associated with certain technologies, manufacturers and geographies.

To find out more about FM’s renewable energy offering, click here.

This article originally appeared in Insurance Business Magazine.

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