SAN FRANCISCO — kWh Analytics, the leader in Climate Insurance, today announced the largest new-build, utility-scale solar project supported by the Solar Revenue Put. The solar project, located in Virginia and owned and operated by The AES Corporation (NYSE: AES), totals approximately 225 MW DC of capacity. The Virginia project is being financed by HSBC, Citi, and National Bank of Canada.
The Solar Revenue Put is structured as an insurance policy on solar production and revenue, providing protection against downside risk. The policy also serves as a credit enhancement for financial investors, allowing asset owners to achieve more favorable financing terms. Using its proprietary actuarial model and risk management software (“HelioStats”), kWh Analytics developed the Solar Revenue Put to drive down investment risk and encourage development of clean, low-cost solar energy.
A recent survey of the solar industry’s most active lenders indicates that more than 60% of the active lenders in the solar market value the Solar Revenue Put as a credit enhancement. Notably, these lenders are now offering the Solar Revenue Put proactively in their financing bids. In total, more than 2.5 GW of solar assets, including both operating and new-build utility-scale and distributed generation portfolios, have utilized financing structures supported by the Solar Revenue Put. The Solar Revenue Put has increased the amount of debt raised against assets by 10% on average.
The Solar Revenue Put is a credit enhancement that guarantees up to 95% of a solar project’s expected energy output. kWh Analytics’ wholly-owned brokerage subsidiary places the policy with risk capacity rated investment-grade by Standard and Poor’s. As an ‘all-risk’ policy, the Solar Revenue Put protects against shortfalls in irradiance, panel failure, inverter failure, snow, and other system design flaws. The Solar Revenue Put provides comprehensive coverage that banks rely upon, enabling financial institutions to more easily finance solar projects on terms more favorable to the sponsor.
About kWh Analytics
kWh Analytics is the leading provider of Climate Insurance by using our proprietary database of renewable energy project performance of over 300,000 operating assets — the world’s largest database — to underwrite insurance policies for renewable energy, backed by the world’s most trusted insurers. To-date, we have insured over $3 billion of American solar power plants with our first insurance product, the Solar Revenue Put. kWh Analytics is funded by venture capital and the US Department of Energy. To learn more, please visit www.kwhanalytics.com, connect with us on LinkedIn, or follow @kWhAnalytics on Twitter.
Solar Revenue Put production insurance supports Arava Power, Paz Oil and Menora’s US solar debut in a $200m senior secured credit facility lead by Nomura.
SAN FRANCISCO–kWh Analytics, the market leader in Climate Insurance, today announced a partnership with Arava Power, Paz Oil and Menora Mivtachim to provide production insurance to optimize debt terms on a 270MWdc utility-scale solar project in Uvalde County, TX.
Arava Power, Paz Oil and Menora Mivtachim utilized the Solar Revenue Put from kWh Analytics to de-risk their solar investment in the United States and enhance the project’s financial success. The Solar Revenue Put is an insurance policy covering solar production to provide protection against downside risk. The policy allows asset owners to achieve more favorable financing terms via additional debt or optimized loan terms, providing sponsors with greater financial flexibility and stability.
“At kWh Analytics, our goal is to provide sponsors and lenders with the tools and resources they need to confidently invest in the renewable energy sector,” said Jason Kaminsky, CEO of kWh Analytics. “The Solar Revenue Put is a game-changer, offering an uplift in return on investment and reducing the risks associated with solar performance. We are thrilled to partner with Arava Power, Paz Oil and Menora Mivtachim on this venture, and are proud to be at the forefront of renewable energy investing in the US.”
Nomura led the debt financing as sole Coordinating Lead Arranger and Sole bookrunner, arranging an approximately $200 million senior secured credit facility on behalf of Arava Power, Paz Oil Ltd and Menora Mivtachim. This financing is a landmark transaction for the consortium with the project. Nomura assembled a syndicate of international lenders which includes Siemens Financial and BHI. Snapper Creek Advisors, a boutique energy advisory firm, is providing commercialization and financial consulting to the sponsors.
“We are proud to have achieved financial closing on the exceptional Project Sunray, together with our remarkable partners, Paz Oil and Menora Mivtachim,” said Arava Power CEO, Ilan Zidkony. “This Project represents the first step in our broader US expansion strategy, and we are honored by the trust and partnership of our financing partners – Nomura, BHI, Bank Hapoalim, and Siemens Financial who have helped us reach this important milestone. We were delighted to be able to work with kWh Analytics on this project, their support and professionalism were first-class, and we look forward to working together on future projects.”
“We are proud and satisfied to reach full financial close and start construction for this substantial and unique solar PV project,” said Hagai Miller of Paz Oil. “By mid-next year, we expect this project to be in full operation, producing enough electricity to power tens of thousands of households in the area. We would like to thank our excellent partners, Arava Power Company and Menora Mivtachim group and to our remarkable financing partners who put their trust in us and into this project – Nomura, Bank Hapoalim, and Siemens Financial.”
Vinod Mukani, Global Head of Nomura’s Infrastructure and Power Business (“IPB”) commented, “We are very pleased to leverage our global financial and intellectual expertise to provide a bespoke funding and financing solution to support Arava Power, Paz Oil and Menora Mivtachim as they enter the United States market. Providing superior execution in growing sectors, like renewable energy, for excellent Sponsors like these, aligns perfectly within Nomura’s business strategy and goals.”
“Nomura is excited to provide a unique financing package supporting the funding of this important project in the US for Arava Power, Paz Oil and Menora, who have talented teams and a compelling business strategy contributing toward the transition of low carbon economy,” said Alain Halimi, Executive Director of Nomura’s IPB. “We appreciate the support and creative approach from the kWh team assisting in enhancing the project’s structure and mitigating lenders’ downside risk.”
The United States has become an increasingly attractive location for international renewable energy sponsors, with growing demand for clean energy and a supportive regulatory environment. However, making long-dated investments in such a rapidly evolving industry can expose investors to risks. The Solar Revenue Put credit enhancement provides a solution for these risks by insuring the revenue generated, increasing investor confidence in renewable energy projects and their returns. This, in turn, helps to drive the growth of renewable energy and supports the transition to a clean grid.
ABOUT Arava Power
Arava Power Company (APC) is a solar Developer / IPP that pioneered utility scale photovoltaics in Israel; developing, owning and operating hundreds of megawatts over the past 15 years.
APC’s profound expertise and years of experience have allowed it to build one of the most profitable portfolios in the industry, maintaining and improving performance through excellence in development, technological innovation and advanced asset management operations.
Today, APC holds a multi-GW development portfolio in Israel and the U.S., across utility scale PV and BESS, Agri-Voltaics and Distributed Energy Systems.
Since the earliest days of the solar industry, APC has been at the forefront of the energy transition, delivering on the promise of clean, sustainable energy to power our planet’s future.
ABOUT Paz Oil Group (TLV: PZOL)
Founded in 1922 and based in Israel, Paz (TASE: PZOL; ilA+) is one of the largest energy companies in Israel, focusing mainly on fuel retail, LPG, real estate, food & convenient retail, renewables, EV charging.
Paz is a public company whose shares are traded in the Tel Aviv Stock Exchange, and it is listed on the TASE’s flagships indexes, which tracks the shares of the companies with the highest market capitalization in the stock exchange.
Paz is the largest gas retailer in Israel with about 270 gas stations and convenience retail locations and more than 60 supermarkets in the center of the cities, which is one of the leaders in Israel. Further, Paz has annual revenue of 5.3$bn, total assets of 4.5$bn and a market capitalization of over 1.3$bn. Paz is currently increasing its dedication to the energy transition infrastructure sector by beginning to install EV charging stations to its existing convenience and gas stations, receiving licenses to supply electricity to a large share of households in Israel using its hundreds of thousands existing LPG clients alongside with using the company’s knowledge for recruiting new clients, and through its acquisition of supermarkets, expanding its retail of food and energy business.
In the renewable sector, Paz Group is establishing a global RES activity focusing on utility scale solar, onshore wind and storage solutions in Europe/US and expand into neighboring countries. In Israel, Paz is focusing to become a customer-centric player in the IL electricity market by providing a variety of solutions to its customers, incl. energy and electricity, mainly to the Industrial, commercial and residential sectors.
The Group’s financial resilience, combined with advanced work methods, a highly developed service orientation and the ability to zero in on marketing opportunities, have positioned Paz as one of Israel’s top companies, with a reputation for professionalism and leadership.
Menora Mivtachim Holdings Ltd. is one of Israel’s five largest insurance & finance groups. The group specializes in asset management, manages the largest pension fund in Israel – ‘Menora Mivtachim pension and gemel’, and is the largest General Insurer in Israel and the market leader in Motor Insurance sector. The group operates through its subsidiaries, in all sectors of Life Insurance, Long/Mid/Short-Term Savings, General Insurance and Health Insurance. In addition, the group is active in the capital markets and finance sectors, including Mutual Funds Management, Financial Portfolio Management, Underwriting and worldwide real estate investments.
ABOUT Nomura
Nomura is a global financial services group with an integrated network spanning over 30 countries and regions. By connecting markets East & West, Nomura services the needs of individuals, institutions, corporates and governments through its three business divisions: Retail, Investment Management, and Wholesale (Global Markets and Investment Banking). Founded in 1925, the firm is built on a tradition of disciplined entrepreneurship, serving clients with creative solutions and considered thought leadership. For further information about Nomura, visit www.nomura.com.
ABOUT kWh Analytics
kWh Analytics is a leading provider of Climate Insurance for zero carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. The Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms, and Property Insurance offers comprehensive coverage against physical loss. These offerings, which have insured over $4 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on Twitter.
kWh has exciting news to share. This week we are introducing property insurance for renewable energy projects, backed by capacity partner Aspen Insurance. This new product plays a vital role in the company’s mission to power the growth of the clean energy industry – an industry critical to reducing greenhouse gas emissions and ultimately fighting climate change.
Having worked in environmental finance prior to joining kWh, I witnessed first hand the struggles this rapidly growing industry faced securing capital to develop and maintain assets, and recognized the critical role insurance plays in the shift to a decarbonized economy. Although I didn’t go into my career thinking I would end up in insurance, insurance solves problems, and this is why we transformed kWh from a data company into an insurance provider. I’m honored to be a part of a highly experienced team of former renewable energy asset owners, bankers, equipment designers, underwriters, and program managers at kWh, all deeply committed to making a change – a team that knows renewable energy assets better than anyone and holds deep relationships with market actors across the value chain.
I was recently asked if our company is an insurtech. After braving the floor of Insurtech Connect in Las Vegas this year, I can confidently say “yes.” We are using data to improve underwriting and solve big problems. As the custodians of the largest proprietary database of solar asset performance, kWh analyzes loss data from $50B of exposed assets to provide insights into risk management and selection. This database allows us to take a novel approach to pricing, managing, and ultimately mitigating the new risks.
However, we are not “new” – we’ve been at this for ten years. Our first product, the Solar Revenue Put, now insures over $4 billion in projects. Our new property offering is a natural extension of this platform. Using our database to bring new sophistication to the assessment of property risk and exposures for renewable assets, our property insurance introduces much-needed capacity to a rapidly growing industry at a time when traditional carriers are pulling back.
I am grateful and humbled to work with an experienced, mission-driven team at the forefront of innovation in an emerging industry. And I remain firm in my commitment to uphold the company’s mission to fight climate change through underwriting products that enable the financing of renewable assets.
Utilizing its proprietary database of over 300,000 renewable energy assets. kWh Analytics’ new solution to underwriting risk offers much needed capacity to meet the rapid growth of generating facilities
San Francisco, CA, January 24, 2023 – kWh Analytics, the industry leader in Climate Insurance, announced today the launch of their highly anticipated Property Insurance for renewable energy assets with capacity partner Aspen Insurance. This new product, which provides coverage against physical damage for solar and other renewable projects, introduces much-needed capacity to a rapidly growing industry at a time when traditional carriers are tightening their portfolio exposure.
Recent years have seen reduced limits and substantial cost increases for asset owners, with a need for new solutions to managing and underwriting risk. kWh Analytics Property Insurance brings new sophistication to the assessment of property risk and exposures for renewable assets, utilizing kWh Analytics’ proprietary database of over 300,000 renewable energy assets.
“The shift to a decarbonized economy is the largest macroeconomic revolution of our generation, and insurance will play a critical role in securing its future. Recognizing that this transformation requires a new approach to pricing, managing, and ultimately mitigating the new risks of the clean energy asset class, kWh Analytics is committed to underwriting products that enable the financing of renewable assets,” said Jason Kaminsky, CEO of kWh Analytics. “Our new property product is a natural extension of our platform, and we are pleased to partner with Aspen to bring it to market as we continue to utilize our data to accurately price risk transfer products.”
“Aspen partners with only the highest quality program managers that can offer competitive products to our client base,” commented Josh Jennings, Head of Inland Marine and Property Programs at Aspen Insurance. “We are proud to expand our offerings for renewable energy clients in support of the energy transition by partnering with kWh Analytics and their data-driven underwriting capabilities. Renewable energy is a growing segment complementary to our existing property insurance offerings.”
In addition to its insurance products, kWh Analytics is leveraging data to encourage resilient design practices. By evaluating historical operating data, the company is able to identify the most common failure modes among existing solar PV projects. The findings, which are incorporated in the Property Insurance underwriting, will be distributed to the company’s clients and broadly to manufacturers, operators, carrier partners, and investors to reinforce the further development of sustainable solar projects.
ABOUT Aspen Insurance Holdings Limited Aspen provides reinsurance and insurance coverage to clients in various domestic and global markets through wholly-owned subsidiaries and offices in Australia, Bermuda, Canada, Singapore, Switzerland, the United Kingdom and the United States. For the year ended December 31, 2021, Aspen reported $13.8 billion in total assets, $7.6 billion in gross reserves, $2.8 billion in total shareholders’ equity and $3.9 billion in gross written premiums. Aspen’s operating subsidiaries have been assigned a rating of “A” (“Excellent”) by A.M. Best Company Inc. and an “A-” (Strong) by Standard & Poor’s Financial Services LLC. For more information about Aspen, please visit www.aspen.co
ABOUT kWh Analytics kWh Analytics is a leading provider of Climate Insurance for zero carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. The Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms, and Property Insurance offers comprehensive coverage against physical loss. These offerings, which have insured over $4 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on Twitter.
Media Contact Nikky Venkataraman Marketing Manager kWh Analytics E | nikky.venkataraman@kwhanalytics.com T | (720) 588-9361
The 2022 annual report encourages collaboration and transparency to support the long-term growth of the renewable energy industry
San Francisco, CA, December 6, 2022 – kWh Analytics, the market leader in Climate Insurance and renewable energy risk management, today released their 2022 Solar Generation Index report. Utilizing operating data provided by industry collaborators and their proprietary Heliostats database, the company identified a persistent pattern of solar asset underproduction across the country.
This year’s report finds that solar assets broadly continued to perform well below expectations, with 2021 operational data showing nearly 8% average underproduction on a weather adjusted basis. Furthermore, the report breaks down project performance by vintage and operational year to highlight the fact that projects constructed after 2015 have missed P50 estimates by 7-13% in their first year of operation, a clear regression compared to production data from earlier vintages. For the first time, the 2022 report also evaluates asset performance as a function of project capacity and mount type, showing that the underperformance trend has not been isolated to any specific group of projects.
“Underperformance affects investors and lenders critical to the success and growth of solar projects,” said Jason Kaminksy, CEO of kWh Analytics. “As an industry, we must collaborate to find ways to course-correct in order to ensure the industry’s long-term financial health.”
The passage of the Inflation Reduction Act has renewed interest in zero-carbon energy assets, and the solar industry alone is expected to expand by nearly 40% over the next five years. To achieve sustainable growth and secure access to necessary capital investment, solar assets will need to exhibit financial health and stability.
“It is imperative that we continue to support the long-term success of the renewable energy sector,” said Jason Kaminksy, CEO of kWh Analytics. “To de-risk investments into zero-carbon assets and encourage resilience throughout the industry, sponsors and lenders should consider accurately priced risk-transfer products, be wary of aggressive production forecasts, and be collaborative with stakeholders to encourage data sharing.”
kWh Analytics generates this index to promote transparency and discussion within the industry. The goal is to provide stakeholders with the necessary data to continue developing and operating solar projects that ensure the industry’s continued growth, and ultimately work together towards a decarbonized future.
ABOUT kWh Analytics
kWh Analytics is a leading provider of Climate Insurance for zero carbon assets. Utilizing their proprietary database of over 300,000 operating renewable energy assets, kWh Analytics uses real-world project performance data and decades of expertise to underwrite unique risk transfer products on behalf of insurance partners. kWh Analytics has recently been recognized on FinTech Global’s ESGFinTech100 list for their data and climate insurance innovations. The Solar Revenue Put production insurance protects against downside risk and unlocks preferred financing terms, and the Renewable Energy Property Product offers comprehensive coverage against physical loss. These offerings, which have insured over $4 billion of assets to date, aim to further kWh Analytics’ mission to provide best-in-class Insurance for our Climate. To learn more, please visit https://www.kwhanalytics.com/, connect with us on LinkedIn, and follow us on Twitter.
As the renewable energy insurance market continues to grow, there are risk concerns including catastrophe exposures, inflation and supply chain challenges.
The insurance industry is well aware of the risks and knows it will require increased underwriting, risk capacity and specialized talent to adequately serve the sector.
The renewable energy insurance market is set to grow by more than $200 billion worldwide in the next decade. Solar and wind outpace other forms of renewable energy deployment in North America, while the continent trails Europe and parts of Asia in developing offshore renewable sources.
Solar, in particular, is on the rise, driven by its affordability as well as federal incentives included in the Inflation Reduction Act. Solar has experienced a 33% average annual growth rate in the last decade, according to Solar Energy Industries Association, and with that expansion comes increased exposure to natural catastrophe risks.
An October report from GCube Underwriting found that natural catastrophe and extreme weather event claims continue to hit the renewables sector with greater frequency and severity. The report found that Texas hailstorms resulted in solar losses almost twice as severe as the other top renewable losses of the last three years combined.
“This has been the year of the hail loss,” said Patrick Stumbras, president of PERse, a managing general underwriter that specializes in renewable energy. “The industry has suffered over $300 million in hail losses in 2022 thus far. Ten years ago, I would’ve told you that hail is not a problem, but the footprint has grown so large.”
This year’s hail losses were almost entirely the result of a series of severe convective storms that hit Texas between May and June. Convective storms usually include hail and high degrees of lightning strikes, and are likely to generate tornadoes. Solar installations are most vulnerable to hail, which damages solar panels and takes away their output.
Advancements in solar engineering have led to the development of panels that are more resistant by moving away from hail or turning in the right direction to protect themselves. However, the kinds of panels that are resistant to hail aren’t going to give operators the price break that they would probably want to justify purchasing them, said Ted Dimitry, energy and marine practice leader at Higginbotham.
Dimitry said supply chain issues will impact how soon hail-resistant panels can be purchased and whether they are cost effective enough to bring to market.
“There’s a function of underwriters not necessarily wanting to tell their developers and operators what materials to buy specifically,” said Dimitry. “That’s not really their place. And in some cases, there just isn’t enough data available to see which hail-resistant panels work and how long which ones last.”
Carriers have begun charging solar developers higher premiums with large deductibles in response to recent hail losses. The market hardened dramatically after a 2019 hailstorm caused upwards of $70 million at the Midway Solar project in West Texas, which damaged 400,000 of the plant’s 685,000 panels.
“In 2019 it was really cheap for a solar developer to pay someone else to take the risk at the end of the day,” said Jason Kaminsky, CEO of kWh Analytics, an insurtech that delivers data-enabled insurance for zero-carbon assets.
“It takes a while for things to change,” said Kaminsky. “In the last two or three years, clients are now realizing, ‘Oh I have to wear the risk. I’m wearing a huge deductible and a sublimit and my lender is more exposed to these risks.’”
Now that owners are more on the hook, the solar industry has begun an era of “really high innovation” to understand what’s working and what’s not, said Kaminsky.
Where the Wind Blows
Michael Bernay, CEO and managing director of PERse, likes to tell the story about how almost every CEO of an insurance company wants to have a wind turbine somewhere on their annual report showing that they’re doing renewables.
“They have no idea how to do that or how to get there, but that’s sort of the mandate that they push down into their own underwriting teams and say, ‘Look, you guys, figure it out,’” said Bernay.
The wind and solar sectors face many of the same natural catastrophe perils, such as flood, lightning and wildfire, as other industries such as construction. Wind farm underwriters are also concerned with the availability of cranes and rigging contractors to respond to repairs and installations.
Wind has experienced multiple significant loss events in the past few years, including Hurricane Hanna in 2020 and Tropical Storm Nicholas in 2021. The storms led to losses of $25 million and $35 million, according to GCube.
2021 Winter Storm Uri proved that wind is also susceptible to freezes.
“If a turbine or other facility is not insulated and hardened against severe cold weather, it’s not going to work,” said Dimitry. “It might even be damaged, but underwriters are going to want to see that that hardening has happened, that it’s been winterized, and that winterization has been maintained.”
Because wind turbine machinery breakdown isn’t automatically included in property coverage, it’s critical for insureds to make sure they’re covered there. The same goes for transformer failure, which often needs to be added to coverage or bought by a separate policy.
Dimitry said there has been a focus on increases in deductibles or retentions. Operational deductibles for wind turbines that are out of warranty are typically $250,000 and above, while older assets in the wind sector are going to have higher deductibles.
“Assets that are being built or in construction is a big focus on wind as there have been a number of installation claims,” said Dimitry. “The experience of the contractor is essential to get that priced well.”
While wind, like solar, is prone to losses during convective storms, many wind farms have monitoring systems that can identify when a lightning strike takes place.
“A quick inspection following an event is key to diminishing the potential size of a loss,” said Dimitry. “We’ve seen blades fail following a lightning strike that aren’t taken out of active service and in the worst case bring the whole turbine down. So taking the cost of the loss to insurers for a blade change out is far better than reinstating a whole tower along with the cell of the blades.”
Repair time can lead to business interruption losses, which is why underwriters like to see a preferred supplier agreement for an operator to have a crane company ready to go. If a crane company can’t supply a crane, there should be an agreement to bring somebody else quickly.
“Sometimes different operators will have a shared crane contractor in the same geographic region and some even have their own crane or cranes that they will operate in order to mitigate being charged too much or having long waiting periods,” said Dimitry.
Wind, the most prevalent source of renewable electricity in the U.S., is still in the infancy stages of offshore development. Most of the country’s existing offshore wind sources are in the Northeast. In October the U.S. Bureau of Ocean Energy Management (BOEM) finalized the first two zones for offshore wind farms in the Gulf of Mexico, one a 174,000-acre zone south of Lake Charles, Louisiana, and the other a 508,000-acre zone near Galveston, Texas. BOEM said the two areas could generate power for three million homes.
“Offshore wind is finally starting to come,” said Stumbras. “There actually is permitting going on, there are land leases, but every time you kick the football down the field, it seems that some other issue comes up with it.”
Though capacity and rates are well-maintained for fixed offshore wind, Dimitry said domestic carriers are unlikely to write 100% of any given project, instead relying on offshore underwriters in London.
“Typically those policies will be subject to tightened wordings on serial losses and using a marine warranty surveyor to monitor, approve and monitor the installation,” said Dimitry.
More Players Needed
Over the last decade, Stumbras has noticed a dichotomy of sorts surrounding the renewable energy market. Media attention on green energy and, more recently, on environmental, social and governance (ESG) requirements has led many to believe that the renewable market is constantly developing. On the inside, however, he sees a shortage of underwriters and focused investing.
“It’s cool and sexy to be in the space, if you will,” said Stumbras. “Along with that, there’s a limited amount of expertise in the space to underwrite this stuff. So you’re seeing maybe a little bit of an influx of somewhat aggressive capital coming into this space and underwriting or not underwriting these accounts.”
Stumbras is most critical of financially-backed players that enter renewables without doing their due diligence in finding underwriters who know the core sectors well. He recalls traveling to London last year to hire another renewable underwriter and being told by a headhunter, ‘Yeah, that’s great, you’re 13th in line.’”
“What you’re doing is you’re taking people who are either oil and gas or traditional power and you’re saying, ‘okay, now you’re anointed a renewable energy underwriter,’” said Stumbras. “Companies go out and take them and put their capital up.”
With the new wave of renewable players having just experienced major hail losses, Stumbras expects a lot of people to “tighten their belts” for January 1 renewals.
Bernay said insurers remain eager to enter renewables because it is brand new.
“It’s opportunistic in the sense that it is true organic growth,” said Bernay. “That’s what most insurance companies are looking for, ‘How do I grow and where is organic growth?’ It is in renewables.”
Kaminsky, whose company kWh Analytics provides a revenue floor to solar projects by using a leveraged database, thinks that renewable capacity has room to expand as carriers adopt smarter terms and conditions and better incorporate data and natural catastrophe management.
“There’s a fear of nat cat right now happening in insurance and reinsurance and there’s a history in our space of some pretty significant property losses,” said Kaminsky. “We’ve seen carriers dip their toe in and some leave and some come back, and they leave again. And really improving the quality of the underwriting — the data available for underwriting — I think is going to be needed.”
For the renewable energy market to improve profitability in wind and solar and expand into emerging sectors like offshore wind and battery storage, it must also attract and develop young talent.
When we got started in this, renewables were 2% of the premium that would go into the energy sector,” said Bernay. There has since been a noticeable shift, where renewables make up a much more significant portion of the energy sector.
“The culture has changed. Whereas before a young underwriter would see no future in renewables, today that’s the only future that you might have if you were getting into an energy related underwriting position. It’s turned full circle.”
