RKH Specialty Insurance Aspects of Solar PV

Energy Cork Conference

RKH Specialty

Energy Cork Conference

29th January 2016

What do we do…?

RKH Specialty has a specialist team for the placement of Renewable Energy PROJECT SPECIFIC

INSURANCE for the following technologies:

• Onshore Wind Farms

• Large-scale, ground based solar photo voltaic parks – around 10GW currently placed

• Concentrated solar power; both parabolic trough and power towers. In Europe & North Africa

• Hydro electricity plants

RKH Specialty

• Anaerobic digestion, bio gas

• Biomass

• Waste to energy, gasification

• Geothermal

• Wave or tidal marine energy devices

• Cover advice & recommendation

• Policy Placement

• Risk Management Services

• Due Diligence Services

• Dedicated Claims Handling

• Financial Closing Services

• Consultancy Services

Our Experience… We have International experience including Europe, Latin America, USA & Canada.

Our Claims understanding and experience allows us to obtain solutions to indemnify our clients faster.

• Solar Power

� Around 10GW International solar power currently placed on behalf of our clients.

� From single site installations to large multi site portfolios, ranging in sizes, across several continents both ground and roof top based.

� We arrange the insurances for all stages including development, construction and through to operation.

� We have developed an extremely broad Wind Farm Policy Wording, extended where necessary

RKH Specialty

� We have developed an extremely broad Wind Farm Policy Wording, extended where necessary after each financial project close to incorporate any new extensions required.

• Wind Power: � Over 20 years experience placing Wind Farm Insurances.� We have placed the largest Construction Onshore Wind Farm in the US at the time. � Over 20GW placed into global insurance markets.

• Hydro Power:

� We have placed over 300MW into the London Insurance markets.

� Insurance placements for both Dam plants and run of the river projects

Solar Power Experience…

• Since the European Feed-in Tariffs for large-scale, ground based solar was introduced, with falling panel prices, we have experienced a huge increase in installed capacity

• Favored as investments by Pension Funds and Debt Finance Banks.

• Around 10GW International solar power currently placed into the London and European Insurance Market

RKH Specialty

• Commercial scale ground based projects plus residential portfolios and industrial rooftop installations.

• Consolidation of operating portfolios, more attractive to insurers due to economies of scale.

• Claims trends: - Eastern Europe – theft. - UK – Flood. - South America - Hurricane and Storm Damage. - Worldwide – Electrical Transformer and Inverter failures.

Why buy Insurance…

• Made mandatory by debt finance parties under the Finance Agreement!

• Protecting Gross revenue from generation interruption.

• Protecting against Natural Catastrophe events, ‘Force Majeure’.

• Protecting against theft, malicious and accidental damage.

• Protecting against loss of revenue resultant from damage to grid export equipment.

RKH Specialty

• Protecting against Mechanical and Electrical failure (limited exposure with PV).

• Protection against manufacturers defects.

• Peace of Mind – be a prudent operator…..

Key Exposures/ Risk Mitigation…

• Natural Event (Natural Catastrophe events including Earthquake, Peatslide, Flooding,

Tornados, Typhoon, Hurricane)

Have Perils been considered during technology design, particularly the support structures,

are the electrical joints elevated etc.

• Testing and Commissioning Issues

Extent of Manufacturers Warranty/ Service Agreement and Experience of EPC Contractor.

• Malicious Damage

Site Security, minimum requirements of pallisade fencing, CCTV, armed guards (depending

RKH Specialty

Site Security, minimum requirements of pallisade fencing, CCTV, armed guards (depending

on territory!) etc

• Theft

Site Security, particularly storage during installation, are the cables buried etc.

• Weight of Snow

Robust Operation and Maintenance Program and design?

• Single Export Transformers

Level of Service Agreement and availability of spare.

• Electrical failure of transformers and inverters are the main exposure.

• The largest claim in the Renewables market in the last 12 months was a hurricane loss

during the construction of a PV project in Mexico last year at a cost to insurers of EUR

40,000,000.

Strong Risk Management…

• Robust design for relevant exposures at each site.

• Quality and Experience of EPC and O&M Contractors.

• Spare Part Availability and Level of Service Agreement.

• Extent of proven panel durability to aggressive wind speeds.

RKH Specialty

• Good Housekeeping’ – vegetation control.

• Bankability of the manufacturers warranty.

• Export transformer service agreement.

• Ongoing Site Security – review and maintenance.

• Secure storage of equipment for items whilst on site awaiting installation.

Information is key…• Material Damage Replacement Values.

• 12 Month Loss of Revenue estimate.

• Site Location; Longitude and Latitude, post code.

• Equipment used, Equipment record, make and model numbers…

• Warranty Status.

• Detailed Service Agreement and Maintenance Program.

RKH Specialty

• Implemented Security Measures.

• Experience of EPC Contractors.

• Lead Time of Critical Components.

• Spare Parts Held on Site.

• Build Period.

• Proximity of non owned property to the project site.

• Insurance claim history.

• Lease Agreement between rooftop and project owner, where appropriate.

Solar Insurance Market and things to consider…

• Highly Competitive, so many insurers in the solar market driving down premiums.

• Minimal failure rate experienced therefore looked favorably upon by insurers.

• Quality improvements in technology and manufacturing and installation methods.

• Improved availability and lead times for replacement parts.

• Irish market looked upon kindly in order to balance underwriting book due to significantly

RKH Specialty

• Irish market looked upon kindly in order to balance underwriting book due to significantly

less Natural Catastrophe exposures when compared to other parts of the world.

• Defects are rare.

• Robust manufacturers warranties.

- Excess Levels

- Breadth of Cover

- Indemnity periods

- Wrap around Insurances’ to Warranties and EPC contractors insurances.

Solar Power Failures – Example

RKH Specialty

Solar PV claim in Italy - Example

• Storm Damage to 48MW PV Farm

• Total Paid: EUR 260,000 (for both Property Damage costs and interruption to revenue)

• We appointed a Loss Adjuster from the Italian office of our preferred Loss Adjusters in London who immediately visited the site and offer assistance and commence investigations.

RKH Specialty

11

• We helped to review the documents and evidence to get the matter settle.

• A great result for both insurers and client as the site was then able to get back up and running sooner than anticipated by prompt, pro active action.

• We were also able to negotiate a more favourable deductibles for the client arguing that although the loss occurred during a Hail Storm, the overwhelming majority of the damage was as a result of wind and water damage and that the much higher Hail deductible should not apply.

Claims experience & method

To date in our years assisting clients with their PV plants, we have experience with claims

settlements for losses including:

• Substation failure

• Cable, Panel and Inverter Theft and attempted Theft

• Malicious damage

• Inverter failure

• Storms

• Wind/ Hail Damage

RKH Specialty

• Wind/ Hail Damage

• Lightening Strike – Metallic – Low Landscape

• Flooding

• Landslide

• Fires

• Electrical Breakdown

• Weight of Snow

• Poor Quality Frames for panels

• Hot Spots

Contact Us

Oliver Litterick

Divisional Director

T +44 (0) 207 456 9320

M +44 (0) 79907 33484

E oliver.litterick@rkhspecialty.com

RKH Specialty

RKH Specialty

One Whittington Avenue, London, EC3V 1LE, United KingdomT +44 (0)20 7456 9300 F +44 (0)20 7456 9399 E enquiry@rkhspecialty.com

www.rkhspecialty.com

RKH Specialty is a trading name of R K Harrison Insurance Brokers Limited (RKHIB), which is an appointed representative of R K Harrison Group Limited. R K

Harrison Group Limited is authorised and regulated by the Financial Conduct Authority in respect of general insurance business. RKHIB is registered in

England No. 6720048. Registered Office: 16 Eastcheap, London EC3M 1BD. Calls may be monitored and recorded for quality assurance purposes.