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Linkesh Diwan, Senior Engineer, Loss Control Engineering

Discover the trend, meet the trendspotter.

The rise of commercial solar

The trendspotter

“My expertise is in renewable energy, so I help develop our guidelines for evaluating renewable energy risks, solar included. I also do technical due diligence, investigations, and inspections for Munich Re when they are looking to invest in a solar or wind farm. HSB is seeing an increase in inquiries from agents and brokers about the risks associated with solar equipment that their commercial clients invest in. They want to be educated, able to explain exposures, and how to best protect this equipment. HSB is here to help.”

Linkesh Diwan, Senior Engineer,
Loss Control Engineering

You probably don’t think about the growth of commercial solar and its effect on the equipment businesses rely on to operate. We do.

Year after year, we are seeing more and more investment in solar energy in the commercial space. The trend has been fueled by several factors, most notably the push toward decarbonization, but there are other factors at play.

The cost of electricity is rising

According to the Energy Information Administration (EIA), average electricity prices for the commercial sector have increased almost 25% in just the past two years from 10.27 cents/kWh in January 2021 to 12.79 cents/kWh in January 20231, and prices are projected to continue to rise.

Cost savings can be substantial

When a business can generate some of its own electricity, they purchase less from the grid. In addition, businesses can use solar power to decrease their rate on the electricity they do need to purchase. Many utility companies determine electric rates for the year based on maximum usage during the prior year. If a business can keep their usage lower during periods of time when they need electricity the most (say during summer months), this can keep them out of the next higher rate tier for the entire next year. This is known as peak shaving.

The cost of solar equipment is falling

The total costs associated with installing solar photovoltaic (PV) systems, including energy storage, has come down dramatically over the past decade. For example, according to the National Renewable Energy Laboratory (NREL), the cost of commercial rooftop PV (200kW) fell from $5.57 per watt in 2010 to $1.72 per watt in 2020.2

Coupling energy storage with energy generation allows a business to use the energy throughout the day and become self-sufficient. With energy storage, a system can be configured to remain online even if there is a power outage. Solar plus storage adds flexibility to the uninterrupted power supply (UPS) system and can reduce fuel consumption.

Government incentives

When clean energy investment incentives under the Inflation Reduction Act (IRA) as well as emission reduction investment incentives are considered, businesses not only stand to gain electric cost savings and improved resiliency, but also can reduce their tax burden.

How HSB is taking on the trend

Download Equipment Breakdown Solar Photovoltaic fact sheet

HSB participates in a number of industry associations including the Solar Energy Industries Association (SEIA), the American Clean Power Association (ACPA), and the American Renewable Energy Standards and Certification Association (ARESCA), helping to develop standards around clean energy. We are committed to ensuring the safety and integrity of the equipment making clean energy a possibility.

In addition to risk transfer, HSB helps our clients better understand the risks associated with solar energy through education and other resources. HSB can also provide loss control inspections of the equipment we insure. Learn more about HSB’s insurance solutions and knowledge base in the related content links below.

At HSB, we’re constantly keeping an eye out, looking for trends, studying them, and identifying solutions.

Additional resources

Related content


U.S. Energy Information Administration: https://www.eia.gov/electricity/data/browser/
National Renewable Energy Laboratory: https://www.nrel.gov/solar/market-research-analysis/solar-installed-system-cost.html

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