Some data and environmental scientists believe that to achieve critical climate goals, global annual investments in renewable energy need to be quadrupled from US $300 bn to US $1,200 bn by 2030. Shifting from fossil fuels to renewable energy solutions is very widely considered a vital step that mankind must take to protect our environment and the future of our planet.

The Insurance industry must take this mandate seriously, and commit to helping the industry facilitate the renewable energy transition. Because renewable technology requires significant investment in equipment, investors tend to be cautious — an understandable approach but one that slows progress in making the vital transition to climate-friendlier energy production. Investing in innovation always involves risk. Development of new technology inevitably includes trial and error, which can stall large-scale investment in critically needed renewable technology advancements.

To boost investor confidence and enable much needed advancements in the renewable energy transition, Munich Re Specialty is among the insurers actively supporting renewable technology at utility scale for both product manufacturers and buyers.

Commitment to solar investors and innovators

We’ve supported solar technology investments since 2009 by providing warranty insurance for PV (photovoltaic) cells and modules for up to 30 years. Our warranty insurance backs up manufacturer warranties. It provides protection against product failures and underperformance to the manufacturer and protects investors even when the warranty provider is no longer in business, a common occurrence in an industry that sees frequent consolidations. When consolidation or insolvency occurs, the policy is transferred to registered buyers, ensuring that warranty claims remain covered. We put our balance sheet behind the warranties. This is our commitment to proper risk management across the industry.

Case study: UV 60 test requirement

That commitment to the industry was recently demonstrated when TOPCon (tunnel oxide passivated contact) PV modules began to experience failures. Developed in the laboratory in 2013 and mainstreamed to mass production only in recent years, these revolutionary PV modules enabled greater efficiency and increased energy harvest. However, in the past year, scientists discovered that those modules can suffer unexpectedly high (and rapid) failure rates under UV light.

Incomplete testing by manufacturers failed to recognize the increased risk of UV induced degradation, especially on the front side of the module, as the regular IEC 61215 does not contain a UV test on the front side. Fortunately, investors backed by Munich Re Specialty are also covered against this degradation mechanism. Further testing proved that it’s possible to manufacture TOPCon PV cells that remain stable under UV stress, and Munich Re Specialty now requires that PV modules pass an additional UV60 test before insuring them, giving both the manufacturer and investor peace of mind.

Due diligence assessments

Before manufacturers can become a PV Warranty Partner, they must pass rigorous factory inspections conducted by our Green Tech Solutions Team. These inspections assess the production process and product quality in 13 categories, ranging from incoming to outgoing quality control.

Manufacturers receive a detailed scoring chart, developed in partnership with Sinovoltaics, noting any and all non-conformities, from the most minor to the most critical facets of their production process. Manufacturers appreciate the guidance they receive from these confidential reports, and they often improve their performance as a result. In a recent example, one factory improved its score from 76% to 84%.

Through these assessments, the goal is to improve the quality standard of PV manufacturing around the world, promoting the utility-scale investment that the renewable transition demands.

Enabling future investment in renewable energy technology

Over 650 utility-scale solar projects have received investment backing, with insurance partners supported in developing their solar insurance programs through technical risk assessments and tailored insurance policies.

The goal is to provide a safer way to help large-scale investors commit resources to the renewable energy transition. With a more than a 16-year commitment to renewable technologies, the Munich Re family of companies insures over 1,400 projects in 90 countries.

Details on renewable energy technology investment and the due-diligence process for PV Warranty Partners can be found here.