Page 19 - Insurance Times June 2019

Construction Risk
Setting up of a solar project is a capital intensive project.
There is a lot of movement of material and manpower, and
in that way it is the riskiest phase of the project.

The construction requires interpretation and compliance
with many laws, codes, and regulations. Arranging and
movement of considerable resources including labour,
equipment, and material adds risk factor. There is always a
possibility of property damage or liability caused from
various kinds of error during the building of the new project.
The frequent loss is reported also of the cracking of panels
when being fixed into place. Breakage and theft in transit
or during installation can also come under this category of
steps of manufacturing require lot of energy. This is one
risk.
of the criticism which solar proponents have to face on
regular basis
Sometimes start-up delays i.e., delay in construction works
may lead to huge revenue loss to various companies 2) Chemicals: To produce solar-grade silicon, semi-
involved in such projects. conductors processing typically involvesuse of
hazardous chemicals. The proper disposal of these
chemical is always under question by environmentalist.
Investor's Risk
3) Recycling: As a normal solar panel expect to have a life
It relates, to the financial uncertainty faced by an investor
who holds securities in a specific firm. Major political and span of 25 years or so solar panel recycling has not
economic events can put threat to the expected return. become a major issue yet. However it would be an
issues in coming years.
These risks are related to affecting the viability of the
project developer as there are various risks related to key Financial Risk
personnel, financial solidity, and technical ability to execute
As of now the bulk of the solar PV cells are being imported
on the plans.
from China / USA, it always carries the risk of fluctuation
of exchange rate and related risk. The trade dispute
Environmental Risk between US - China is a new risk.
There are high risks of environmental damage as well due
to the expansive size of these solar parks including any Political & Regulatory Risk
liability following such damage.
In India, we do not have an uniform policy across all states.
The regulatory challenges are different and so it the risk.
For example, large solar parks can become one of the
The incentive structure keep on changing and such policy
reasons for land degradation and habitat loss. Also, thin-film
change affect the viability and profitability of the project.
PV cells contain a greater number of toxic materials than
those used in traditional silicon photovoltaic cells which
At Operational Stage
include gallium arsenide, cadmium-telluride etc. If these
Operational Risk
materials are not handled properly then these could pose
serious environmental or public health issues. This risk relates to the period when the project is put in to
place erection and it goes in to generation phase.
Some other negative environmental effect are as follows: Operational risks can result from unforeseen and/or
1) Energy: The manufacturing process of solar panels is negligent events such as breakdown in the supply chain or
energy intensive. It is due to the transformation of raw a critical error being overlooked in the manufacturing
minerals into usable photovoltaic. Manufacturing process.
requires combining multiple materials with incredible
precision to produce high efficiency panels. All these There is always a risk of unscheduled plant closure and it

The Insurance Times, June 2019 19