Page 22 - Insurance Times June 2019

the insurance company within 45 days of the end of the The Solar Panel Warranty Insurance caters to solar park
applicable energy shortfall policy year. developers, with the park owner as the insured and sole
beneficiary. The policy safeguards the insured against
According to the company's insurance policy document, the performance degradation of PV modules, under
maximum amount HDFC Ergo would pay for a loss arising performance warranty due to the following hazards:
from any one energy shortfall policy year is the amount Faulty manufacturing
shown as the Energy Shortfall Annual Limit in the
Material defects
Declaration/Policy schedule. If the energy shortfall policy
Material ageing
year is less than one year in length, the applicable Energy
Shortfall Annual Limit would be reduced proportionately.
Future Ahead
This policy would not apply to insure installations that are India continues to be the country having highest GDP
under construction or in operational testing. growth rate . This coupled with growing urbanization and
manufacturing activities are all contributing to India's
Regular solar panel guarantees are: energy needs. We are also having a global pressure to
reduce the carbon footprint and hence we have to work
5+ years product warranty
hard on our pledge to reduce these emissions. India's
10 years on 90% performance output government has set itself an ambitious target of generating
25 years on 80% performance output. 40 per cent of its energy from renewable sources by 2030 -
with the aim of meeting the country's rapidly growing
In case a solar system is underperforming or certain PV demands, which are currently largely met by coal and oil.
panels are having some defect, under the guarantee The country's heavy reliance on fossil fuel adds strain to our
conditions, the manufacturer will support in the form of foreign exchange reserve and finances.
solar panel replacements or additional PV power.
The renewal energy sector is labour intensive. It requires a
good number of skilled / semi-skilled manpower. As per one
Now suppose if a manufacturer goes bankrupt or due to
estimate India's expansion of wind and solar power over the
some reasons is unable to pay for the warranty he has
next five years could generate 330,000 jobs in areas
promised, then to cover such types of risks ICICI Lombard
including manufacturing, project design, construction,
has started to sell a specific solar energy centric insurance
business development, and operations and maintenance,
policy which is Solar Panel Warranty Insurance Policy.
according to a report by the World Resources Institute.
This policy now covers the solar park developers by insuring
As such the solar sector is going to continue as a sector
the park owners. The standalone insurance product gives
having lot of activities in near future providing good
comfort to lenders and investors and is a perfect solution
business opportunity to insurance industry also.
to support project finance.
References
Solar energy is poised to become a key source of renewable
1) https://www.businesstoday.in/current/corporate/solar-
energy base in India, in the long run. The viability of solar
industry-wishes-big-growth-next-year/story/302870.html
power projects depends largely on the performance of the
2) https://sdg.iisd.org/news/solar-energy-installations-in-
solar modules. Also, the risksassociated with this industry are
2017-topped-gas-coal-and-nuclear-combined-amid-
different compared to the conventional power generation
steady-growth-in-renewables/
sources, such as thermal power plants. Thus, a
3) https://www.hdfcergo.com/documents/downloads/
comprehensive solar panel insurance product would help in
policywordings/Solar-shortfall-policy-wordings.pdf
covering various risks associated with developing, building,
4) https://www.solarinsure.com/solar-panel-extended-
operating, owning, and investing in solar power projects.
warranty
This policy is a long-term product in which solar park 5) https://www.icicilombard.com/insurance-information/
developer is protected for at least 15 years from the start travel-insurance-info/article/solar-panel-warranty-
date of commercial operation of solar parks. This will make insurance-launched-by-icici-lombard
the energy transition cheaper and generate more economic 6) https://www.thenational.ae/business/energy/renewable-
value. energy-india-s-next-employment-boom-

22 The Insurance Times, June 2019