Industry insurer GCube has highlighted the need for clean energy companies and asset owners to prepare for out-of-season severe weather damage.
Insurers, including Swiss Re and Munich Re, have reported that 2018 saw the fourth-highest natural catastrophe losses of all time. In renewables, GCube highlights that extreme weather losses jumped to 15% of all claims, almost double that of previous years.
As the global climate shifts, the nature of extreme weather is likely to change, said GCube, which means means that damage will be caused outside of season and in unexpected locations.
GCube chief executive Fraser McLachlan said: “Every so often, the market gets caught out. As the climate changes, so must our expectation of when and where losses will occur.”
In particular, the insurer highlights the way that projects are often sited next to areas of high hazard natural catastrophe exposure, based on historical data.
McLachlan said: “Realistically, siting a project on the edge of a flood zone or wildfire area is no better than building one in a flood zone or the wildfire zone – it carries almost the same degree of risk.”
In recent years, GCube has seen several losses as a result of inadequate preparation for extreme weather. These events include solar panels in a Californian parking lot damaged by burning cars as a result of wildfires.
At another solar farm in Texas, unexpected flooding led to damage on fencing and construction infrastructure, causing delays and revenue loss, according to the insurance provider.
GCube advises developers to evaluate projects on a case-by-case basis.
Asset owners and insurance managers must address each project independently, rather than relying on portfolio-wide risk analyses which may overlook individual project features or weather variability, according to the company.
This involves ensuring that connected infrastructure and equipment are capable of resisting catastrophe-level events.
While turbines and solar plants are increasingly designed to resist tough conditions, such as hurricane-strength winds, this does not mean that connected infrastructure and surroundings do not pose a risk – such as trees touching transmission lines, said GCube.
McLachlan said: “Every project has a unique risk profile.
“Apart from anything. If a project causes third-party damage, the owner might be liable. Considering risk on a project-by-project basis is the best way to avoid this.”