Risk Management

Solar’s Risk Challenges

New solar power technology adds clean energy opportunities as well as daunting risk challenges.
By: | October 1, 2016 • 6 min read

Misaligned mirrors at Ivanpah Solar Electric Generating System — the world’s largest solar plant — caused a fire in May that took one of the California facility’s three generators offline for several weeks.

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Unlike the much more common photovoltaic (PV) solar installations, which directly convert sunlight into electricity, Ivanpah is a concentrated solar power (CSP) facility, using thousands of mirrors called heliostats to focus intense sunlight on concentrating towers, producing steam to generate electricity.

There are substantial differences between the risk profiles of PV and CSP, and the industry as a whole is dynamic enough that accurately assessing risk is an ongoing challenge.

While vast in size — Ivanpah takes up 3,500 acres — CSP generates more electricity per square foot than PV. And using heat storage technology, CSP can continue generating power after nightfall.

CSP’s drawbacks include multiple bottlenecks or choke points. Whereas PV generally has one point where power enters, CSP has concentrating towers, steam boilers and generators — each vulnerable to outages. CSP towers are also vulnerable to lightning strikes.

“With CSP, it’s such unique equipment. The equipment is going to range much more widely with CSP products versus photovoltaic,” said Sam Walsh, senior vice president, solar PV underwriting at GCube.

“It is important to know your supply chain, and be aware of the delays that can arise.”  — Christi Edwards, vice president, clean tech segment, Chubb

That can make replacing equipment a challenge, he said.

“It is important to know your supply chain, and be aware of the delays that can arise,” said Christi Edwards, vice president of the clean tech segment at Chubb.

Christi Edwards, vice president, clean tech segment, Chubb

Christi Edwards, vice president, clean tech segment, Chubb

While CSPs generate power into the night, Ivanpah is slow to start in the morning, requiring natural gas to preheat its boilers.

With moving parts prone to wear and tear, its thermal focus and reliance on combustibles, “CSP really isn’t solar,” said Michael J. Bernay, CEO of PERse, Ryan Specialty Group’s alternative energy group. “To date, pretty much everything that’s been built has been more of a thermal project than it has been a solar project.”

That impacts CSP’s risk profile. “PV is much closer to wind risk when it is modeled for exposure,” Bernay said. “CSP is much closer to a traditional gas-fired thermal project.”

“Photovoltaic is a lot more standard, a lot less moving parts and a lot less difficult to underwrite,” said Ara Agopian, president of SolarInsure, the renewable energy division of Asset One Insurance. “We definitely have a better handle on the photovoltaic side, especially on the large commercial installations.”

PV installations are generally large utility ground mount or distributed rooftop installations ranging from single homes to massive industrial facilities. Both benefit from how ubiquitous PV panels have become; if one breaks, it has little impact and is easily replaced.

Ground-mounted PV installations are more similar to CSP in size and in risks. Both can be hit by wind events — including tornados — as well as flash floods, which can wash out support structures, especially during construction.

“The liability in any solar panel is once they’re activated, they’re generating power” — James Biggins, managing consultant and power generation practice leader, Global Risk Consultants Corp.

Both are generally in remote locations, meaning no liability from adjacent structures, but firefighters and water can be far away. Automatic fire suppression — generally gaseous or water mist types — is extremely important.

Remote facilities also may be very lightly staffed, raising other risk and liability concerns, including trespassers or vandals.

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James Biggins, managing consultant and power generation practice leader, Global Risk Consultants Corp.

With fewer moving parts to break and little in the way of lubricants or other combustibles, ground-mounted PV installations require even less staff, making security monitoring more important.

“There may be workers during the day doing maintenance, but [not] at night and many times during the day. … There are some PV sites where you’ve got the field of solar panels and the control building, but it’s all remotely operated from another facility,” said James Biggins, Chicago district managing consultant and power generation practice leader with Global Risk Consultants Corp. “There may well be nobody out there.”

Distributed PV solar rooftop installations are different. All PV produces electrical current, so there is always some fire risk.

“For rooftop installations, there is a risk to the structure underneath and there is risk to adjacent structures,” said Edwards.

Probable Maximum Loss

“With any rooftop installation, the entire system has to be viewed as your probable maximum loss, because if you lose the entire building, you’re losing the system with it,” Walsh said.

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Rooftop installations can also hamper firefighting efforts.

“If the system isn’t de-energized, you would be dealing with an electrical fire scenario,” Walsh said. “So you don’t want to be pouring water on it. One of the concerns is how project owners and operators work together with local fire authorities to plan accordingly.”

“We have had situations where we’ve had a fire, and in the attempt to try to control it, the fire department has inadvertently made it worse,” Bernay said.

Not all fire departments are properly trained to deal with putting out a fire where there’s an energized solar system on the roof, he said.

“There have been instances where a fire department shows up, realizes it’s there and chooses not to fight the fire. … Even if the fire originated in the underlying structure, if the fire department won’t put it out because of the solar system, who’s going to be held responsible for the damage that occurs?” Walsh asked.

That’s why Edwards recommends inviting the local fire department to visit any installation and create a firefighting plan. She also recommends a thorough risk assessment, as well as knowing your state’s fire code — and building to the most stringent requirements available.

The National Electrical Code recommends rapid shutdown capability and disconnecting methods. The National Fire Protection Association’s 2015 fire code stipulates adequate spacing so firefighters can move about the roof and ventilate if need be.

Walsh recommends adequate signage on all sides of a building to alert fire crews to rooftop installations.

“It’s Live Power Up There”

“The liability in any solar panel is once they’re activated, they’re generating power. There’s always power being produced anytime there’s a light source,” said Biggins. “So from a worker safety standpoint … they’ve got to always remember it’s live power up there from those panels.”

“Hurricane Sandy is probably the largest event we’ve paid out losses for in regards to solar in the U.S.,” — Sam Walsh, senior vice president, solar PV underwriting, GCube.

While the decentralized nature of distributed solar installations dilutes the risk, events like hurricanes or seismic incidents can cause widespread losses, although Superstorm Sandy was in some ways encouraging.

“Hurricane Sandy is probably the largest event we’ve paid out losses for in regards to solar in the U.S.,” said GCube’s Walsh.  His company paid $7 million to $8 million in losses.

“But what was interesting was that we probably insured 100-plus projects in the area and I think we probably only paid out on six or seven projects in total,” he said.

Those losses were less from wind damage than from the corrosive effects of wind-driven salt water.

Snow piling up on PV installations can also cause damage. It can slide off angled panels, hit cars or people, or drip and cause icy spots, all serious liability issues.

Residential solar installations can be challenging to insure too. In some states, homeowner’s coverage for rooftop solar may be virtually unavailable. Leaseback arrangements where the installer retains ownership and responsibility for insurance can be an attractive option.

“It is important for consumers to be clear about who is responsible for the maintenance of the panels installed on their homes,” said Edwards. “For the operators, it is important to make sure the installer is experienced and reputable especially if they are using subcontractors.”

One potential complication for all solar installations is when errors during installation cause problems down the road, leading to disputes between the installer’s insurer and the operator’s insurer over the cost, timing and liability of the loss.

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“The massive growth has really only taken place in the past six or so years,” Walsh said. “Once these systems enter year 10, are we going to start seeing issues crop up that will be pervasive across the industry?”

New technologies like large scale battery systems and insurance products like weather risk transfer products, which pay out for low sunlight or wind, will keep the changes coming.

“It’s a fairly new industry,” Agopian said.  “We don’t have enough data on the risk management side just yet. … But it’s increasing and improving. We’ll get better at it.” &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]