Zurich Risk Engineering, a division of the well-known global insurance company, released a white paper in May, “Risk Topics: Photovoltaic Systems,” outlining their guidance on photovoltaic systems. Their bottom-line recommendation from this short paper:
Avoid the installation or integration of photovoltaic systems onto or into buildings until the challenges and increased risks associated with these systems are fully understood and addressed in applicable codes and standards. As an alternative, locate photovoltaic systems at ground level separated from important buildings and structures.
Much of the guidance from the paper is good design and installation practice, like designing to local snow and wind loading requirements, observing proper structural analysis guidelines, and implementing a thorough O&M program. However, calling for an end to roof-mounted solar reaches above and beyond risk mitigation when we have codes, standards, and products on the market today to meet these needs. Zurich’s white paper sets a dangerous precedent in an industry that often marches in lockstep.
The quick and nearly industry-wide end of beachfront homeowner’s insurance in much of the Gulf and East Coasts between hurricanes Katrina and Sandy suggests the potential for rooftop solar, if other insurance underwriters release similar guidance. Guidance can quickly become exclusions. Exclusions can quickly become the difference between whether an underwriter cancels a policy outright or significantly raises it due to entering a new risk class.
For a homeowner or business investigating solar, a landscape of increased or cancelled insurance would represent a huge danger for the viability of the distributed solar market. For commercial solar, it would pose the most significant threat. Business insurance requirements for commercial properties are very different from those for homes, especially relating to structures. Codes and standards for commercial buildings differ significantly from those for residential structures.
The insurance industry remains a viable business model by mitigating and avoiding risk, which avoids claims and payouts. Their policies and riders include long lists of exclusions and requirements. Insurance as an industry is more risk-averse than banking. In the solar industry, insurance has so far played a role downstream in defining the costs and categories of worker’s compensation and business insurance. For years, many installation companies paid to cover all the risk of a roofer plus all the risk of an electrician, until the solar industry was a big enough client to warrant developing a solar worker classification.
Over the years, a few high-profile solar and fire interactions have hit the news. There was the infamous “Bakersfield” Fire, started by a ground fault in a solar energy system. At the New Jersey Dietz & Watson warehouse fire, firefighters let the whole building be consumed by the flame because of their concern over the electrical shock risk posed by the 7,000 solar panels on the roof.
In the last few years, solar codes and standards committees have begun responding to increased calls for firefighter protection in the presence of solar energy systems. Section 690.12 of the 2014 NEC defines rapid shutdown as a procedure to aid in safely diffusing the output of solar energy systems, to mitigate dangers of continuous solar output during firefighting operations. Read more about Rapid Shutdown and the 2014 Code in the April/May SolarPro article Understanding the NEC 2014 and Its Impact on PV Systems.
As an industry, solar energy has moved beyond the quaint “alternative energy” moniker. While all solar statistics of jobs and installations numbers have exploded, established industries and business models are perceiving threats, real or imagined, from this growth. Many challenges lie ahead, from asset securitization to risk mitigation to forming new relationships between solar and utilities.
As responsible solar professionals, we need to remain vigilant regarding the climate in the wider business and regulatory environments we currently interface with (or will likely interface with soon). These include insurance, electrical inspectors, union labor, and increased regulatory pressures from government. As these sectors attempt to stake a claim in the growing economy around solar, additional pressures and lobbying will continue to appear as threats.
That said, take some of this as good news. Solar is indeed growing up and, like a teenager, asserting its place in the economy as much more than a niche artifact of the back-to-the-land movement.