The rapid growth of the U.S. solar market and the associated risks
Despite the northeastern states getting hit by one of the worst winters on record, the residential solar market had its best quarter ever. The first quarter, typically the slowest of the year for the solar market, grew 11 percent over the previous quarter and 76 percent over the first quarter of 2014.
Shayle Kann, Senior Vice President at GTM Research, stated that, “Q1 2015 provided a clear glimpse into the role that residential sector will play as a primary driver of not only solar market growth, but the overall electricity generation mix. In the first quarter of this year, the U.S. installed more residential solar than natural gas, and solar on the whole accounted for 51 percent of all new electric generating brought on-line. We expect more than 3 million residential solar installations over the next five years, marked by a broader trend toward customer engagement in energy usage, generation and management.”
Solar continues to be the fastest-growing source of renewable energy in the United States. The U.S. is expected to generate enough solar energy to power approximately 8 million homes by 2016, offsetting 45 million metric tons of damaging carbon emissions. This is the equivalent of eliminating 10 million cars from the road. According to the U.S. Community Solar Outlook 2015-2020 report conducted by GTM Research, there are 24 states with at least one community solar project operational, and 20 states have or are in the process of passing community solar legislation. California, Colorado, Massachusetts, and Minnesota are prepared to install the most community solar during the next two years, and these states alone are responsible for more than 80 percent of installations over the next two years.
Chairman and CEO of XPRIZE, Peter Diamandis, claims that there are 3 technological changes responsible for the growth of the U.S. solar and energy market as a whole:
- The falling cost per watt of silicon photovoltaic cells, which has plummeted from $76 in 1977 to less than $0.36 today
- Satellite-earth imaging enabling companies to make swift and accurate decisions to determine if a rooftop is suitable for solar panel installation
- Significant improvements in battery storage allowing for more of the solar energy captured during the day to be time-shifted it to the night
With U.S. solar installations growing at a record pace, there are a number of risk factors project owners should consider, including:
- Contractor & equipment risks: Contractors should be experienced with solar installations and local building and electrical codes. Quality, warrantied equipment and appropriate racking and mounting technologies should be used.
- Project siting: Consider inherent location risks including windstorm, weight of ice snow and water intrusion.
- Fire Safety: Installations may have a significant effect on firefighter’s ability to respond to a fire, including electrical the shock (from energy generated from the panels even after power to the building is cut), the panel’s influence on the integrity of the roof/building during a fire and overall roof accessibility.
In a time of rapid growth, the management of risks like these is critical to success of the project and key to its insurability.
About the Author
Matthew Rist is an Area Assistant Vice President and a member of Gallagher WGA’s Renewable Energy and Clean Technology team. He provides risk management and insurance solutions to clients in the energy and clean technology areas, working closely with them to help design, negotiate and implement comprehensive insurance programs.