Insurability of PV Performance Liability and its Impact on Overall PV Financing Costs

To maintain or even go beyond today’s level of 100GW PV installation per annum, the PV industry must attract over USD 100 billion new investment each year. A five-basis-point difference in overall financing cost, either for PV project financing or PV manufacturer’s corporate financing would therefore mean USD 500 million difference in bottom-line for the PV industry.One popular method to reduce overall financing cost is to transfer PV manufacturer’s 25-year performance liability to the insurers. This would allow both PV project and manufacturers to leverage insurers’ strong balance sheet for credit enhancement and financial flexibility. However, to achieve this, insurers must establish the technical and financial basis commensurate with the risks they will take on and be able to price the risk accurately.This paper summarizes the minimum requirement for PV performance insurance, insurer’s pricing considerations, and presents a financial roadmap for sustainable PV development.