Due to high boost in solar power market in India, more competition and collapsing tariff bids, Indian Insurance companies have introduced new products to safeguard lenders and developers.
Solar energy shortfall insurance policy has been launched by HDFC ERGO General Insurance Company. This policy would offer protection to lenders and developers against any shortfall occurring in solar power generation because of non-physical damage. These damages would include sub-optimal design, lower-than-expected solar radiation, and error in determination of yields during the design phase.
The insurance policy aims to protect the project operators against any financial liabilities that they may encounter when they are not able to supply the volume of electricity promised in the power purchase agreements. This policy has been set for the duration of five years.
ICICI Lombard has also come up with a product that covers reduced generation that occurs due to physical defects in the solar panels. This insurance coverage is set for the time span of 15 years. It would offer project developers a shield against loss in generation due to unexpected degradation of solar panels and faulty manufacturing.
The feasibility of solar power projects is more or less dependent of the performance of the solar modules. According to Alok Agrawal, Executive Director, ICICI Lombard General Insurance- the risks factors associated with the solar power industry is different from the conventional power generation industry. Thus, their comprehensive solar panel insurance product would be helpful in covering different risks that are connected with developing, building, operating, owning and investing in solar power projects.
The solar power market of India which is booming fiercely has been birth to another market, which is insurance for the project developers. By October 2017, total of 15.5 Gigawatts of solar power capacity was operational. The Indian government plans to auction 77 gigawatts between Jan’18- March 2020, and more volume is under construction. Final goal is to have minimum of 100 gigawatts of operational solar power capacity by the year March 2022. Hence there is much scope to develop for insurance companies in India who are launching insurance products for solar power industry.