Solar continues to dominate new electricity generation capacity added to the grid in the United States, representing over 50% of utility-scale electricity generation capacity additions expected in 2025, according to the EIA.
As solar plays a pivotal role in supply U.S. electricity, assessing risks to developing projects and operational assets is essential to inform accurate insurance underwriting and to promote resiliency of these assets.
An annual report from risk assurance firm kWh Analytics examined the top risks facing U.S. solar projects today and made recommendations for mitigating and accurately modeling these risks.
“As renewable energy becomes the backbone of the electrical grid, ensuring system resilience is no longer optional—it’s imperative,” said Jason Kaminsky, chief executive officer at kWh Analytics. “Keeping these assets operational requires unprecedented collaboration among asset owners, operators, financiers, insurers, brokers, and manufacturers.”
Extreme weather
Hail risk remains the top issue faced by solar projects. This year, while only 6% of damage and loss events are related to hail, the events represented 73% of total financial losses from weather events, said kWh Analytics.
The report warned that hail risk is something to evaluate even in regions that are not typically considered hail prone. North Carolina, not typically considered a high-risk region for hail, represented 19% of total losses incurred.
Research from Central Michigan University found that almost all (99.3%) of solar plants in the U.S. have at least a 10% chance of having hail of 2 inches near the project each year. Over a 25-year span, 100% of large-scale projects have a risk of 2 inch hail, said the researchers.
kWh Analytics recommends using wind and hail stow tracker technology, selecting solar modules with thicker, tempered glass. For fixed-axis systems, the company recommends performing torque audits and using deep pile foundations to ensure secure systems under high winds.
Research from VDE Americas shows that hail mitigation works. While the Fighting Jays solar project in Texas made headlines for having massive widespread damage due to golf ball-sized hail, three sites in the region that performed proactive hail stowing successfully weathered the 2024 storm.
The risk of hail intensifies as solar module formats get larger, glass gets thinner, and frame and backsheet configurations change. Glass breakage is on the rise, and research from Kiwa PI Berlin found that glass failures are contributing up to 10% of identified system failures, highlighting the need for procuring resilient modules.
GroundWork Renewables suggests selecting 3.2 mm glass / 2 mm glass modules over 3.2 mm glass / polymer backsheet modules. Its research concluded that glass/glass modules can withstand impact forces 1.7x greater than their glass/polymer counterparts.
Another weather risk that may be unexpected stems from wildfires. Projects can experience 6% annual revenues losses from far away wildfire smoke, according to NOAA-funded research from 60Hertz Energy. This doubles loss estimates from the 2022 risk assessment report. The problem is not just isolated to the West: about 65% of wildfires are burning in the Midwest, Northeast, and Southeast, said the report.
Operational risks
Accurately modeling the expected performance and output of a solar asset is important to ensuring it is delivering on its power purchase agreement obligations. kWh Analytics analyzed 34,000 system-months of assets in service from 2015 to 2023, finding that nationwide, assets are underperforming 8.6% below baseline financial models and loan agreements.
The report said underperformance is likely due to a combination of under-evaluated risks like extreme weather, curtailment, clipping losses, and a tendency for performance estimates to be inflated due to poorly aligned financial incentives to over-promise and under-deliver.
The risk assurance firm said this highlights the need for improved data granularity and sharper model accuracy for solar performance forecasting in order to boost investor confidence and support sustainable growth of the industry.
Cybersecurity is another risk to keep on the radar, said the report. Check Point Research reported a 70% increase in cyber attacks on utilities in 2024. As assets become highly connected and operated with advanced monitoring systems, solar and storage assets connected to the grid expand its threat surface, said the report.
Another trend is an increase of hot spots in solar modules, said research from Zeitview. Hot spots can lead to up to 30% losses per module and cause long-term damage and degradation, it said.
Hot spot prevalence increased from about 0.24% of sites to 0.81% of sites from 2023 to 2024. It said the glass cracks, clamp designs, and cell mismatches are leading causes of module hotspots. Half-cut modules consistently reported the highest rate of hot spot issues, with an uptick in 2024, said Zeitview. It recommends performing inspections and placing a focus on system component compatibility to mitigate these issues.
The report also warned that performance modeling may underestimate the impact of climate change on future performance. Clean Power Research said future climate models suggest a potential 4.9% underperformance over the next 30 years. While climate models suggest a trend of sunnier days, this benefit is expected to be outweighed by higher temperatures, and lower rainfall leading to more soiling losses. Clean Power Research said integrating climate modeling will be required for more accurate financial predictions.
Artificial intelligence may be causing issues with asset performance expectations as well, said kWh Analytics. It said that AI may misclassify up to 20% of operational issues if the model lacks domain-specific training.
An “out-of-the-box” model tested by the group incorrectly identified the root cause of critical damage categories like weather-related and damage losses upwards of 40% to 50% of the time. Continuous updating and training of the AI can help reduce these issues, it said.
“Ultimately, while AI can dramatically improve risk assessment and management in solar operations, unchecked reliance on out of the box models without and fine-tuning process poses a significant risk,” said kWh Analytics.
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