Sciemus launches insurance product for lack of sunlight on solar farms

Sciemus, a provider of modelling and analytics to the global insurance markets, has launched an insurance policy to protect the owners of solar farms against a lack of sunlight.

The policy pays out if levels of sunshine fall below an agreed amount - which thus reduces the output and revenues of the farm - and it is available as a hedging instrument for solar farm operators for up to 10 years.

Other lack of sun insurance schemes are available, but it is understood they are tied into property damage programmes.

The Sciemus insurance can be purchased as a stand-alone product, which makes it more affordable, particularly for the operators of smaller solar farms.

The product is index linked and pays out a fixed price per unit of lost sunlight at the end of each 12 month period. It is calculated on the sunlight either at the solar farm or at the nearest weather station.

It is currently available in Europe and North America, and Sciemus plans to roll it out into the Middle East and North Africa (MENA) region later this year.

“The problem many solar farms face is that they secure debt financing at the P95 level, leaving a 5 percent chance that the Annual Energy Production will not be achieved,” said James Ingham, head of renewables at London-based Sciemus. “We know the weather can be variable, and if sunshine levels are less than expected then the output of the farm diminishes, yet the farm operators are still obliged to pay back their bank debt.”

He added: “Our product is a very useful hedge against volatility in the weather and it provides solar farm operators with ease of mind, knowing that regardless of the weather, their cash flow is secured and they will be able to fulfil their debt obligations. And because it is a stand-alone product unconnected to property damage insurance, it is particularly attractive to smaller solar farm operators or those new to the market.”