Almost every solar or battery storage project reaches a point when someone asks a seemingly simple question: can we insure this project? By then, however, much of the answer has already been determined. The technology has been selected. The engineering is largely complete. Contracts have been signed. Equipment may already have been ordered or installed. Key decisions on fire safety, accessibility, monitoring, maintenance and system integration have already been made.
An insurer entering the process at this stage cannot redesign the project. The insurer can only assess the risk that has already been created. That is why insurability should not be treated as something to arrange towards the end of project development, but incorporated into a project from the beginning.
Risk starts long before the loss
When a solar installation fails, a battery system suffers a serious incident or an asset sustains major physical damage, attention naturally focuses on the event itself. But the underlying risk may have originated much earlier, during design, engineering, component selection, transport and storage, or installation and commissioning, and it may also emerge years later through inadequate maintenance, monitoring or follow-up of identified deficiencies.
The timing matters. Changing a design while a project is still on the drawing board is relatively straightforward, correcting a problem during construction is more difficult, and resolving a fundamental design or installation issue once an asset is operational can be expensive. And once risk has turned into actual damage, the discussion is no longer limited to engineering – it may involve business interruption, lost revenue, contractual liability, financing and insurance.
Risk management, not insurance, will decide the future of solar and BESS
Effective risk management therefore starts long before a loss occurs. It starts while there is still an opportunity to change the project. This is what De-Risking is ultimately about. De-Risking does not mean eliminating risk. No solar or storage project can ever be risk-free. It means identifying risks early, understanding how they may develop and interact, and taking measures to make them demonstrably manageable throughout the lifecycle of the project. The objective is to replace uncertainty with insight, control and confidence.
Good components do not guarantee a good project
The solar industry has invested heavily in improving and assessing individual components. Modules have become more efficient, inverters smarter, battery technology is developing rapidly, and monitoring and energy management systems provide increasingly sophisticated information.
All of this matters, but a project is not simply a collection of components. Consider a commercial rooftop PV installation. Modules, inverters, cables and connectors interact with the roof structure, roofing materials, electrical infrastructure, fire safety concept and the operational use of the building. Every individual component may comply with the relevant standards and specifications, yet the combination can still create an unacceptable risk.
We see this regularly in inspection practice. Installations may contain high-quality modules and inverters from reputable manufacturers, yet inspections reveal risks in cabling, connections, mounting, workmanship or the interaction between the PV installation and the building. There may be nothing wrong with the module. There may be nothing wrong with the inverter. But there can still be something wrong with the project.
Risk also sits between the components
This becomes increasingly relevant as energy systems grow more complex. Floating solar introduces a different set of interactions: the electrical installation must function alongside anchoring systems, floats, changing water levels, waves, wind loads, material movement and more difficult access for inspection and maintenance. Battery energy storage systems add another layer, with battery cells, modules and racks interacting with power conversion systems, cooling, battery management systems, energy management systems, fire detection, safety provisions, software and operational procedures. The overall risk profile is determined by how these elements work together.
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Risk therefore exists not only within individual components, but also between them. Those interfaces are not necessarily captured by a product certificate. A certificate can demonstrate that a component meets specific requirements under defined conditions, but it cannot, by itself, demonstrate that the entire project has been designed, integrated, installed and operated in a way that makes the overall risk acceptable. For asset owners, investors, lenders and insurers, that distinction is becoming increasingly important.
Project quality has a lifecycle
Project quality is also still too often assessed through a series of individual control moments. An inspection is carried out. The system is commissioned. Documentation is completed. The asset enters operation. These are important milestones, but risk does not stop developing once a box has been ticked. Solar and storage assets are expected to operate for 20, 25 or 30 years. During that time, components age, operating conditions change, software is updated, equipment is replaced and maintenance is performed. Ownership may change, and the way a building or site is used may evolve.
Decisions made during development can therefore have consequences many years later. Equipment positioning may affect future accessibility or emergency response. A design choice may influence maintainability and repairability. An undocumented change during construction may undermine the original safety concept. Incomplete maintenance records may make it difficult to determine years later whether an emerging problem was identified and addressed. Risk management therefore needs to follow the lifecycle of the asset rather than being treated as a one-off compliance exercise.
Evidence matters
This leads to another increasingly important issue: evidence. It is no longer sufficient simply to state that risks have been managed. Stakeholders increasingly need to see that they have been managed. Was the project built according to design? Were changes documented? Which inspections were carried out? Were identified deficiencies corrected? Has maintenance been performed as required? What does monitoring data show? Are responsibilities clearly allocated? What happens when abnormal behaviour is detected? Good documentation is therefore more than an administrative requirement, it is part of project quality.
This becomes particularly apparent after a serious incident, when decisions taken years earlier may suddenly need to be reconstructed. Without reliable evidence, a technical problem can quickly turn into uncertainty. And uncertainty matters to insurers, lenders and investors.
Insurance as a stress test
This is where the insurance process provides an interesting perspective on project quality. An insurer does not simply ask whether a module, inverter or battery has been certified. Ultimately, the insurer needs to answer a different question: what risk am I being asked to take? That requires looking at the complete project. When that question cannot be answered adequately, uncertainty increases. That uncertainty may translate into additional technical requirements, higher deductibles, restricted cover, higher premiums or, in more difficult cases, problems obtaining adequate insurance at all. Insurability therefore becomes a useful stress test of project quality.
Insurability and bankability
This is also where insurance and financing begin to converge. Investors and lenders depend on future cash flows, and those cash flows have value only if the asset can operate reliably and if major adverse events do not create unacceptable financial consequences. Insurance is one of the layers used to protect those cash flows and the capital invested in the project. At Solarif, we have used a simple formula for many years: No Insurance = No Financing = No Project. It should not be read as a literal financing rule for every solar or storage project, but the principle behind it is more important, since if a project is difficult to insure, the reasons deserve attention.
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What concerns the insurer? Which technical or operational uncertainties remain? Which risks have not been adequately controlled? What additional measures are required? And who ultimately carries the financial exposure? These are not merely insurance questions. They are investment questions. And increasingly, they are bankability questions.
Residual risk cannot be engineered away
This is also why De-Risking should not be confused with trying to eliminate every possible risk. That is impossible. Solar and storage assets will remain exposed to fire, storm, hail, equipment failure, human error, degradation and external events, and new risks may also emerge during an asset's lifetime. De-Risking is about understanding those risks and making conscious choices. Which risks can be avoided? Which can be reduced? Which need continuous monitoring? Which consequences can be mitigated? And after all reasonable measures have been taken, what residual risk remains, and who carries it?
Some risk will remain with the project owner, some can be allocated contractually, and some can be transferred to insurers. The important point is that this allocation should result from deliberate decisions made during project development, construction and operation, rather than being discovered only after something has gone wrong. In that sense, De-Risking is not an insurance exercise and it is not a final compliance check, it is part of building a project that can remain technically reliable, operationally stable, insurable and financeable throughout its lifecycle.
Bankability starts before financial close
Solar and battery storage are developing from innovative technologies into essential energy infrastructure. That changes the standard by which projects should be judged. Technology will continue to improve. Modules will become more efficient, batteries more sophisticated and software more powerful. But technical progress alone will not determine which projects deliver reliable returns over 20 or 30 years.
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The next level of maturity will increasingly depend on how well technology, engineering, construction, inspection, documentation, operation, maintenance and risk transfer are integrated throughout the asset lifecycle. Financial close may be the moment when a project becomes financed, but its bankability has been built long before then. A bankable project is the result of thousands of good decisions made before financial close. (Harry Wolkenfelt/hcn)
