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REIB products make PV projects more bankable

REIB products make PV projects more bankable

Renewable Energy Insurance Broker (REIB) is an international insurance broker established in 2011 and specialised in solar insurance. REIB has insured photovoltaic plants with more than 2GWp on four continents.Based on the experience of their employees from the offices in Sofia, New York and Berlin, REIB is able to provide tailor-made insurance solutions globally at any stage of solar project development. Delyan Iliev is Managing Director of the company.

Mr. Iliev, insuring RES projects does not sound at all that different from insuring any other industrial project but it does have its specifics. Can you tell us a bit more about REIB’s core activities and why this type of service is gaining increasing popularity in SEE? 

Everyone who is supporting and gravitating around the PV industry like banks, lawyers, accountants, contractors, developers, knows very well the specific needs of the sector. Insurance business is part of the game as well. PV projects have their specific terms and conditions – the solar power plant must be insured during the period when the installation is completed, but still not connected to the grid; higher insurance amount for Delay in Start Up during Erection All Risks insurance compared to every other asset; market adjustable insurance sums; Loss of Income instead of Loss of Profit; defect cover, etc. All the above-mentioned specifics differentiate the solar power plants from all other insurable assets.

We at REIB have specialised in solar insurance for more than twelve years and we speak our clients’ language. Based on this experience, we advise our customers how to protect their PV assets in the most cost effective way – insurance requirements in the EPC contracts, security measures for the operational solar power plants, O&M contracts requirements and their annexes. Our claims experience is also very helpful for our partners as they become aware of the bottlenecks for each solar project at the very beginning and try to avoid them. These are some of the factors that have influenced the increased demand for our service in the last two years. Adding the global climate change and the war in Ukraine, the main drivers of the increasing popularity of the solar industry in Europe, our boutique service is becoming more and more in demand.

Larger investors traditionally aim to hedge their risks and use insurer services but some smaller ones are still on the fence about this particular expense. Does REIB provide services to SMEs and what would be your advice to those still hesitating to earmark part of their investment budget for insurance coverage? What percentage does the insurance policy take in the entire budget for financing a RES project? 

Yes, usually all PV plants over 1 MWp are well insured against the traditional risks. Regarding small installations, we see that banks and other financial institutions are the main drivers of operational All Risks insurance. For SMEs, REIB provides a simple solution combining comprehensive cover with cost effective insurance premium. Based on our discussions with clients, we know that completing insurance questionnaires and providing all kinds of equipment data is a time-consuming activity and most of them prefer the insurance process to be a quick and paperless procedure. For these clients, we usually set up a so-called Master Insurance Policy where we need some basic info and then just issue an insurance certificate for each small solar installation. The benefits are for both sides – the client knows their insurance conditions at the very beginning when they sign the Master Policy and pay nothing (payment is due when a PV plant is added to the policy), while the insurer also has vested interest as they know that the whole client’s portfolio will be insured – more solar installations in different locations, less risk for the insurance company in one particular location, less risk exposure.

Looking at the price, we are very attractive on the market – for small installations of up to 100 kWp the premium is about EUR 150, for projects in the range of 100 kWp–500 kWp – 0.2% out of the investment and for over 500 kWp – less than 0.16%.   

One of your products is focused on hedging against reduced yields. Does that mean that you are practically guaranteeing returns even if production is below forecast?

Yes, together with our partners from Colonnade Insurance S.A. we put together a tailor-made solar insurance product which guarantees the performance (P50) of each new solar power plant. This means that if the real produced energy is less than 10% of the prognosticated one (P50 according to PV Syst or PVGIS report), then the insurance company will compensate the investor. This is a significant guaranteed solution for banks, leasing companies and investment funds – the cash flow of the project is secured.

What would this mean for an investor who is seeking external financing, let’s say from a bank? Does your experience show that having such an insurance in place leads to an easier financing process?

We have a good example of what this product means for investors when they need bank financing. One of our long-term Italian clients wanted to buy an operational four-year-old solar project using a bank. They chose the same bank they used for their own new PV installations, so both parties know each other, rely on each other and there is no reason to decline a new loan for an operational plant. However, the bank wanted someone to guarantee the performance of this “old” installation in order to provide financing. The O&M provider of our client at that time refused to issue such a warrantee or to sign an O&M contract and guarantee the production – they do not know who built this plant, how it was maintained, are there any issues, etc. Our client then came to us and asked for an insurance solution that can guarantee the performance of this particular solar installation. Of course, we provided our tailor-made solar insurance product and the deal was sealed. We can definitely say that REIB makes your solar project more bankable!

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