In order to promote the solar industry in India, the Government of India has mandated all PSUs to consume 30% of power from solar energy. The lack of insurance covers result in an investment deficit that impacts growth and therefore availability of insurance becomes imperative for the survival of the sector.
To curb the losses occurred due to loss of sunlight, ICICI Lombard General Insurance, has introduced a standalone insurance product Solar Panel Warranty Insurance. The product offers comfort to lenders and investors and is a perfect solution to support project finance.
To support this capacity, ICICI Lombard has launched a Solar Panel Warranty Insurance policy. The product will be distributed through the company’s branches and affiliated agencies. The policy safeguards the insured against performance degradation of Photovoltaic modules, under performance warranty due to the following hazards:
The Jawaharlal Nehru National Solar Mission, also known as the National Solar Mission, is an initiative of the Government of India and State Governments to promote solar power. The mission is one of the several initiatives that are part of the National Action Plan on Climate Change. The program was inaugurated by former Prime Minister Manmohan Singh on 11 January 2010 with a target of 20GW by 2022 which was later increased to 100 GW by the Narendra Modi government in the 2015 Union budget of India. India increased its solar power generation capacity by nearly 5 times from 2,650 MW on 26 May 2014 to 12,288 MW on 31 March 2017. The country added 5,525 MW in 2016-17, the highest of any year.
In order to promote Solar Industry in India, the Government of India has asked all PSUs to mandatorily consume 30% of power from Solar energy. The Ministry of New and Renewable Energy (MNRE) has approved sales of tax-free bonds to support the Jawaharlal Nehru Solar Mission. Further MNRE has announced subsidies to the developing projects of Solar power under government schemes.
Associated risk factors
Risk and uncertainties are present throughout each phase of solar project lifecycle from construction to operation and through its lifecycle to decommissioning. In addition to conventional risks, the new risks associated with solar industry are degradation in performance of modules due to equipment defects and even due to lack of sunshine. It is understood that the viability of solar power project depends just on the performance of solar modules. Despite the industry’s explosive growth in recent years, economic uncertainty and risks in developing, building, operating, owning and investing in solar projects remain daunting. Until November 2017, Indian Industry did not possess warranty insurance products in the Indian market that can fill the gaps in the performance of solar modules and reduce the risks associated with the equipment quality. The lack of insurance covers result in an investment deficit that impacts growth and therefore availability of insurance becomes imperative for the survival of the sector.
First Solar Panel Warranty Insurance by ICICI Lombard General Insurance
The Solar Panel Warranty Insurance introduced by ICICI Lombard General Insurance, India’s largest private non-life insurance company, is a standalone insurance product providing comfort to lenders and investors and is a perfect solution to support project finance. This first-of-its-kind product will be distributed through the company’s branches and affiliated agencies. The product offers a great degree of business certainty and thus constitutes a powerful differentiator in a competitive marketplace. Ultimately it gives operators of solar parks additional economic security in the event of an unforeseen loss in performance of modules. The factors that justify the requirement of Solar panel warranty insurance are mentioned below:
This new insurance solution might be a major stepping-stone in financing PV module projects as it provides additional financial security. It safeguards the insured against performance degradation of PV modules. This type of coverage gives comfort to lenders and investors and is a perfect solution to support project finance. Performance degradation of the PV modules is covered under the Performance Warranty due to the following perils:
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