Oregon Solar Projects Get Insurance to Guarantee Production


Originally posted on Bloomberg.

  • GCL New Energy developing 50 megawatts of solar projects

  • KWh’s ‘solar revenue put’ ensures 95% of power plants’ output

GCL New Energy Holdings Ltd. is managing the risk related to the unpredictable nature of the sun, with an insurance-like policy that will guarantee the production from solar projects it’s building in Oregon.

KWh Analytics, a San Francisco-based risk-management software company, structured the coverage for the 50-megawatt solar portfolio, according to a statement Wednesday. Swiss Re AG is backing the insurance product and PNC Bank NA committed tax equity financing for the four solar farms. Terms weren’t disclosed.

The insurance product, known as a “solar revenue put,” can guarantee as much as 95 percent of a farm’s expected output, and can lead to better financing terms. The policy sets a floor for electricity output from a solar farm, where production will rise and fall with the sun. Clients typically pay a premium, and if a plant doesn’t generate enough power to reach the floor, the insurer covers the difference. Underpinning KWh’s puts is a database of historical production from other solar farms that helps predict output from planned projects and performance data from specific components at existing plants.

“Swiss Re is guaranteeing the volume,” Richard Matsui, KWh’s chief executive officer, said in an interview. “That’s game changing.”