Solar Manufacturing Business Insurance

The solar energy sector is rapidly expanding, with solar power accounting for a significant majority of new electricity-generating capacity added to the U.S. grid in recent years. In fact, in 2023, solar energy made up 67% of all new capacity additions, underscoring the industry's critical role in the clean energy transition. However, with this growth comes a complex landscape of risks and challenges, especially for solar manufacturing businesses that supply the essential components powering this green revolution.

Understanding the nuances of solar manufacturing business insurance is vital for companies looking to protect their investments, operations, and future growth. This article delves into the key aspects of insurance in the solar manufacturing sector, exploring the risks involved, the types of coverage available, and the evolving insurance market dynamics that businesses must navigate.

For those interested in the broader context of solar energy’s rise and the associated risk management challenges, the Solar Energy Industries Association (SEIA) provides insightful data and analysis.

Solar manufacturing businesses face a unique set of risks that can impact their operations, financial stability, and reputation. These risks range from equipment failures and supply chain disruptions to extreme weather events and regulatory changes.

One of the most pressing concerns is the increasing frequency and severity of extreme weather events. Jason Kaminsky, CEO at kWh Analytics, highlights that "extreme weather events, one of the most significant financial risks to solar in particular, are becoming more frequent and more severe." For manufacturers, this means potential damage to facilities, delays in production, and challenges in meeting delivery commitments. The unpredictability of climate patterns can also lead to increased insurance premiums and necessitate the implementation of more robust risk management strategies to safeguard assets and ensure continuity of operations.

Additionally, the solar industry is grappling with equipment underperformance, which has led to substantial financial losses. According to the 2023 Solar Risk Assessment Report by kWh Analytics, the industry loses approximately $2.5 billion annually due to equipment underperformance, with power loss anomalies increasing by 94% since 2019. While this statistic primarily reflects operational solar assets, it underscores the importance of quality control and risk mitigation at the manufacturing stage to prevent downstream losses. Manufacturers are now investing in advanced technologies, such as predictive analytics and IoT sensors, to monitor equipment performance in real-time, thereby enhancing their ability to preemptively address potential failures before they escalate into significant issues.

Supply Chain and Manufacturing Challenges

Recent developments indicate a shift in the clean energy manufacturing landscape. In Q2 2025, canceled clean energy manufacturing projects totaling $5 billion outpaced new projects valued at $4 billion in the U.S., signaling growing uncertainty and volatility in the sector. These disruptions can have cascading effects on manufacturers, affecting raw material availability, production schedules, and financial planning. The reliance on global supply chains, particularly for critical components like photovoltaic cells and inverters, has made manufacturers vulnerable to geopolitical tensions and trade disputes, which can further exacerbate delays and cost fluctuations.

Such challenges necessitate comprehensive insurance solutions that address not only physical damage but also business interruption and supply chain risks. Moreover, manufacturers are increasingly exploring localized sourcing strategies to mitigate these risks, fostering partnerships with domestic suppliers to enhance resilience. This shift not only helps in reducing lead times but also supports local economies and aligns with sustainability goals. As the industry evolves, the integration of risk management into the overall business strategy will be crucial for manufacturers aiming to navigate the complexities of the solar landscape effectively.

Solar manufacturing companies require a tailored insurance portfolio that addresses their specific operational risks. The following coverages are essential components of a robust risk management strategy:

1. Property Insurance

Property insurance protects manufacturing facilities, equipment, and inventory against damage from fire, storms, vandalism, and other perils. Given the exposure to extreme weather, ensuring adequate coverage for natural disasters is critical. Additionally, solar manufacturing facilities often house sensitive equipment and technology that can be costly to replace. Therefore, it is essential for businesses to conduct regular assessments of their property values and update their policies accordingly to reflect any changes in operations or expansions. This proactive approach not only safeguards physical assets but also ensures compliance with any contractual obligations that may require specific insurance levels.

2. Equipment Breakdown Insurance

This coverage addresses the risks associated with mechanical or electrical breakdowns of manufacturing equipment. However, insurers are increasingly tightening terms for equipment breakdown insurance due to uncertainties over equipment availability and replacement parts, leading to longer waiting periods and more scrutiny of indemnity limits. This trend reflects the broader challenges in the solar supply chain and the need for manufacturers to work closely with insurers to craft appropriate policy terms. Furthermore, manufacturers should consider investing in regular maintenance programs and equipment monitoring systems to minimize the risk of breakdowns and potentially lower their insurance premiums by demonstrating a commitment to risk management.

3. Business Interruption Insurance

Business interruption insurance compensates for lost income and ongoing expenses if operations are halted due to covered events. Similar to equipment breakdown coverage, insurers are tightening business interruption terms in the solar sector, emphasizing the importance of clear loss control measures and realistic indemnity limits. Manufacturers should also explore the inclusion of contingent business interruption coverage, which protects against losses incurred due to disruptions in the supply chain, even if the manufacturer’s own operations are unaffected. This is particularly relevant in the solar industry, where reliance on a network of suppliers can create vulnerabilities that impact overall production capabilities.

4. Product Liability Insurance

Given the critical role of solar components in energy generation, product liability insurance protects manufacturers against claims arising from defective products that cause damage or injury. This coverage is vital to safeguard against reputational damage and costly legal battles. Manufacturers should also consider implementing rigorous quality control processes and thorough testing protocols to mitigate the risk of defects. By demonstrating a commitment to product safety and quality, companies can not only reduce their exposure to liability claims but also enhance their brand reputation in a competitive market.

5. Supply Chain Insurance



With the volatility in clean energy manufacturing projects and supply chains, insurance that covers delays or losses due to supplier issues is becoming increasingly relevant. Manufacturers should evaluate options that mitigate risks related to raw material shortages and logistical disruptions. Additionally, establishing strong relationships with multiple suppliers can provide a buffer against unforeseen disruptions, and integrating technology such as supply chain management software can enhance visibility and responsiveness. By proactively managing their supply chain risks, solar manufacturers can better position themselves to navigate the complexities of the market while ensuring continuity of operations.

Effective risk management in solar manufacturing requires close collaboration between insurers, developers, and equipment manufacturers. As emphasized by kWh Analytics, "insurers must collaborate closely with developers and equipment manufacturers to institute loss control stipulations and craft policy terms that balance premiums with adequate protections."

This partnership approach helps design insurance products that are both comprehensive and cost-effective, reflecting the unique risk profiles of solar manufacturing operations. It also encourages proactive measures such as regular equipment maintenance, quality assurance protocols, and contingency planning to reduce the likelihood and impact of claims.

Such collaboration is particularly important given the scale of investment needed for the clean energy transition. A report by Howden and Boston Consulting Group highlights that at least $10 trillion in new insurance coverage is necessary to support the $19 trillion investment required to achieve net zero by 2030. This underscores the critical role insurance plays in enabling the solar industry's growth and resilience.

Moreover, the integration of advanced technologies such as data analytics and artificial intelligence into risk management practices can further enhance this collaborative effort. By leveraging real-time data, insurers can better assess risks associated with solar installations, leading to more tailored insurance solutions that address specific vulnerabilities. For instance, predictive analytics can identify potential equipment failures before they occur, allowing manufacturers to intervene proactively and minimize downtime, thereby protecting both their investments and the interests of their insured clients.

Additionally, fostering a culture of transparency and open communication among all stakeholders is vital for effective risk management. Regular workshops and joint training sessions can help align the objectives of insurers and manufacturers, ensuring that everyone is on the same page regarding risk mitigation strategies. This collaborative spirit not only strengthens the relationships between parties but also cultivates a shared commitment to innovation and safety, ultimately driving the solar industry toward a more sustainable and resilient future.

The insurance market for solar manufacturing is evolving rapidly in response to industry growth and emerging risks. Insurers are becoming more cautious, tightening coverage terms and increasing scrutiny of risk factors such as equipment availability, replacement parts, and business interruption scenarios.

At the same time, the solar industry’s expansion is undeniable. Globally, solar energy generated 5% of the world’s electricity in 2023, reflecting its growing importance in the energy mix. This growth drives demand for innovative insurance solutions that can keep pace with technological advances and operational complexities. The rise of solar technology, including bifacial panels and energy storage systems, introduces new variables that insurers must consider when assessing risk. As these technologies become more prevalent, insurers are tasked with understanding their unique vulnerabilities and potential impacts on overall operational risk.

Manufacturers should stay informed about these market dynamics and engage with insurance providers early to secure coverage that aligns with their risk profiles and business goals. Adopting advanced risk assessment tools and participating in industry risk-sharing initiatives can also enhance coverage options and reduce costs. Furthermore, as the industry faces challenges such as supply chain disruptions and regulatory changes, manufacturers may benefit from collaborating with insurers to develop tailored policies that address these specific issues. By fostering a proactive relationship with insurance providers, manufacturers can better navigate the complexities of the evolving market landscape.

For a detailed look at why insurers are tightening terms on business interruption and equipment breakdown insurance in the solar sector, PV Tech offers an in-depth analysis. Additionally, understanding the implications of climate change on risk assessment is becoming increasingly crucial. Insurers are now factoring in the potential for extreme weather events, which can significantly impact solar manufacturing operations. As the climate continues to change, the need for comprehensive coverage that addresses these evolving risks will be paramount for manufacturers aiming to secure their investments and ensure operational continuity.

Solar manufacturing businesses operate at the forefront of the clean energy revolution, but they face a complex array of risks that require specialized insurance solutions. From extreme weather and equipment underperformance to supply chain disruptions and tightening insurance markets, manufacturers must adopt a proactive and collaborative approach to risk management.

Securing comprehensive insurance coverage tailored to the unique challenges of solar manufacturing is not just a protective measure—it is a strategic imperative that supports business continuity, financial stability, and long-term growth. By understanding the evolving risks and working closely with insurers, solar manufacturers can navigate uncertainties and contribute confidently to a sustainable energy future.

For more insights into the financial risks and insurance opportunities in the solar energy sector, the Insurance Business Magazine provides expert perspectives and market trends.