Q&A: Does your solar business have the insurance coverage it needs?

solar contractor insurance

With insurance (or the destruction of it) in the news so much lately, we figured we’d reach out to Christy Howley, solar program manager at ProSight Specialty Insurance, for some solar installation insurance advice. Recently, ProSight aligned with the North American Board of Certified Energy Practitioners (NABCEP) and became the group’s preferred insurance provider. As a result, companies with NABCEP certification or certified employees may be eligible for preferred rating.

Here’s how you can avoid being left high and dry by your solar business insurance.

Solar Builder: What is typically lacking in more general insurance programs that solar contractors get lumped into?

Christy Howley: Some policies may lack proper errors and omissions (E&O) coverage. This goes beyond general liability and can help protect against subjective claims like negligence, fair dealing and inaccurate advice.

Another coverage that solar contractors should look for is employment practices liability insurance (EPLI). This will help protect a business from claims that include: wrongful termination, discrimination, sexual harassment and retaliation.

At ProSight, we are tapped into the solar industry and that allows us to create specific coverages designed to solve business obstacles that are unique to the solar industry. Examples are operational systems coverage and obstruction of premise supplemental (OOPS) coverage. The former provides liability coverage for operational solar systems. The latter, OOPS coverage, helps protect businesses from paying out of pocket to compensate clients when an installation accident leaves living quarters uninhabitable. Both coverages can provide a contractor with peace of mind while working on projects.

SB: What coverages in particular should solar contractors be seeking out? And what scenarios are covered by these programs?

Howley: What’s lacking in a policy differs in every situation. Insurance policies are not one-size-fits-all, so business owners should make sure they are very explicit with the capabilities and direction of a company. This will allow the agent to find a policy that best fits the company’s needs.

In the solar and energy efficiency field, there are so many different business models that you will rarely find two companies that are doing the exact same thing. So, where a certain coverage might be important to a business that procures and sells solar systems, that same coverage might not be necessary for a company that solely installs.

Contractors should also evaluate their policy for any problematic exclusions in their policies that may be critical to their business model. If they are not careful, they could undertake a job that is not covered by their insurance. If an incident were to occur, the company would be liable for the damages.

SB: Is there anything you see as over-coverage that should be avoided to save costs?

Howley: Insurance is peace of mind. If specific coverages give a solar practitioner the comfort to do business, it’s well worth the price of the premium. And, it’s not only the individual company that benefits. The entire solar industry benefits when businesses are properly insured and conducting installations safely. When an insurance carrier has to pay a large loss, it impacts the policies and premiums that are subsequently written. So, if each solar provider gets properly covered and goes the extra mile to install properly and keep their employees safe, it will help maintain cost stability across the industry.

SB: Are those coverages available across the country or just in certain solar-heavy regions?

Howley: ProSight has the ability to provide our exclusive coverages nationwide. Whether your company operates in a solar-heavy region like New York City or you are one of the first solar businesses in your area, we can give you access to Operational System coverage, OOPS coverage and much more.

SB: Does size and scope of a business matter? Like, what if someone wants to get into solar + storage, or maybe start doing small commercial instead of just residential?

Howley: The size and scope matters most when the business moves into arenas that the current insurance policy excludes or doesn’t currently contemplate. If a company does commercial but wants to get into residential, even if it’s only a small percentage of the business, it is crucial to be sure there isn’t a residential exclusion on the policy.
The same goes for solar + storage; if a policy is set up for coverage on installations and the business wants to start providing storage options to their customers, be sure to re-examine the insurance policy before taking the steps into expansion. If a customer files a claim against the company for something that isn’t covered under the current policy, the business and the owner could be on the hook for all the damages.

SB: What’s an example of how a specific coverage saved a customer?

Howley: One of our insureds utilized our worker’s compensation coverage for an unfortunate incident that happened during an installation. In a total fluke situation, a plank gave out while a worker was walking on it. The worker fell about 30 ft and was severely injured. With ProSight’s WC, the worker’s injuries and lost time at work were covered for as long as the injury lasted. We want our insureds and their employees to go home safely each night, but if an accident happens, our policy covers medical expenses and time missed from work.

SB: Is there anything a solar contractor can do personally or in their business to further lower costs on premiums?

Howley: The main thing solar contractors can do is treat their people well. Make sure they get proper training, allow them to attend industry conferences, get them the most updated equipment and do whatever it takes to prepare employees to be the best at their jobs.

Industry certifications can also help offset long-term costs as well. The education received while undergoing and maintaining the certifications from NABCEP can signal to insurers and customers alike that your business is compliant with the highest level of certification and scrutiny.

— Solar Builder magazine

Why sale leasebacks? How this PPA solution gets commercial solar projects financed

solar panels and money

An increasing number of solar developers are realizing they can use sale-leaseback financing to take advantage of tax incentives for solar installations, and in turn, reduce costs, conserve cash, increase profitability and enhance their brands.

Reducing energy costs is a major consideration for many businesses and government entities because they know that lower energy costs translate into improved profitability and cash flow, and investments in sustainability can add significant value to assets.

Developers such as Community Energy and Monolith Solar are using sale leasebacks to finance projects that include a power purchase agreement (PPA), allowing monetization of the tax benefits, inclusive of the investment tax credit and depreciation. In this structure, solar developers own and operate the system and sell the power to a third party.

The features of a smart sale-leaseback project include:

  • Strong credit all around (developers, PPA offtakers, installers)
  • Positive project cash flow
  • Experienced engineering, procurement and construction management teams
  • Tier 1 components
  • Strong site control
  • Solid PPA
  • Strong incentives
  • Quality operations and management plan/partner

Smart sale-leaseback programs allow developers to finance distributed solar projects that otherwise may not be financeable, as this financing structure scales down nicely, following industry trends of lower costs per watt.

Conserve cash, gain flexibility

Solar developers benefit from financing solar equipment acquisitions by preserving cash and credit lines for other uses. Here are some of the other benefits of financing solar capital expenditures:

  • Potential tax benefits. Equipment financing may provide tax advantages by monetizing the Investment Tax Credit, utilizing Modified Accelerated Cost Recovery System (MACRS) and bonus depreciation benefits.
  • Stimulus benefits. Additional savings opportunities may be available through solar renewable energy credits and grants.
  • Flexibility. Whether it’s a tax or non-tax lease, payments can be structured to match budget requirements, with terms aligned with the solar equipment’s useful life.
  • Reduced capital outlay. By bundling solar equipment with other costs, including design, engineering, development and installation, businesses can acquire what they need with no money down and one fixed monthly payment. In most cases, 100 percent financing can be provided.
  • Be known as a green leader. A solar system is not only a wise financial investment but also supports environmental values. Financing allows organizations to demonstrate commitments to promoting clean energy and reducing their carbon footprint.

10 questions to ask

In the acquisition of solar equipment, it’s important to weigh all available options. Here are 10 questions to consider:

Before
1. Do I need construction financing?
2. Does the installer have the experience, financial strength, qualified staff and bonding capacity to complete a successful project?
3. Does the project use Tier 1 components?
4. Is the PPA financeable?
5. Does the energy offtaker meet a finance company’s credit requirements, i.e. investment grade credit rating?
6. Do I have good site control?

During
7. What are the lease terms, including tenor, monthly lease payment and end-of-term options?
8. What are my other financial obligations for the equipment (such as insurance, taxes and maintenance) during the financing period?
9. Can I purchase the system during the lease term?

After
10. Can I return the equipment or renew the lease?

With answers to these questions, solar developers can effectively utilize solar equipment financing to conserve cash and build their balance sheets by leveraging PPA revenues and retaining the entire revenue stream, as opposed to selling off the PPA.

Choosing a Finance Partner

Seek out a financing partner who can accommodate businesses with customized payments to match budgetary requirements. Make sure the financing company has solar lease financing experience, understands solar project needs, takes the time to ask questions and listens to your responses.

Above all, look for a financing company with a track record in renewable energy and a willingness to customize leasing solutions to help solar developers finance their projects.

Doug Beebe and Luis Gutierrez are VPs of energy finance for the eastern and western United States, respectively, for Key Equipment Finance.

— Solar Builder magazine

Pared-down MLPE: How Empower Micro Systems does residential solar with two SKUs

empower-genesys-8k-powerbridge-1In its early days, the U.S. residential solar market was dominated by high-volume buyers like Sunrun, Solar City and Vivint, which means they bought most of the equipment, with the remaining market being served through distribution channels. But big-time growth going forward in the residential solar segment will be driven by the local installer, and the growth of that local installer market will come through greater simplicity, in both process and systems. That’s how we see it at least, and that’s the thesis driving a new PV electronics platform from Empower Micro Systems, a technology company that is currently licensing its new patented solar platform to larger established brands.

“With more financing options available, there is just not a huge advantage in being larger,” says Mika Nuotio, CEO of Empower Micro Systems. “The system is collapsing. Hyper regionalized deployment is coming. The vast majority is from installers, sold through distribution.”

So, if smaller companies gravitating toward simple solutions is the operating assumption, Nuotio says SKU consolidation is one of the most important goals to shoot for — reducing inventory costs and inventory turns makes an installer’s job easier and more profitable.

“In particular in solar, if you sit on inventory for a month or two, you are eroding your profit margin and reselling that equipment. Fast inventory turns make things much easier,” Nuotio says. “Installers are in the service business. They need transactional efficiency. When we designed our technology, we looked at the whole value chain from manufacturers through distributors to homeowners. What’s the technology that streamlines everything?”

SKU consolidation

Installers like stocking products in a van or keeping confined stock at a distributor. Select the wrong size or put the wrong one in the van and another trip is needed.

Simplicity is far from a new concept, as pretty much all manufacturers are trying to simplify their products and an installer’s workflow, but Empower’s Genesys 8K modular technology platform is maybe the simplest out there, cutting the SKU count to two: just a PowerBridge and a PoweHub. With those two, Nuotio says you can build any system from 2.4 to 11.4 kW, which could cover about 99 percent of U.S. residential installs. Comparable module-level power electronic solutions will likely have eight to 15 different SKUs.

Introducing ‘fractal inversion’

Empower Genesys So, how is Empower able to say “just buy two components and then that’s it?” Nuotio explains it is part technology and part design. The Empower technology uses a combination of microinverters and DC optimizers, an architecture that Nuotio is calling fractal inversion.

Here’s how it was described to us: The PowerBridge is a microinverter, one installed per module; the input is DC, and the output is low voltage AC (operating between 0 and 40 volts). Multiple units are then connected in series to create an AC string and aggregated together to hit grid voltage.

The PoweHub is the smart energy combiner. It combines multiple output circuits into one circuit that goes into the service panel and can support up to three strings. Each string is 16 amps, and the aggregate output max is 48 amps. The power rating of the system scales with the number of PowerBridges.

“Because we are connecting the PowerBridges serially in the string, we have an all AC system that doesn’t need a proprietary trunk cable,” Nuotio says. “Installers we talk to say they don’t like trunk cables; they are complicated to deal with, you need three different versions in stock, slicing connectors, sealing caps. That whole thing goes away.”

Overall, the system concept reminds us of Enphase, except for the commitment to pared down SKUs and the move away from trunk cables. It is similar to SolarEdge in that the DC to AC ratios aren’t rigid, which is a trend you can expect to continue in residential solutions. It differs from SolarEdge by being all AC voltage, which means less thermal stretch compared to an oversized DC string.

“Thermal stretch on an individual PowerBridge actually goes down when you oversize in our system,” Nuotio says. “Each PowerBridge is operating at a lower power output, and the string current is limited to a max level of 16 amps. If you keep loading more and more DC power, the total power is max 3.8-kW AC, so each unit actually processes less power and therefore puts less thermal stretch on the electronics.”

Lastly, as solar + storage systems start to take off, Nuotio says the PowerBridge simply couples to a lithium ion battery pack in the way it would a PV module, to help keep those SKU counts low and install solar today but be ready with the infrastructure for storage down the road.

Limitations?

The rigid modularity of the system might not work for every single home on the market because a single string of at least 8 PV modules is needed to make the system and economics payoff. But that is a fairly small volume of projects.

“If you look at the cost of customer acquisition, permitting, installation and truck rolls to do anything, an eight-module system is just not economical. It is washed out by soft costs, so we don’t see that as a major limitation from an overall market perspective.”


Tigo with Amazon AlexaTigo Skill connects a PV system to Amazon’s Alexa

Tigo is now offering its customers the benefits of Amazon Alexa technology via the new Tigo Skill, available on Alexa-enabled products. Using the Tigo Skill, residential and commercial customers with monitored PV systems can request tailored information from Alexa, the cloud-based voice service by Amazon. For example, simply saying “Alexa, ask Tigo how much power my PV system generated today,” will report a day’s worth of power without the need to log in to Tigo’s SMART website.

“Within seconds, you can know how well your PV system is producing — without logging on to a computer or climbing on the roof,” says Maxym Makhota, Tigo’s VP of Software Development. “Tigo Skill is the first to bridge the gap between solar, artificial intelligence and the Smart Home mentality in which information is always available.”

— Solar Builder magazine

SB Buzz Podcast: Discussing rail-less mounting with Ecolibrium Solar

Ecolibrium

We ventured out to Boulder, Colo., to discuss rail-less solar mounting with Chris Berg and Jonah Coles of Ecolibrium Solar. Because it is Colorado, the Ecolibrium office was located like 50 feet from a brewery, Asher Brewing Co., so that seemed like a good place to chat.

Click to listen (and subscribe!) below. Here’s what to look for in the discussion:

First minute: Beer selection.

2-min mark: Ecolibrium has a streamlined process for testing UL 2703 compliance because it is a certified partner lab of TÜV Rheinland Group. Chris explains how having this testing in-house adds to its product development.

4-min: We discuss the acceptance level of rail-less mounting in the market right now, and why, in Jonah’s view, it will only gain more ground as more installers get trained on these systems.

“Installers might not like it in the first week; they will come around in week two, and by the end of the month they won’t want to go back,” Jonah says. Then explains what hurdles need to be overcome in that first month and what advantages that can be gained, both on site and by doing more jobs overall.

10-min: Jonah dives into what he sees as myths about rail-less racking. One of them being that rail-less is only good if you have a perfect rectangle.

“I feel it’s the exact opposite. I installed rail for years before I came to Ecolibrium and was introduced here to rail-les, and if I have a couple of offset rows of panels [with rail] I have to square up that rail every time I have a new offset panel. But the panel is square, so if you don’t have a rail and you’re dropping a panel in, as long as you’ve placed your mounts where the panel is going to cover … there isn’t any squaring to do.”

14-min: We discuss the challenges and new considerations that exist with rail-less mounting. Plus, what should you look for when procuring a rail-less system?

18:50: We decided whether to stop the podcast and eat lunch or keep going.

19:01: We keep going.

19:08: What more can we expect to see in terms of rooftop solar product development, both residential and commercial – and how these developments can continue to grow the solar contractor market.

27-min: Examples they’ve seen (or things they would like to see) to keep removing soft costs from the installation process.

— Solar Builder magazine

Solar Builder Project of the Year Winner: Roadrunner Food Bank

Roadrunner Food Bank

Solar energy is superior to other generating resources not just because of what it provides but because of what it can save. Deployed in the right situation, energy costs go down, CO2 emissions are removed from the atmosphere and maybe a few other nonrenewable resources get to stay put under our feet. Our 2017 Project of the Year adds one more saving to the list: lives.

That isn’t hyperbole either. The Roadrunner Food Bank in Albuquerque, N.M., is a nonprofit feeding about 70,000 people a week. Any money it has is directly turned into meals for the hungry. Unlike the intangible CO2 saving stats often cited for solar projects, the solar + storage system installed by Affordable Solar and Sharp is having a direct impact on the community.

“Between the expanded array and the storage, we’re putting 150 units of demand aside every month. It’s saving us a bunch of money, and every dollar we save equals five meals,” says Teresa Johansen, COO of Roadrunner. “That efficiency allows us to actually feed more of New Mexico.”

Previously, the food bank payed on average $180,000 a year in utility bills with an estimated 30 percent of that going toward demand charges. The solar + storage system is expected to save the food bank approximately $30,000/year in utility charges and $1.2 million over its lifetime. Times that by five. That’s how many more meals Roadrunner can provide that it could not previously.

Not that we need to say more to make its case for Project of the Year, but everything that led to the development of this project was needed to make it possible.

Developer: Affordable Solar • Contractor: Affordable Solar • Modules: Q-Cells and Hyundai • Inverters: Solectria (PV) and Ideal Power (ESS) • Mounting: Unirac  • Storage: Sharp SmartStorage

The Donation

Our story starts about seven years ago, when Affordable Solar donated a small 5.7-kW array to Roadrunner to provide a small benefit to the food bank and then maybe build that relationship down the road. Johansen planned to pursue a larger array when they replaced the roof, which would be a $900,000 expense.

“We didn’t have any of that funding when we started,” Johansen says. Eventually Roadrunner received a grant to cover about half of the re-roofing costs, so they did that and called up Affordable to install solar panels on that half. The local NBC affiliate, KOB TV, stopped by when it was completed to showcase the project, and Johansen was asked what she was going to do after this. “I didn’t even know the camera was still on but I said ‘Well, if someone would give me another $300,000 I’d do the other half of the roof.’ And then that’s what happened!”

Yes: Someone saw that news spot, someone who had never donated to the food bank before and wrote a check for $300,000.

“Then I called Affordable and said ‘Can we expand the array to the other half of the roof?’” Johansen laughs. “PNM, our electric company, was like ‘you just did this; what do you mean you are putting another application in?’ That was quite a process to get that going.”

Roadrunner – Actual First Year System Performance

The Test Case

With this new 366-kW PV system going in, Kevin Bassalleck, president of Affordable Solar, decided Roadrunner was the perfect project to test a solar + storage system, and he made the decision to fund and own the storage piece of the system, basically as a testing ground.

“We recognize it’s an exciting trend to couple solar with storage, but it’s a different sport altogether from a project development and sales cycle perspective,” Bassalleck says. “Everything is more complicated, so for us to do that effectively, we felt like we needed a case study. We wanted to deploy a modest-sized energy storage system and own the asset ourselves and learn lessons along the way in terms of how we interface with the customer effectively, how we do analysis correctly, what we learn about the technical solution deployed and then what it means from a performance and savings standpoint. This has helped us fine tune our approach on future projects, validate some of the assumptions we make and build our presentations for future customers.”

Roadrunner was the perfect test case not just because of the long-time relationship but because of the underlying demand charges in their service territory and Roadrunner’s predictable peak demand profile.

“The load profile of this site was typical of a warehouse facility. It had enough demand peaks on top of the base energy load that we knew installing a SmartStorage system was going to be able to reduce some of the peak requests,” notes Matt Mapes, director of sales for Sharp’s Energy Systems and Services Group. “In a location like Albuquerque, where you have a lot of sun in the middle of the day, we knew solar was going to take a chunk out of the base load, but they had no way of guaranteeing that they’d be able to reduce the demand peaks.”

What has Bassalleck learned from this little experiment of his?

“Solar on its own does little to nothing to consistently and reliably mitigate demand charges for a customer and to do it reliably and predictably, you need intelligent energy storage systems to couple with it, and then you have the foundation of what you need for a viable project,” Bassalleck says.

Also: “We’ve learned these things work.”

sharp smart storage

The Results

The value proposition of Sharp’s energy storage system is a combination of its expertise in sizing a system to pair with PV to dramatically reduce peak demand charges paired with a 10-year performance guarantee that reduces the risk of the customer taking a chance on this emerging technology.

“While the PV system concentrates on the energy side [kWh], SmartStorage is focused on the power [kW],” Mapes says. “Because they have to work hand in hand, the system sizing is very important, so we use Sharp’s proprietary analytics to ensure the system is sized correctly.”

Seeing the performance since the start of the year has made Johansen a believer.

“Before, we’d get a late afternoon thunderstorm and it could blow it. All it takes is one day. This guarantees we get our demand savings. We are peaky because we have things like a large freezer unit that goes into defrost and then all of the fans ask for heat and it drives up our peak. And it’s a pretty predictable peak, so we could look at that and size the batteries to make sure you could knock it off. It’s amazing. A cloud goes over, our demand goes up and the batteries deploy. ”

And more food gets delivered. A winning formula, for sure.

Chris Crowell is the managing editor of Solar Builder.

— Solar Builder magazine