Rooftop solar: Emerging risk control needs for properties

This is rapidly changing. Pushed by changing regulations, solar panel use on commercial buildings is expected to double in the EU by 2050, for example. The US Inflation Reduction Act has many incentives to expand the use of solar power.  

Under normal operating conditions, rooftop PV systems do not pose health, safety or environmental risks if properly designed, installed and maintained. However, rooftop solar increases the value at risk compared to ground mounted systems (see Figure 1). PV panels can cause property damage and in commercial buildings, can result in business interruption.

Swiss Re constantly tracks the shifting risk landscape of energy transition, as detailed on our Renewable Energy Risks page. There are three broad categories of risk facing rooftop solar: 

• Installation and maintenance of PV systems. Failure to properly manage solar installations can lead to fire, which, while infrequent, can be high in severity. 
• Building/roof design and construction materials. Roofs should be non-combustible and accessible. 
• Weather exposure and natural catastrophe damage. Storm and hail can both cause significant damage to PV systems; and trends for both could be more regionally severe with climate change. 

In this report, we take a deep dive into these major loss drivers (see Table 1) associated with commercial rooftop solar installations and effective risk management to achieve 'solar readiness' of buildings.

By leveraging their experience in risk control and quantification, the insurance sector can assist financial decision-makers in adopting an evidence-based, data-driven approach to manage both established and emerging risks effectively.

The future is bright; the future is solar. It will be brighter still with effective risk management. We hope you enjoy the publication.