In October 2018, severe winds hit the Oakey 2 solar farm, which was still under construction in the Darling Downs region of southeast Queensland.
The storm damaged 2,000 of the site’s modules, delaying its completion. Then, in January 2020, the same site was hit by yet another severe storm, which exacerbated delays and led to a major write-down of the project’s value, to the tune of A$12.5 million.
This was not the only time severe weather has damaged infrastructure at a renewable asset in Australia.
In February of this year, a two-year-old wind turbine at Berrybank wind farm, near Geelong, collapsed in high winds, during a damaging thunderstorm. Investigations into that event are ongoing, but a lightning strike is being considered as a potential culprit.
Perhaps surprisingly, in a country almost characterised by extremes of weather and climate, these have been relatively isolated incidents in Australia – at least for now – despite several years of natural disasters, including floods and fires, that were likely exacerbated by climate change.
But a new report from global renewables insurer GCube has found that natural disasters and extreme weather events are leading to more frequent and more severe insurance claims from renewables projects around the world.
It says they represent an emerging threat to the industry – the great irony, of course, being that natural disasters and extreme weather are, and will increasingly be, exacerbated as global average temperatures rise.
“The insurance market, from a natural catastrophe standpoint, has looked at earthquakes, hurricanes, and flood risk traditionally,” explains GCube CEO and founder Fraser McLachlan. “But what’s emerged over the last four to seven years is that weather is changing globally, and there are a whole bunch of new perils coming into the mix.”
And the report warns that Australia will likely not escape these impacts.
Australia is insulated – but for how long?
The report found that losses to renewable infrastructure from extreme weather remain low in Australia.
In fact, in 2024, insured losses in the renewables sector were at their lowest for twenty years.
But that doesn’t mean the year was free from weather and climate related crises, including record-breaking flooding early in the year, a category 3 tropical cyclone, and 76,000 hectares of fire damage in the Grampians region of Victoria.
Insurance costs have risen by nearly 30 per cent since March 2022, and 90 per cent of properties in at-risk regions are projected to become uninsurable by 2030.
And Australia is uniquely positioned to become increasingly, dramatically vulnerable thanks to several key features of the island continent.
The report notes that Australia’s susceptibility to the vicissitudes of the El Niño Southern Oscillation (ENSO) cycle, which produces both El Niño and La Niña years, makes the insurance market unpredictable.
CSIRO findings show that the ENSO cycle is already being exacerbated by climate change, with both strong El Niño and La Niña events – which cause unusually dry, arid and unusually wet, stormy conditions respectively – increasing in frequency.
And last year, one of Australia’s largest solar farms, the 400 MW New England solar farm near Uralla, reported a loss of around A$30 million in anticipated earnings due to delays caused by heavy rains.
Crucially, with investment in renewables in Australia picking back up – and with a 2030 target of supplying 82 per cent of the country’s electricity from renewables – projects will continue to push into new territory, which will come with their own weather risks.
The report cites two significant “known unknowns”: the risk of hail to solar developments in Eastern Australia, and the risk to wind turbines from tropical cyclones.
In fact, maps of operational or planned solar projects overlay almost perfectly with maps depicting hail frequency. Hail events with stones exceeding three centimetres are not uncommon across Australia’s eastern seaboard.
And, as this 2021 study published in the journal Nature points out, rising temperatures will increase both the likelihood of hailstorms, and the size of the hailstones formed.
Part of the problem from an insurance standpoint, McLachlan points out, is that Australian insurers are currently naïve to the rising threat.
In insurance, a sub-limit is a monetary cap placed on certain covers, meaning that in the event of certain catastrophes, the pay-out will be less than the total insurance cover value.
But while insurers in most other countries are setting up sub-limits for severe convective storms, for instance, in Australia, insurers are still deploying full-value limits. Severe convective storms have driven 70 per cent of global insured losses in recent years.
While that may seem good on the face of it, in practice, without sub-limits for high-risk or high-frequency threats, insurers end up bearing the brunt of costs and tend to either jack up premiums or pack it in altogether.
Biggest insurance impacts felt in the US
Looking globally, natural disasters and extreme weather events are leading to more frequent damage, higher insurance premiums, and impacting the bankability of many renewable projects.
This is particularly true for the US, where some developers are struggling to secure financing because of gaps in insurance coverage, and rising costs.
The US is extremely vulnerable to this problem, with hail and wildfire losses on the rise, and some disasters exceeding US$300 million (about A$475M) in insured damages.
In June 2023, baseball-sized hailstones destroyed nearly all of the solar panels at a 5.2MW solar farm in Scottsbluff, Nebraska.
The panels were designed to be hail-proof, but the sheer size of the stones, coupled with high winds that may have driven them at force into the panels, led to the near-complete destruction of the farm’s 14,000 solar panels.
The event occurred within ‘tornado alley’, a region of inland US that experiences high frequencies of supercell thunderstorms.
Over in Europe, the report finds that the region is no longer considered a low-risk renewables market, with unprecedented asset loss from disasters and extreme weather in 2024, including the region’s second-costliest year for flood damages.
Flood Bernd in 2021, hailstorms in France in 2022, severe storms in Italy in 2023, and a year’s worth of rainfall in a single day in Valencia, Spain, were all associated with a combined €24 billion (about A$43bn) worth of insured losses.
In 2024 alone, €29bn (about A$52bn) worth of assets were destroyed in natural disasters on the continent. The bulk of losses occurred at solar farms.
Renewables projects need to consider extreme weather to remain insurable
The report notes that factoring “one in 100-year flood events” into the construction of renewables projects in Australia is no longer going to cut it. The long-term success of projects will depend on mitigation strategies that seek to protect assets for the duration of their often 25-year lifespans.
For solar projects, that means investing in resilient equipment and adopting new hail-safety systems. For wind farms, turbines must be chosen that are up to the task of withstanding the unique wind conditions in their area.
Of all the many extreme weather events that can damage assets, hail is something GCube has focused much of its attention on. In 2023, the company released a report dedicated to the icy stuff, which found that hail claims around the world were averaging around US$58 million (around A$91m) per claim.
Insurance companies can offer hail cover to solar farms, but only if the panels on the farm have a mechanism that enables them to be turned at least 70 degrees to the ground, so the hail will only strike a glancing blow.
Some Australian projects are starting to factor in hail risk, though they’re late to the party globally.
Earlier this month, Flow Power announced that it was teaming up with Canadian Solar to deploy the latter’s anti-hail module technology at Flow Power’s Coonawarra, South Australia-based solar and battery energy storage system (BESS) project.
The first phase of that project is set to begin in the spring of 2025.
The company will also deploy the same anti-hail modules at its 5.8MW Cootamundra solar plant in New South Wales.
But hail isn’t the only threat. When it comes to high winds, solar farms can protect themselves by deploying creative stowage solutions whereby the external panels absorb higher risk but protect the bulk of the panels within the array. Or, they can build for impact, like NEXTracker, which uses thicker steel on the outer rows to protect the more vulnerable outer panels.
Wind turbines, on the other hand, are supposed to be better at withstanding both wind and hail, but severe winds have been seen to topple turbines in the US in recent years.
“It’s perverse that an industry that protects against climate change is so impacted by it,” McLachlan says.
