Solar energy is currently one of the most promising sectors in Indonesia. The government, through its energy transition program toward Net Zero Emissions by 2060, is targeting a larger share of renewable energy in the national energy mix. Among various green energy sources, solar power plants (PLTS) are seen as a fast, efficient and environmentally friendly solution.
In line with this trend, floating solar farms and rooftop solar PV projects are growing rapidly. Floating solar farms are built on the surface of reservoirs, lakes, or dams, while rooftop solar is often installed in office buildings, factories, industrial areas, and even homes. This project growth creates both significant business opportunities and challenges, particularly in terms of investment protection.
The main questions for investors and project owners are:
“How much does the insurance premium cost for floating solar farms and rooftop solar in Indonesia?”
This article will discuss business opportunities, risks, case studies, types of insurance needed, premium estimates, and the importance of using a professional insurance broker like L&G Insurance Broker. With this understanding, it is hoped that business owners, investors, and stakeholders can make informed decisions to ensure the sustainability of solar energy projects in Indonesia.
Contact L&G Insurance Broker now at 08118507773 for a free consultation before the risks haunt your business.
Background & Business Opportunities
Indonesia has a solar energy potential of over 200 GWp, thanks to its equatorial location with high year-round sunlight intensity. This potential has prompted the government to encourage the development of large-scale solar power plants (PLTS) and rooftop solar power plants (PLTS) to meet energy transition targets.
The two most dominant models are:
- Floating Solar Farms (PLTS Terapung) → are usually built on reservoirs or lakes. Their advantages include land efficiency, reduced water evaporation, and better panel performance due to lower ambient temperatures.
- Rooftop Solar PV → suitable for office buildings, factories, shopping centers, and industrial areas. Besides saving electricity costs, this installation also strengthens the company’s image as an environmentally friendly business.
The investment value is substantial. For example, the 145 MW Cirata Floating Solar Power Plant cost over Rp 4 trillion. For rooftop installations, factory installations can cost Rp 8–15 million per kWp. If the capacity reaches 1 MW, the cost can reach Rp 10–15 billion.
The high cost of capital makes project insurance a vital necessity. Without proper protection, a single accident or damage could result in billions of rupiah in losses, even rendering a project unbankable in the eyes of investors and financial institutions.
Risks Faced by Floating Solar & Rooftop Solar
Despite being environmentally friendly, solar energy projects carry complex risks that could threaten the sustainability of the investment.
Floating Solar Farm Risks:
- Extreme weather → strong winds, storms, or high waves that can damage panels, cables, and anchors.
- Structural damage → pontoons or floats crack, causing the panels to sink.
- Environmental disturbances → sedimentation, moss, or debris that damages the system.
- Electrical risks → short circuit due to humidity high.
Risiko Rooftop Solar PV:
- Fire → Non-standard electrical installations can trigger fires in panels and buildings.
- Mechanical damage → falling objects from a height or strong winds.
- Panel theft → rooftop solar is prone to theft because the panels are high value.
- System failure → inverter is damaged thus stopping electricity production.
Financial & Operational Risks:
- Project delays due to force majeure or contractor failure.
- Business losses due to electricity production downtime.
- Claims from third parties if the installation causes harm to others.
Without insurance, these risks can lead to unexpected financial losses. Insurance not only provides financial compensation but is also a prerequisite for bankable funding, where financial institutions require risk protection before providing financing.
Example of Loss Case
Some real cases show how important insurance protection is:
- Floating Solar Power Plant in India (2022) → A storm destroyed hundreds of panels, causing over $1 million in damage. The project only recovered thanks to all-risk property insurance.
- Rooftop Solar in Malaysia (2021) → A fire caused by a short circuit in an inverter destroyed the entire factory roof. The factory owner experienced three months of downtime and millions of ringgit in losses.
- Solar power plant projects in Europe → mass theft of solar panels resulted in huge losses, but marine cargo + property insurance managed to cover the losses.
In Indonesia, although data has not been widely published, similar risks are very likely to occur, especially due to tropical weather factors, high rainfall, and varying installation standards.
These cases serve as a lesson that solar energy investment should not only focus on design and installation, but must also be equipped with comprehensive insurance protection.
Types of Insurance Needed
To protect floating solar and rooftop solar investments, a combination of several policies is required:
- CAR/EAR (Contractor’s/Erection All Risks Insurance)
Protects projects during the construction and installation of solar panels. Covers risks of fire, accidents, installation errors, and certain forms of force majeure.
- Property All Risks (PAR)
Covers physical damage after the project is operational. This is particularly relevant for floating solar and rooftop installations, as they are vulnerable to weather and fire damage.
- Machinery Breakdown (MB)
Protects vital components such as inverters, transformers, and switchgear.
- Business Interruption (BI)
Provides compensation for lost income if electricity production stops due to damage covered by the PAR/MB policy.
- Third Party Liability (TPL)
Protects against third party claims, for example damage to a neighbor’s property due to a rooftop panel fire.
- Marine Cargo Insurance
Guaranteeing panels and equipment during transit from overseas to the project site.
- Surety Bond & Performance Bond
It’s essential for contractors as a guarantee for tenders and project implementation. It can be issued directly or in the form of a counter-bank guarantee.
With this combination of policies, the project will be protected from risks from engineering, procurement, construction, to operational & maintenance (EPC+O&M).
Insurance Premium Cost Estimate
Premium costs depend on the project value, risk type, location, and contractor track record. Here’s a general estimate:
- CAR/EAR Insurance:
Rate: 0.20% – 0.35% of the project value.
Example: rooftop project Rp. 10 billion → premium Rp. 10–25 million.
- Property All Risks (PAR):
Rate: 0.15% – 0.35% per year of the asset value.
Floating solar Rp 4 trillion → premium Rp 3.2 – 6 billion/year.
- Machinery Breakdown (MB):
Rate: 0.05% – 0.12% of the machine value.
- Business Interruption (BI):
Additional 30–40% of PAR premium.
- Marine Cargo Insurance:
Tariff: 0.08% – 0.15% of cargo value.
- Surety Bond:
Fee: 1%–2% of the collateral value.
If in the form of a contra bank guarantee, the rates can be more competitive.
This estimate is indicative. In practice, premiums can be lower if you use an experienced broker who can negotiate the best rates and wording with insurance companies.
The Importance of Insurance Brokers
Arranging insurance for a solar energy project is no simple matter. There are numerous technical clauses, exclusions, and policy terms that must be ensured to meet the project’s needs. A small error could result in a claim being denied or a reduced payout.
This is where the role of an insurance broker like L&G Insurance Broker becomes crucial. L&G has extensive experience in:
- Handling large energy, mining, construction and infrastructure projects in Indonesia.
- Designing insurance programs that comply with international standards and meet the requirements of banks and investors.
- Negotiate competitive premiums without compromising the quality of coverage.
- Providing full claim assistance, ensuring claims are paid according to the value of the loss.
With the support of brokers, investors and contractors not only get financial protection, but also legal certainty and trust from lenders/investors.
Conclusion
Solar energy investment is Indonesia’s future. However, this significant opportunity also comes with significant risks. Panel damage, extreme weather, fires, and even financial risks can disrupt your project at any time.
Don’t let investments worth billions to trillions of rupiah be threatened just because of inappropriate insurance protection.
👉Use the services of L&G Insurance Broker to ensure your floating solar farm and rooftop solar projects:
- Get competitive premiums.
- Protected with correct policy wording.
- Have full assistance in claims.
Contact L&G now and ensure your solar energy project is protected from start to finish.
DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
