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Here Are The Risks And Insurance For Solar Power Plants (PLTS) That You Need To Know

Liga AsuransiDear Risk takers, how are you? Hope your business is doing well.

As usual, we always discuss risk management and insurance on this blog. We are discussing risks and insurance for Solar Power Plants (PLSTS). If you are interested in this article, please share it with your colleagues so that they understand like you.

Solar Power Plants (PLTS) have become a promising solution for utilizing renewable energy in Indonesia. However, like every project, PLTS development also involves certain risks that must be considered. In this context, insurance is vital in protecting investments and reducing potential negative impacts.

One of the main risks faced in constructing PLTS is the significant investment value. The PLTS development process requires high technology and significant infrastructure, which requires a substantial investment.

In the case of PLTS construction with a capacity of just 1 megawatt, the investment value can reach millions of US dollars. Therefore, stakeholders need to protect their investments with proper insurance.

 

UNDERSTANDING THE RISKS FACED BY PV mini-grid

Apart from financial risks, the location of PLTS construction can also be challenging. Some PV mini-grid projects are built in remote or hard-to-reach areas, affecting the ability to perform installations and repairs efficiently. This risk can be overcome with insurance covering the cost of shipping, maintenance, and equipment repair.

This insurance will protect equipment damage, loss, or damage during shipping, as well as repair costs due to damage that occurs during PLTS operation.

In addition, PLTS is also vulnerable to weather risks that can affect performance and productivity. Extreme weather, such as storms, heavy rains, or prolonged heat waves, can disrupt the operation of a solar power plant and even cause physical damage. In this case, insurance or insurance that covers weather risks can provide protection against losses due to decreased performance or damage caused by bad weather.

Engaging an insurance broker is a wise decision to manage all these risks. Insurance brokers have specialized knowledge and experience in the renewable energy industry and can assist in identifying relevant risks and offering appropriate insurance solutions. They have access to a broad insurance market, enabling stakeholders to choose from various policies to suit their needs.

In facing the risks and challenges associated with PLTS development, it is essential to understand the need for comprehensive insurance protection. Through the right policies, stakeholders can protect their investments, minimize financial risks, and ensure the continuity of PLTS operations.

In the rapid development of the renewable energy industry, insurance brokers provide protection, trust, and confidence to stakeholders in achieving long-term success.

The investment required for constructing a Solar Power Plant (PLTS) is indeed huge, and a location that is difficult to reach also adds a level of risk that must be considered. Therefore, it is essential to carry out effective risk management and obtain high-quality insurance coverage. Thus, in the event of an accident or damage, the insurance company can bear the cost of repairs and repairs.

 

OVERCOME PLTS RISK

As an insurance broker with over 30 years of experience in the industry, we would like to share our expertise with you. The aim is to give investors and PLTS owners a better understanding of the associated risks.

PLTS development involves stages that have a high risk. Not all insurance companies are willing to provide coverage for this type of work. The highest risks usually occur during solar cell installation, testing, and operation.

To get insurance coverage from an insurer, there are several things to note:

  • Choose an insurance company that has experience in handling PLTS projects. Choosing an insurance company with in-depth knowledge and understanding of the unique characteristics of PV mini-grid will ensure that the risks associated with your project are managed appropriately.
  • Perform a comprehensive risk evaluation. Before starting a PV mini-grid project, it is essential to carry out a thorough risk evaluation. Identify potential risks during the development, testing, and operational stages of PLTS. This will help you obtain insurance coverage in accordance with the risks involved.
  • Don’t forget to pay attention to the quality and insurance coverage offered. Ensure that the insurance policy covers all relevant risks and has explicit provisions regarding compensation in case of damage or accident. Discuss with your insurance broker the specific needs and requirements of your PV mini-grid project.
  • Always renew and double-check your insurance coverage. The associated risks may change during the construction and operational stages of PLTS. Always recheck your insurance coverage and ensure the range is still by the risks involved.
  • By following these steps, you can ensure that your PV mini-grid project has adequate insurance coverage. High-quality insurance guarantees will give you confidence and protect your investment from financial risks that may arise.

Several factors need to be considered to ensure effective risk mitigation during the construction stage of a Solar Power Plant (PLTS). The following are some essential points that must be considered in the feasibility study and PLTS development stage:

  • Comprehensive feasibility study

Analyzing soil conditions and construction methods and using experienced contractors are important steps in determining the feasibility of a PLTS project. A complete feasibility study will provide an accurate picture of the risks and benefits associated with the project.

  • Use of high-quality materials

The selection of suitable materials will provide long-term reliability and durability for the PLTS project. The highest quality materials will reduce the risk of damage and extend the system’s operational life.

  • Pay attention to weather conditions.

Weather conditions, especially rainfall levels, must be carefully considered during the PLTS development stage. Avoid working during high rainfall, which can cause distraction and safety risks.

  • Adequate road access development

Ensuring adequate road access to the project site is essential for the smooth transportation of materials and equipment required during the construction of a PV mini-grid. Good roads will minimize the risk of damage and congestion.

  • The condition of the surrounding community and their support

Paying attention to the relationship with the surrounding community and getting help from them is essential to maintain the harmony and smooth running of the project. Holding dialogue and building good relations with the community can reduce the risk of conflict and obstacles in PLTS development.

  • Selection of the type and brand of the machine

Choosing the correct type of machine and a trusted brand is essential in maintaining the reliability and efficiency of PLTS operations. Selecting a suitable device will reduce the risk of damage and excessive downtime.

  • Competent project management team

An experienced and skilled project management team ensures that a PV mini-grid project runs well. A team that can manage risk, monitor project progress, and coordinates all development aspects will minimize the risk of errors and delays.

  • Project financing plan

Developing a mature and adequate financing plan is very important to ensure the smooth running and success of the PLTS project. Having sufficient sources of financing will reduce the risk of a lack of funds and development delays.

  • Power Purchase Agreement (PPA) contract with PLN

Drawing up a good PPA contract with PT PLN (Persero) or other electricity service provider bodies is essential in ensuring the sustainability and profitability of a PLTS project. A transparent and profitable PPA contract will provide certainty of income and reduce the risk of market uncertainty.

In addition, several types of insurance are required during the PLTS construction stage, including:

  • Professional Indemnity (PI) for consultants and contractors.
  • Surety Bonds and Bank Guarantees include Bid, Performance, and Payment Bonds.
  • Marine Cargo Insurance for shipping materials from abroad and between islands.
  • Construction/Erection All Risks/Third Party Liability Insurance (CAR/EAR/TPL) to protect against the risk of damage or accidents during construction.
  • Construction Plant and Equipment Insurance to protect construction equipment used in the project.
  • Motor Vehicle Insurance for project vehicles and cars.
  • Workmen’s Compensation Assurance or Employment BPJS for labor protection.
  • Personal Accident Insurance for protection against personal accidents.

By paying attention to these factors and obtaining appropriate insurance coverage, you can reduce risks and ensure the overall success of the PV mini-grid project.

The PLTS operational stage is essential after the installation project is complete. At this stage, the electricity production capacity of the PLTS is tested to ensure that it is by the contract made with PLN. If the electricity capacity is appropriate, then a Commercial Operation Date (COD) is signed, and the PLTS can operate commercially and receive payment from PLN for the electricity produced.

However, before PLTS is fully operational, it is necessary to prepare operational insurance coverage, which is a challenge that is just as difficult as getting guarantees during the construction phase. Insurers tend to worry about the risk of fire, flood, hurricanes, riots, and the evil intentions of people around the PLTS site. In addition, there is also the risk of electrical breakdown and the risk of consequential loss, which can cause loss of income due to machine damage.

The following are the types of insurance required for the operational stage of PLTS:

  • Property All Risks Insurance (PAR)

This insurance guarantee covers the entire PLTS structure, including powerhouses, turbines, transformers, control panels, transmission cables, etc. The Property All Risks guarantee also covers the risk of floods, landslides, hurricanes/hurricanes, water damage, riots, other people’s malicious acts, theft, and demolition.

  • Earthquake and Volcanic Eruption (EQVE)

This insurance guarantee protects against damage from earthquakes and volcanic eruptions. This insurance is usually processed in conjunction with the PAR.

  • Business Interruption Insurance following PAR/EQVE

This insurance protects against operational disruptions caused by risks covered by the PAR and EQVE policies.

  • Machinery/Electrical Breakdown (MB)

This insurance protects against turbines, transformers, and other generating equipment damage.

  • Business Interruption following MB

This insurance protects against operational interruptions caused by risks covered by the MB policy.

  • Public Liability Insurance

This insurance guarantee protects against third-party lawsuits due to errors or negligence of the PLTS company. For example, damage to residents’ houses or accidents that result in death due to the collapse of PLTS facilities.

  • Health Insurance for employees

Protect PLTS employees with health insurance that covers medical expenses and health protection.

  • Employment BPJS insurance for employees

Protect PLTS employees by BPJS Employment provisions regarding labor protection.

In addition, other aspects need attention and may require additional insurance types not listed above.

From the analysis above, the risks in the construction and operation of PLTS are included in the high-risk category. Therefore, getting help from an insurance expert, such as an insurance broker with experience in this field, is essential. Insurance brokers will help arrange insurance coverage and settlement of claims in the event of an accident.

For your PLTS project, contact a reliable insurance broker immediately for the proper protection.

 

WHY INVESTORS, OWNERS, AND CONTRACTORS

Investors, owners, and contractors require the services of an insurance brokerage company in the context of a PLTS project for the following reasons:

  • Expert Knowledge

Insurance brokerage firms have in-depth knowledge and understanding of the insurance market and the PV mini-grid industry. They understand the risks associated with a PLTS project, both in the construction and operational stages and the type of insurance suitable for dealing with these risks. Insurance brokers can help investors, owners, and contractors understand their insurance needs with this knowledge.

  • Risk Analysis

Insurance brokers can conduct a thorough risk analysis of the PLTS project. They will evaluate possible risk factors, such as physical damage, loss of revenue, legal liability, operational disruptions, etc. With a deep understanding of these risks, insurance brokers can help investors, owners, and contractors identify and manage potential risks.

  • The Right Insurance Quote

Based on the risk analysis, the insurance broker will help find and offer the type of insurance that best suits the needs of the PLTS project. They have access to different insurance companies and products to find the most optimal solution regarding premiums, coverage, and policy terms.

  • Negotiation and Selection of the Best Insurance

Insurance brokers will act as intermediaries between investors, owners, and contractors with insurance companies. They will negotiate with insurance companies to obtain favorable policy terms, including competitive premiums and suitable coverage. With their experience and expertise, insurance brokers can help find the best insurance that meets the needs and budget of a PV mini-grid project.

  • Claim Settlement

If an accident or incident triggers an insurance claim, an insurance broker will assist in the claim settlement process. They will help investors, owners, and contractors gather the necessary documents, compile claim reports, and communicate with insurance companies to ensure the claim process runs smoothly and on time.

By using the services of an insurance brokerage company, investors, owners, and contractors can take advantage of the knowledge and experience of experts in the insurance industry to protect their PLTS projects from risks that may occur. Insurance brokers will assist in all aspects related to insurance, from risk analysis to settlement of claims, thereby ensuring comprehensive protection.

 

CONCLUSION

The construction and operation of PLTS involve high risks, such as construction risks, equipment damage, natural disasters, and lawsuits. Therefore, PLTS investors, owners, and contractors must obtain experienced insurance broker services.

Insurance brokers will assist in identifying existing risks, adjusting appropriate insurance solutions, and guiding to protect the financial interests of stakeholders. They can also assist in negotiating comprehensive insurance policies and arranging settlement of claims in the event of an accident.

In building a PLTS, it is essential to consider factors such as soil condition analysis, selection of experienced contractors, use of quality materials, attention to weather conditions, construction of adequate access roads, and local community support. At the operational stage, insurance such as Property All Risks, Earthquake and Volcanic Eruption, and Public Liability Insurance are required to protect assets and overcome possible risks.

By involving experienced insurance brokers, PLTS stakeholders can get the proper protection and reduce the financial impact of the risks that arise. An insurance broker is essential in maintaining the PV mini-grid project’s long-term success and providing stakeholders peace of mind.

LOOKING FOR INSURANCE PRODUCTS? DON’T WASTE YOUR TIME AND CONTACT US RIGHT NOW

L&G HOTLINE 24 HOURS: 0811-8507-773 (CALL – WHATSAPP – SMS)

website: lngrisk.co.id

E-mail: customer.support@lngrisk.co.id

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