Swiss Re Corporate Solutions, the commercial insurance arm of reinsurance giant Swiss Re, has entered into an Agency Agreement with solar risk management firm, kWh Analytics, designed to accelerate the growth of solar energy.
According to Swiss Re and kWh Analytics, the InsurTech collaboration establishes a completely new category of risk management products that are based on data which underpins the Solar Revenue Put – developed by kWh and which enables banks to finance solar assets in an efficient manner.
Structured as a parametric insurance policy on solar production and revenues, the Solar Revenue Put serves as a credit enhancement for financial investors.
Swiss Re Corporate Solutions underwrites the solution, and the partnership between the two officially marks the re/insurer’s principal risk taking in the North American solar mark, which is an expansion of Swiss Re’s thermal coal policy first announced in June 2017.
Ivan Gonzalez, Chief Executive Officer (CEO) of Swiss Re Corporate Solutions, North America, commented: “As we strive to make the world more resilient, we prioritize risk transfer solutions that enable sustainable progress for our customers and our communities. The agreement helps further that commitment and establishes an entirely new category of risk management products based on kWh Analytics’ industry-leading solar power plant data repository.”
The first Solar Revenue Put was transacted in late 2017 and has now been structured on USD 1 billion of solar capacity. kWh Analytics structured a Solar Revenue Put with global solar developer GCL New Energy and U.S solar project investor PNC Bank for 50 MW of solar farms in September 2018, backed by Swiss Re.
The re/insurer then provided risk capacity for a 35MW Solar Revenue Put in November of the same year, which was followed by the refinancing of kWh Analytics’ portfolio of 41 projects. Then, in July of last year, kWh Analytics closed a Solar Revenue Put for a 23 MW solar project, with capacity provided by Swiss Re Corporate Solutions.
Richard Matsui, CEO of kWh Analytics, added: “In the solar business, risk is cost. In fact, the cost of capital is the single largest cost to a solar power plant. Using data, we are reducing that risk.
“Investors have long sought assurance that solar power plants will perform as promised. With kWh Analytics and Swiss Re Corporate Solutions now protecting their investments, stakeholders are better able to invest the hundreds of billions of dollars that the solar industry requires in the next three years. Swiss Re seized the opportunity to build a lead in insuring the world’s fastest growing source of energy.”
According to the International Energy Agency, solar power was the world’s fastest growing source of new energy last year, producing greater levels than wind, power, hydro power, and natural gas. Swiss Re and kWh Analytics note that as estimated by McKinsey & Company, by 2025, the solar power industry will require USD 1 trillion of investment capital to support the construction of new solar power plants.
Van Skilling, former CEO of Experian and kWh Analytics Board Member, said: “The world desperately needs novel solutions to real problems. We need more creative partnerships like this one, that craft entirely new product categories by combining fresh sensor data with proven risk capital. This is true innovation. The importance of the Solar Revenue Put to our local, national and global communities in accelerating the adoption of clean energy and reducing climate change is obvious.”
