Introduction

Over the course of the last two decades renewable energy has been a subject that has found its way into discussion from the family dinner table to the top of global political initiatives and policies. It can at times be a polarizing topic; however, its relevance in the current geopolitical and geo-economic landscape is undeniable. According to World Resources Institute (WRI) Explaining the Exponential Growth of Renewable Energy:

“Wind energy first took off in the early 2000s, while solar energy took off about a decade later but has been growing even faster than wind. The factors driving the growth in renewable energy have been systemic, but certain key moments have reflected the larger trends or acted as turning points in renewable energy adoption.”

^{Figure 1 - Key milestones in the growth of solar and wind energy (World Resources Institute).}

Within the same article WRI outlines the following:

“The market share of solar and wind in global electricity generation grew at a compound average annual growth rate of 15% from 2015-2020. If exponential growth continued at this rate, solar and wind would reach 45% of electricity generation by 2030 and 100% by 2033.”

Separately, according to the Deloitte 2022 Renewable Energy Industry Outlook:

“In 2021, the renewable energy industry remained remarkably resilient. Rapid technology improvements and decreasing costs of renewable energy resources, along with the increased competitiveness of battery storage, have made renewables one of the most competitive energy sources in many areas. Despite suffering from supply chain constraints, increased shipping costs, and rising prices for key commodities, capacity installations remained at an all-time high. Wind and solar capacity additions of 13.8 GW in the first eight months of 2021 were up 28% over the same period in 2020. Many cities, states, and utilities set ambitious clean energy goals, increasing renewable portfolio standards and enacting energy storage procurement mandates.

Renewable energy growth is poised to accelerate in 2022, as concern for climate change and support for environmental, social, and governance (ESG) considerations grow and demand for cleaner energy sources from most market segments accelerates.”

With the above context in mind, investment in—and construction of—new projects in the renewable energy sector will continue to grow and thereby increase the number of builder’s risk policies being underwritten. The aim of this paper is to review some of the unique circumstances surrounding renewable energy construction projects and how those circumstances can impact builder’s risk claims.

Notable Peril Examples

Damage to Components

Avoiding damage to components during the construction process is a top priority for every contractor and owner. However, even when the best care is taken, unavoidable circumstances arise, accidents occur, and components can be damaged. For example, on wind turbine projects some of the typical components that can be damaged are nacelles, hubs, rotors, and, most commonly, blades (as shown in Figure 2).

^{Figure 2 - Basic layout of a typical wind turbine's major components.}

Some common causes of damage include weather events, transportation, delivery, and erection activities. When faced with turbine component damage, it is important that the parties involved weigh all the available options for repair or replacement and associated ramifications. Are the damages to affected components repairable, and is repair or replacement the most mitigative approach?

Key factors to review when considering whether to repair or replace damaged components include:

• Direct cost of material and labor for a repair vs. replacement.
• Timeline for performing repairs to existing components vs. timeline to receive replacement components, and whether there are any readily available.
• Based on current weather conditions, is it feasible to perform a repair? Can temporary measures be established to allow for the appropriate environment required to perform repairs?
• Other impacts to the construction project, including equipment and crew resequencing, schedule delays, etc.

Weather Related Impacts

Extreme weather is a common peril faced at wind and solar energy construction projects. Some of the more common types of extreme weather events experienced are heavy rain, high wind, hurricanes, and hail. Each of these perils carries their own unique set of circumstances.

Flooding from heavy rains can result in impacts to construction progress, particularly when heavy equipment and large components are involved, as in the case of a wind turbine project.

^{Figure 3 - Flooding at a project site.}

When faced with this type of event, it is important that all involved clearly understand the options available. For example:

• Is it better for the contractor to halt work for a short period of time to allow for possible site recovery, and/or when is the right time to start mitigation efforts?
• What are the potential impacts for reconstruction of specific site access items?
• What are the specific soil conditions at the site, and what are the impacts from potential subsequent rain events?
• What is the current stage of the project, and what are the potential impacts to the critical path of the construction schedule?

Each of these circumstances should be addressed and weighed against the specific site conditions and project circumstances.

High winds and hail can significantly impact wind and solar energy projects. As with all projects, it is critical that there is good initial documentation of the visible damages to the impacted components. This documentation should include:

• Photo documentation (both aerial and ground level).
• Site mapping outlining saturation zones and boundaries.
• Infrared imaging for solar sites (if available).

The accuracy of the visible damage inspection data is important as it typically plays a significant role in developing testing strategies to address any potential unknown damages.

Fire

Wildfires and brush fires are another notable peril faced by solar energy projects. It is important to get to the impacted site quickly to ensure the most accurate site documentation. Some important initial questions to answer and document are:

• How and from where did the fire originate?
• What are the boundaries (if any)?
  • Access roads, inverter pads, etc. can act as fire break areas.
  • Aerial imaging can be particularly useful in determining boundaries.
• If a tracking system is in place, what was the approximate physical position of the Photovoltaic (PV) modules at the time of the fire event?
  • The position of the PV modules relative to the ground can assist in estimating how close modules were to the flames and elevated heat.
• What types of impacts/damages did various equipment sustain, i.e., scorching/melting of equipment vs. soot/ash impacts?

The accuracy of this initial data is important as it typically plays a significant role in developing testing strategies to address any potential unknown damages.

Unique Solar Testing Requirements

The following are some unique types of testing for solar projects:

• Current and voltage characteristic curve (IV curve). The IV curve provides a quick and effective means of accessing the performance of solar PV modules or strings. This can be used to determine if modules within an “impacted” area are showing lower performance when compared to control modules.

• Electroluminescence (EL). EL testing uses specialist imaging equipment and specified current flows to create images of the panel that can detect hidden defects in the structure of PV cells. It is typically utilized to evaluate potential non-visible defects and damages such as:

• • Micro-fractures
  • Cell cracks
  • Soldering defects
  • Dead cells
  • Back-sheet scratches

^{Figure 4 - Electroluminescence testing on solar panels.}

As is important with all testing methods, it is vital that a good baseline is established to ensure that data collected within the potentially impacted areas can be evaluated against real time field PV modules. This is vital as many factors can contribute to variations in performance and hidden defects aside from any loss being evaluated, including shipping, installation, and/or thermal expansion and contraction.

Builder’s Risk Procedures

Initial Damage Assessments

As with any loss it is critical in renewable energy builder’s risk losses to accurately identify and document the scope of damages related to the claim event. This is typically achieved through:

• Detailed field notes and photo documentation of visible site conditions.
• Site diagramming and impact mapping.
• Detailed discussion with the onsite construction and project management team.

As part of this scope identification, it is also important to document and discuss any potential exposures that are not immediately obvious. At solar energy sites these can come in the form of:

• Potential non-visible micro-fractures to PV modules.
• Underground cable impacts.
• Equipment shorts.

At wind sites these exposures can come in the form of:

• Collateral circumstances from the damaged event, like additional proof rolls for equipment delivery or turbine construction activities.
• Resequencing of contract scope.
• Additional crane breakdowns, etc.

In addition to documenting the scope of the impacted portions of the project, it is important to document the overall general status of the project, including areas not directly impacted by the event. The importance of this exercise is to ensure a good understanding of the status of construction progression at or near the time of the event. This information is valuable when analyzing potential impacts to the construction schedule and delays.

^{Figure 5 - In-progress construction of wind turbines at a project site.}

It is also prudent to have discussions surrounding the need for site monitoring or additional testing. Documentation gathered from site monitoring can be valuable if claim related repairs are progressing on a time and expense basis and if there are concerns that there are relevant chances of additional delays to the construction schedule. Additional testing can commonly come in the form of EL and power testing for solar sites and material and soil sampling in the case of wind sites.

Request for Information (RFI)

Due to the complexity of many renewable energy claims—especially if delay, lost productivity, or acceleration are being claimed—the RFI is critical to be able to properly review the claim. The RFI will include information related to evaluation of the claimed repair costs as well as documents which allow insight into the project status such as construction schedules, meeting minutes, daily reports, etc. The items below, although not all inclusive, represent typical critical information to allow a claim to be reviewed:

• Cost support including invoices, time and material tickets, payroll records, and change orders. A claim review is assisted if the insured has also designated a specific cost code where all costs related to the loss can be tracked.
• Project meeting minutes, plan of the day (PODs), and monthly reporting. These documents provide an understanding of the activity being executed on a day-by-day basis as well as a general overview of any project issues.
• Contract documents. The executed contract agreements between the Owner and General Contractor as well as the General Contractor and Subcontractors provide an understanding of contract terms as well as any allowable timeframes, markups, and unit pricing.
• Site specific drawings and specifications.
• Construction schedules in native software format. If delay or acceleration is to be evaluated the construction schedules in their native format are critical to any assessment. If the native format is not provided, many details necessary to evaluate delay, such as the critical path, logic, and constraints, are not able to be viewed and assessed.

Delay in Completion Issues

Solar and wind energy projects are often constructed in remote locations, and, in the case of wind farms, with equipment of significant size as compared to a more traditional commercial building construction. As a result, when delay is claimed on a solar or wind energy project there are some unique considerations when analyzing delay and acceleration/mitigation claims.

Component Availability

Availability of replacement components can be impacted by several factors:

• Lead times for replacement components can be extended.
  • Manufacturing locations are typically not domestic and have to account for re- procurement coordination and transport.
  • The current inventory of components may already be slated for another upcoming project.
  • Transportation and shipping timelines may be extended.
• Component obsolescence.
  • Particularly a possibility for PV modules as the technology changes rapidly.
  • Potential re-engineering may be required due to component obsolescence.

The availability of replacement components can have collateral impacts on project schedule, crew and equipment sequencing, and site commissioning. It is important for contractors to consider all the collaterally impacted factors and potential mitigating options when deciding on a plan for replacement or repair.

Availability of Personnel and Equipment

Large scale wind and solar energy projects are typically located in remote and/or difficult to access areas. As a result, the industry primarily utilizes non-local resources for construction personnel. In addition, much of the equipment, especially erection cranes for wind farms, are of limited availability and are shipped from other locations, often booked well in advance.