Reduced Yield Coverage

As the demand for clean and sustainable energy sources continues to surge, solar farms have emerged as a critical player in this eco-friendly revolution. However, the successful operation of solar farms is not without its challenges. Reduced Yield Coverage (RYC), offered by Colonnade, is a groundbreaking insurance solution tailored in new solar farms in the CEE region. In this article, we explore what RYC is, what is the difference between traditional property insurance and RYC, and its impact on the future.

Understanding Reduced Yield Coverage

RYC, at its core, is designed to cover the loss of production of the insured photovoltaic plant. This coverage comes into play when the actual annual production figure of the plant falls below 90 % of the estimated annual energy production at the end of the policy period, which typically spans one year. It is important to note that indemnity can only be calculated at the end of the policy period. Short-term or periodical shortages do not trigger this coverage, and requests within the policy year are disregarded.

Traditional property policies vs RYC

Traditional property policies as we know them, are adept at covering physical damage and business interruption resulting from such damage. However, the unique nature of solar farms, also known as photovoltaic plants, needs a specialized approach. Recognizing this, Colonnade has developed the RYC, an innovative endorsement to property policies. The primary aim is to address the specific challenges faced by solar farm operators and offer a comprehensive solution to protect their investments.

The triggers of RYC

RYC responds to various triggers that can result in a reduction of energy production at solar farms. These triggers include:

• Decrease in global solar radiation: RYC takes advantage of NASA data to monitor changes in global solar radiation at the plant location. This is a critical factor that directly impacts energy production;
• Internal operating defects: Any internal operating defects within the photovoltaic modules and inverters of the plant are considered a trigger for RYC coverage;
• Above-average or excessive wear of the photovoltaic modules and invertors of the plant.

Coverage limits

For clients opting for RYC, the maximum coverage limit is 5 000 000 € per policy, with a cap set at 30 % of the annual expected production. A deductible of 10 % of the annual expected production applies before the coverage takes effect. These limits and deductibles are designed to strike a balance between risk mitigation and cost-effectiveness.

Colonnade´s RYC cover is not limited to policies where they underwrite 100 % of property risks. In cases where Colonnade serves as the lead insurer, RYC is still available, broadening the reach of this innovative solution to a broader spectrum of clients.

One of the most significant advantages of RYC is its ability to provide certainty to clients who have the financial backing of banks or creditors. By ensuring that the level of revenue from electricity generation activities remains stable, this coverage reduces uncertainty, making it an attractive option for investors and financial institutions alike.

This coverage ensures that investors can confidently and securely contribute to a sustainable, eco-friendly future.