We’ve teamed up with global insurance firm Lockton Companies to discuss how to safely implement solar PV strategies whilst mitigating fire risks.

With the UK Government targeting net zero, the latest change to permitted developments (PDR) in December 2023 has removed previous caps and opened up new opportunities for solar and achieving ESG goals. It is therefore no surprise that the use of renewables is becoming a key consideration for developers across real estate. But with potential fire risks causing concerns for insurers, how do we mitigate these risks and create solar PV strategies that are sustainable but safe?

Solar energy is on the rise

Solar PV’s hold a multitude of benefits for commercial property owners across a variety of sectors, from industrial to residential. The removal of red tape and the previous one-megawatt cap by the government, has meant a recent reduction in costs and time associated with full planning applications. Unit prices are at an all-time low and pay-back on a PV system is shorter than ever. This means that making use of spare roof space is a sound decision for both owners and occupiers.

With technology in renewables constantly advancing, solar energy is becoming a must to futureproof and add value to a building. As a renewable energy source, PV’s help to reduce bills, make buildings compliant and more rentable, hold low maintenance costs and can be used as a new revenue stream for landlords for 25-years. The valuation benefits are also quite clear; the difference in capital value between a warehouse with an EPC D rating and an EPC B rating can be substantial. It is also a far more environmentally conscious way of generating energy, helping with ESG credentials.

Besides the financial and environmental benefits to solar energy, it may also provide a backup to securing electricity in a time where the National Grid is under strain. From the sharp uptake of electric vehicles (EVs) to the reduction of coal power, the gradual societal shift to electrification requires a significant supply of electricity to meet the demand – and one that we cannot guarantee the grid can maintain.

Despite its benefits, there are a few rare risks associated with solar panels which are increasingly coming to light as its usage increases, and simultaneously raising concerns with insurance providers.

The risks of solar

One identified issue surrounds solar panel electrical connectors. The most common connector is the MC4 (Stäubli Multi-Contact) connector, a weatherproof single-contact connector containing built in strain relief and interlocks. Whilst a standardised connector across the industry, with many connectors created overseas there is a risk the connectors either supplied with the solar module or utilised by the installer are not in fact genuine Stäubli Multi-Contact MC4 or are mismatched.

With manufacturers creating a variety of different brands to varying quality standards, pairing different PV connectors is one of the most common solar deficiencies and one that holds the potential for a fire through arcing of electricity.

Storm damage is another factor to be aware of and exploring the feasibility of a solar PV system, including roof space suitability is key. This includes assessment of the roof type, roof condition, skylights, shading from roof plant equipment, nearby buildings or trees.

Resolving risk from solar

The good news is that fire risk can all be minimised by good system design, product selection and installation practices. In fact, according to a BRE report (Fire and Solar PV systems, Instigations and Evidence), most fires have generally been caused from poor installation or the use of wrongly specified, incorrect or faulty equipment. Once deciding to proceed with PV installation, it is imperative to recruit consultants and contractors who are experts in their field, and who put fire safety first.

For example, confirming the compatibility of connectors during the design process is key; using the same brand of connectors will increase the chance of compatibility. With safety a priority, we at Hollis have conducted a deep dive into our supply chain to ensure the risk of mismatching connectors is minimised for our clients, therefore reducing the risk of fire during operation. Additionally, utilising an optimised solar system to allow for each panel to be controlled independently allows for not just greater system performance but also a safer solar array that can automatically shut down the system to a safe voltage of 1V DC per panel. This allows the fire brigade to safely access the roof and even automatically link the PV to the existing fire alarm system.

However, it isn’t just the initial installation and short-term operation which requires fire safety precautions. Safety in the long-term is of utmost importance, and this is only guaranteed through maintenance. Owners of PV’s should be undertaking an annual service for optimum efficiency but also to quickly identify and rectify any faults in the system. Whilst unlikely, and in theory solar panels do not require frequent service, maintenance will work in the benefit of all property owners, occupiers, and insurance providers.

As with all exterior installations, losses from storm damage are a risk. This can be mitigated through assessment of the roof condition and suitability, fitting and installation along with regular maintenance, and through having the proper insurances in place.

All things ESG

Before proceeding with the installation of solar panels, it is worth understanding whether they support your overall ESG strategy. Whilst a source of clean energy, not all panels are equal, and some recent reports have highlighted the alleged forced labour from some solar panels from the Xinjiang area in China. Considering the entirety of your solar panel’s supply chain will ensure the system installation helps you reach your ESG ambitions.

Moving forward

The use of solar PV is a viable option for commercial property owners looking to increase the sustainability credentials of their asset and assisting tenant’s energy costs. It is however essential to understand the risks associated with PV’s, especially those surrounding fire, and take the necessary precautions to mitigate this risk.

Whilst PVs are seen as a positive for occupiers, owners, and insurers alike, there will be more due diligence checks and requirements that need to be understood at the early stages of PV installation. This is gaining more traction with the recent second edition publication of RC62 (Recommendations for Fire Safety with PV Panel Installations) which provides ‘practical guidance to insurers and clients on the requirements for the procurement, ownership, operation, and maintenance of safe and efficient PV systems.’

Technical expertise and advice

The technical expertise of solar experts at Hollis, and insurance brokers Lockton, can help. Both independent, Hollis and Lockton are able to act solely for our clients, providing advice that is in the best interest of them and their asset. An independent, approach focused on the success of our clients, Lockton’s creative thinking and approach to risk management covers key areas such as professional indemnity, fire issues, and roof safety.

If you would like further information on your solar PV feasibility and route to insurance, please get in touch with Hollis’ Head of energy solutions Stuart Patience, Lockton’s Senior Vice President Rachel Norris, and Partner Jonathan Hackett.