Global solar industry sees 95% increase in average downtime days due to pandemic, supply chain
GCube Insurance Ltd released its latest market insights report, “Supply Another Day: Measuring the Insurance Impacts of the Renewable Energy Supply Chain Challenge.”
Drawing on the expertise of the company’s global underwriting and claims teams, the report articulates the impact of global supply chain disruption and rising inflation on renewable energy developers, manufacturers and insurers, in an environment of unprecedented demand for clean energy. . assessment of insured values and targeted investment in skills and supply chain diversification, in an effort to improve the resilience of the global renewable sector.
According to the report, the COVID-19 pandemic and subsequent supply chain disruptions have caused the industry-wide average number of downtime days to increase by 38% from 2016 levels; reversing a downward trajectory seen in 2018 with a more than 10% increase in downtime days between 2019 and 2020. BI periods for those claims continue to lengthen, while the number of BI claims examined has been stable for the past two years stays.
The global solar industry has witnessed the worst effects of this disruption, with a 95% increase in average downtime. Recurring COVID-19 lockdowns in China, combined with a shortage of other options for manufacturing and supplying complex solar components worldwide, have exposed the weaknesses of Southeast Asia’s total reliance on the solar industry and sent a clear signal about the importance of a diverse range of options.
Without an industry-wide effort to diversify the solar supply chain, procurement slowdowns and cost inflation will accelerate. However, investment in the public and private sectors has struggled to support growth within supply chains, hindering both the creation of new supply routes and infrastructure and the development of key skills and expertise.
This lack of funded development leaves the supply chain unable to scale its resources and staff to meet the industry’s growing demand. This is a particular challenge for contractors, who are under pressure to stretch resources and lower their rates to take advantage of new opportunities. GCube predicts an increase in contractor quality claims in the coming months as OEMs struggle to cope with the pressure on their resources and rates.
“The market continues to face challenges that are unprecedented in GCube’s more than 25 years of experience working with renewable energy policyholders. The demand for renewable energy projects and the technology, equipment and skilled labor needed to deliver them has never been greater. But the roadblocks created by the pandemic on the world’s path to a cleaner energy future have exposed weaknesses in the global supply chain that urgently need to be addressed,” said Fraser McLachlan, CEO of GCube.
“Pairyness will be a make-or-break component of the renewable energy developer’s business plans in today’s market, and part of it is taking reasonable responsibility for the level of risk they bring to their projects. Ensuring that TIVs are reported as accurately as possible is critical to allow for appropriate component and downtime coverage and to protect revenue streams – while a realistic approach to competitive contractor rates can provide both security for themselves and flexibility for the contractor in buffering against quality defects,” McLachlan continued.
“Supply Another Day” is available exclusively to GCube customers and brokers. For more information or to request a copy, email: firstname.lastname@example.org.
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