5 Items to Check the Price and Insurance Costs of a Solar Power Plant

Table of Contents

• Consider the price of a solar power plant including insurance costs

• Item 1: Confirm the scope of insurance coverage and the equipment configuration

• Item 2: Confirm natural disaster risks and site conditions

• Item 3: Confirm equipment deterioration and past accidents and repair history

• Item 4: Confirm preparations for business interruption losses and suspension of power sales

• Item 5: Confirm deductible terms and risks excluded from coverage

• Why overlooking insurance costs skews price judgment

• Summary: Assess insurance costs together with site-specific risks

Consider the price of a solar power plant, including insurance costs

When considering the purchase or acquisition of a solar power plant, many operational personnel first check the installed capacity, actual generation performance, power sales conditions, remaining term, and land conditions. These are indispensable items for judging the price. However, when considering the actual operational burden, insurance costs are equally important. Solar power plants are outdoor installations and are exposed to various risks such as wind and rain, lightning strikes, snowfall, landslides, fallen trees, fires, theft, and third-party damage. Therefore, even if the price appears reasonable, if the necessary insurance is not taken into account, the burden after purchase may be greater than expected.

The insurance cost for a solar power plant is not determined simply by whether you purchase insurance. The perceived risk varies depending on the scope of the covered equipment, the installation location, disaster risks, the age of the equipment, past accident history, management practices, coverage terms, and deductible conditions.

Even for plants with the same installed capacity, risk assessments differ for sites near forests, on slopes, on poorly drained land, or in regions prone to strong winds or heavy snowfall. Also, for plants with equipment degradation or insufficient inspections, it is necessary to more carefully assess the likelihood of accidents or failures.

For practitioners searching for "solar power plant price", what matters is not only the purchase price but also being able to anticipate what costs and risks will arise during the operating period. Insurance costs, like operation and maintenance costs and repair costs, are an important element for keeping a plant operating safely. Even if a project has a low price, if disaster risk or equipment risk is high and the required insurance coverage becomes broader, the actual burden may increase. Conversely, projects that appear expensive may offer easier prospects for long-term operation if equipment condition and land conditions are good and risk management is straightforward.

The purpose of checking insurance costs is not just to see whether the premium is high or low. It is to clarify which risks need to be covered, which equipment is eligible, how far coverage extends in the event of accidents or disasters, and how to assess the impact of a suspension of power sales. This article explains five items for verifying the price and insurance costs of solar power plants, aimed at practitioners.

Item 1: Confirm the scope of insurance coverage and the equipment configuration

The first item to check when confirming the insurance cost for a solar power plant is the scope of coverage and the equipment configuration. Insurance does not mean the entire plant is automatically protected to the same extent. You need to confirm how far the coverage extends—whether solar panels, power conversion equipment, mounting structures, foundations, cables, connection equipment, monitoring devices, fences, gates, drainage facilities, access/maintenance paths, and so on are covered.

Especially in used solar power plants, the equipment configuration may have changed from the original drawings. If there is a history of replacing some equipment during operation, updating monitoring devices, repairing fences or drainage facilities, or changing cable routes, you must verify whether the equipment covered by insurance matches the actual conditions on site. If equipment shown on the drawings has been updated on site, or equipment on site is not reflected in the documentation, it becomes difficult to explain incidents or to perform management verifications.

When assessing insurance costs, we check not only the installed capacity but also the types and layout of equipment. Whether there are multiple power conversion units, where monitoring and communications equipment are installed, whether cables are underground or largely exposed, and how extensive fencing and drainage are—all of these change how risks are perceived. If you only check the installed capacity when looking at the price of a power plant, you can overlook the actual equipment that would be covered by insurance.

It is also important to ensure that the scope of insurance coverage aligns with the scope of management responsibility. The risks you need to check vary depending on whether you own the land or lease it, whether the management area is limited to inside the fences, or whether it also includes drainage channels and access roads. If the land is leased, it is essential to confirm in the contract with the landowner who is responsible for what and what extent of restoration will be required in the event of a disaster or accident.

To accurately assess insurance costs, you need to cross-check not only the insurance contract but also the equipment register, drawings, site photographs, and inspection reports. If you can clarify which pieces of equipment exist, which are covered, and which may pose risks for future repairs or incident response, you can make a more realistic judgment about the relationship between price and insurance cost.

Item 2: Check natural disaster risks and site conditions

When considering insurance costs for solar power plants, natural disaster risks and site conditions are critically important. Solar power plants are outdoor facilities and are exposed to wind and rain, lightning strikes, snowfall, landslides, fallen trees, flooding, and other hazards. Even for plants with the same installed capacity, risk assessments differ greatly between flat, well‑drained, easy‑to‑manage land and sloped or poorly drained land near forests.

First, what I want to check is drainage and topography. I confirm where rainwater flows in from and where it flows out to, whether drainage channels are functioning, and whether there are any places where water tends to accumulate. At power plants with poor drainage, scour around foundations, ground softening, impacts on cables and electrical equipment, and deterioration of access walkways can occur. On land where sediment flows in with every heavy rain, the burden of restoration work and cleaning also increases.

On sloped or developed land, the condition of the slope faces must also be checked. Look for signs of cracking or collapse, any accumulation of soil or debris, and whether water or sediment is likely to flow in from above. Disaster risk is not something that can be easily discerned from current power generation alone. Even if generation performance is stable, if the site is prone to damage during heavy rain or strong winds, the approach to insurance and maintenance management will change.

Surrounding trees are also important. At power plants located near forests or other trees, there is a risk of overhanging branches, fallen leaves, and trees falling. Fallen trees can damage panels, fences, cables, and power conversion equipment. If fallen leaves clog drainage channels, it can lead to drainage problems. If surrounding trees grow and increase shading, they may also affect power generation.

In areas prone to heavy snowfall or strong winds, check the condition of equipment anchoring, the integrity of mounting racks and foundations, the condition of fences and gates, and on-site access during winter or severe weather. When a disaster occurs, it is also important to know whether personnel can access the site, whether service vehicles can reach it, and whether recovery work can be arranged easily. Power plants that are difficult to restore experience longer outage periods, which also affect revenue from power sales.

Natural disaster risk and site conditions affect not only insurance costs but also the appropriateness of the price. For lower-priced power plants, site risks may underlie the low cost. For higher-priced power plants, things like drainage, road access, and recoverability in the event of a disaster may be valued. When checking insurance costs, it is important to review not only the insurance policy but also the local disaster risks.

Item 3: Verify equipment deterioration and past accident and repair history

When considering insurance costs for a solar power plant, you also need to check equipment deterioration and the history of past accidents and repairs. If equipment is aging, there have been many past accidents or failures, or repair details are unclear, you should carefully assess future accident risks and repair liabilities. Insurance is meant to prepare for unforeseen events, but it does not simply cover everyday deterioration or inadequate maintenance. It is important to understand the condition of the equipment and clarify which risks you should insure against.

The equipment to be checked is not limited to solar panels. We inspect the entire power plant, including power conversion equipment, mounting structures, foundations, cables, connection equipment, monitoring systems, fences, gates, drainage facilities, and so on. Panel cracks or soiling, records of stoppages of power conversion equipment, damage to cable sheathing, deterioration of connection points, corrosion of mounting structures, scour around foundations, and damage to fences are all related to the risk of accidents or outages.

If there is a history of past incidents, confirm the cause, extent of damage, details of restoration, and measures to prevent recurrence. The mere fact that an incident occurred is not necessarily a problem. What matters is whether the cause was identified, appropriate repairs were carried out, and whether the same risk remains. For example, if part of the equipment was damaged by strong winds, check whether the anchor points have been reinforced and the inspection regime reviewed. If there was damage due to poor drainage, it is necessary to verify whether improvements to the drainage facilities have been completed.

Repair history is also important. If an inspection report contains identified issues and the subsequent responses are unknown, they may remain as potential risks for future accidents. Even if something is considered repaired, caution is needed if it is unclear which equipment was addressed and to what extent, or whether measures to prevent recurrence have been implemented. Before considering insurance costs, confirm whether the condition of the equipment is being properly managed in the first place.

Also, check the quality of the photos and records in the inspection report. Even if photos exist, if the locations are not identifiable, it becomes difficult to trace incident histories and repair histories on site. Damaged areas, repaired areas, areas with poor drainage, broken fence locations, and cable damage locations should ideally be organized together with location information.

Equipment deterioration and accident history affect both price and insurance costs. For low-priced deals, confirm whether deterioration or accident history is behind the low price. For high-priced deals, check whether there are few accident records, the equipment is in good condition, and repair records are clear so that these can be confirmed as value. To appropriately consider insurance costs, it is important to understand equipment risks from both on-site inspections and documentation.

Item 4: Confirm preparedness for business interruption losses and suspension of electricity sales

When checking insurance costs for a solar power plant, you need to consider not only damage to the equipment but also preparations for a stoppage in electricity sales. If the plant stops due to a disaster, accident, or equipment failure, that period will affect revenue from electricity sales. Looking only at the restoration costs of the equipment itself can lead to overlooking the reduction in income during the downtime.

The first thing to check is the history of past outages. Confirm which equipment experienced downtime, when and to what extent it occurred, what the cause was, and how long it took to recover. An outage in itself is not necessarily a problem. What matters is whether the anomaly was detected quickly, whether the cause was identified, whether recovery arrangements were carried out smoothly, and whether measures to prevent recurrence remain in place.

When preparing for a suspension of electricity sales, power generation monitoring and an on-site response system are crucial. Even if abnormalities can be detected, if the person responsible for checking notifications is unclear or cannot get to the site quickly, the suspension period will be prolonged. At remote power plants or plants with poor access roads, on-site inspection and restoration work may take time. Before considering insurance costs, it is important to confirm whether you have operational arrangements to shorten the downtime.

It is also important to assess whether on-site conditions make recovery easier. Confirm whether work vehicles can approach power conversion equipment and connection facilities, whether equipment can be brought in, whether access is possible even after rain, and whether roads and access routes can be used during disasters. Even if the damage to equipment is the same, the length of the outage may differ between power plants that are easy to restore and those that are difficult to restore.

The risk of suspension of power sales is not something that can be easily seen from surface-level prices or generation performance alone. Even if generation performance appears stable, be cautious if there was a long-term stoppage in the past and the reason for it has not been adequately explained. If generation drops significantly in specific months, check for causes such as equipment stoppages, disasters, output curtailment, or monitoring failures.

When evaluating insurance costs, it's important to consider not only the restoration of equipment after a failure but also how to account for the impact of periods when power generation is unavailable. By determining which risks to cover with insurance and which to mitigate through maintenance and repair planning, you can make a more realistic assessment of the relationship between price and insurance costs.

Item 5: Confirm Disclaimer Terms and Risks Excluded from Compensation

When reviewing insurance costs for a solar power plant, deductible provisions and risks excluded from coverage are easy to overlook. Being insured does not mean that all losses will be covered. If you do not confirm which incidents are covered, under which conditions coverage is excluded, and how much you will be responsible for paying, you may be left with unexpected expenses when an incident occurs.

First, what we need to confirm is the scope of coverage for natural disasters. Risks such as wind and rain, lightning strikes, snow accumulation, landslides or debris flows, flooding, and fallen trees vary depending on the power plant’s location. For plants near forests, you need to check for fallen trees and fallen leaves; on slopes, landslides and drainage; and in snowy regions, the effects of snow. We verify whether the disasters covered by the insurance correspond to the hazards that can actually occur on site.

Next, confirm how deterioration of facilities and inadequate management are treated. If the cause is aging deterioration, insufficient inspections, inadequate vegetation management, neglected drainage channels, pre-existing damage, or the like, it may not be covered. This is extremely important. Rather than assuming you are safe just because you have insurance, you need to separate the risks that should be prevented through daily management from the risks to be covered by insurance.

Also check the policy’s deductible conditions. By understanding which costs you would have to pay yourself if an accident occurs and under which conditions coverage is excluded, you can more accurately anticipate the actual risk. If you compare prices and insurance premiums without checking the deductible conditions, it may look like you’re insured, but you might not be adequately prepared in the event of an accident.

The scope of equipment covered by compensation is also important. Confirm whether not only solar panels and power conversion equipment but also cables, connection equipment, monitoring devices, fences, drainage systems, and gates are covered. Damage to a power plant can extend beyond the generation equipment itself to surrounding facilities. In particular, damage to fences and drainage systems can greatly affect management and safety even though they do not directly generate power.

When reviewing insurance coverage, it is important to cross-check not only the written documents but also the on-site risks. If the risks present at the site are not reflected in the insurance coverage, your assessment of the insurance cost is inadequate. In low-cost cases, coverage may be limited or many risks may be excluded from coverage. For high-cost cases, make sure to verify that measures to address local risks are in place.

Why Overlooking Insurance Costs Skews Price Judgments

Overlooking insurance costs when assessing the price of a solar power plant can mean that a deal that seemed reasonable at the time of purchase becomes an unforeseen burden over the course of operation. Insurance costs are not merely fixed expenditures. They are an important item to verify that reflects the plant’s location, equipment condition, disaster risk, management arrangements, and past incident history.

In low-priced projects, there may be many risks that need to be covered by insurance. For power plants with poor drainage, a risk of fallen trees, advanced equipment deterioration, concerns about fences or cables, or a history of frequent outages, it is necessary to carefully consider not only insurance but also maintenance and repair plans. If you evaluate only the low price without looking at insurance costs, you will misjudge the actual operational burden.

Also, it is risky to feel secure merely because you have insurance. Unless you check the scope of coverage, deductible and exclusion terms, the equipment covered, and the risks excluded from coverage, you won't know how much will be covered in the event of an incident. In particular, defects caused by aging or poor maintenance may be matters that should be handled through routine management and repairs rather than by insurance.

Organizing insurance costs is also important for internal explanations. When explaining the price of a solar power plant, presenting the purchase price, operation and maintenance costs, repair risks, and insurance costs together increases transparency in decision-making. If insurance costs are postponed, they may become an additional burden after acquisition.

Insurance costs should not be something tacked on at the end of a price evaluation; they should be treated as part of the pre-purchase risk assessment. After identifying on-site risks, equipment risks, and downtime risks, deciding how much to cover with insurance and how much to mitigate through maintenance is fundamental to realistically assessing the price of a solar power plant.

Summary: Assess insurance costs in conjunction with local risks

To confirm the price of a solar power plant and its insurance costs, it is important to check five items: the scope of insurance coverage, natural disaster risks, equipment degradation and accident history, preparedness for suspension of power sales, and deductible conditions and risks excluded from coverage. Insurance costs should not be viewed merely as an expense, but treated as a basis for assessing what kinds of risks the plant faces.

Cheap power plants may be inexpensive for a reason. Factors such as high disaster risk, advanced equipment deterioration, unknown past accident history, difficulty of on-site recovery, and many risks that are not covered by compensation may be hidden. Even when a power plant is expensive, if the equipment condition is good, on-site risks are small, and insurance and management systems are well organized, it may be easier to plan for long-term operation.

For practitioners, it is important not to treat insurance costs as something separate from the price. By reviewing the purchase price, maintenance costs, repair costs, insurance costs, and the risk of suspension of electricity sales together, the actual burden becomes clear. This is especially true for used solar power plants, where cross-checking past accident records, inspection reports, repair histories, and on-site conditions is essential.

During on-site surveys, it is important to accurately record risks that could affect insurance costs. Recording drainage channels, slopes, trees that cause shading, the risk of fallen trees, fence damage, cable damage, the locations of power conversion equipment, access routes, and candidate repair locations along with location information makes it easier to organize the scope of insurance coverage and on-site risks.

If you want to check the insurance costs for a solar power plant together with on-site risks, using LRTK (an iPhone-mounted GNSS high-precision positioning device) is also effective. If you can record the locations of equipment within the plant, disaster-risk points, drainage channels, areas near boundaries, and candidate repair sites together with high-precision position information, you can reconcile discrepancies between the drawings and the actual site and leave clear, readily usable evidence for insurance verification and internal explanations. When determining the price of a solar power plant, it is important to check insurance costs together with on-site risks.