Etiqa has launched Solar Energy Shortfall Insurance (SESI), the first of its kind in Malaysia that will compensate insured solar farm operators for financial losses arising from any shortfall in solar energy production due to the reduction in solar irradiation, or reception of light energy from the sun. The plan is underwritten by Etiqa General Insurance Berhad.
As solar farms are dependent on sunlight for solar energy, frequent occurrences of cloud cover in the sky, or bad weather may obstruct direct sunlight from reaching solar panels resulting in irregular solar panel energy output.
SESI has been designed to provide ease of mind for solar farm operators by providing coverage for any shortfall in revenue and profit which was projected based on future solar panel energy production.
The measurement standards are based on both input (solar irradiation) and output (energy generated production) because the shortfall of energy production is significantly correlated to the reduction in solar irradiation.
In principal, the intention is to cover the actual financial losses resulting from production shortfall due to solar irradiation reduction. These pure production losses are computed by removing the production shortfall caused by factors, which are not associated to or contributed by solar irradiation, such as Operations and Maintenance issues which include operations shut down for maintenance or due to equipment breakdown or production interrupted by curtailment, etc., so that such production shortfall will not be included under the actual compensation computation.
Fukhairudin Mohd Yusof, CEO of Etiqa General Insurance Berhad said, “Etiqa is proud to be the first insurance company in the country to introduce Solar Energy Shortfall Insurance, which is a breakthrough insurance solution that is aligned with the Government’s efforts to increase the country’s renewable energy mix from 25 per cent in 2022 to 31 per cent by 2025.
“With the Solar Energy Shortfall Insurance in place, investors and financial institutions are able to invest and financially support solar energy businesses more confidently.
“Just recently Etiqa became the first insurance and takaful company in Malaysia to become a signatory of the United Nations’ Principle for Sustainable Insurance (UN PSI) under the United Nations Environment Programme Finance Initiative (UNEP FI), and the launch Solar Energy Shortfall Insurance proves our commitment to these principles, as well as Etiqa’s ambition of being a regional industry leader in ESG that aligns business with key issues pertinent in sustainability which are related to climate, environment, community & financial resilience,” he added.