Nature shows the way

As published in PV Magazine International in July/August 2024

Copernicus, the EU space program, confirmed in May 2024 that Europe is the fastest-heating continent, with average temperatures 2.6 C above pre-industrial levels. Everoze Partner Ragna Schmidt-Haupt discusses climate risk and mitigation for solar and energy storage projects as global warming accelerates.

Evaluating and mitigating climate risk is not yet part of standard technical due diligence for solar or battery projects. The science that goes into assessing insurance premiums remains a black box for many within the renewables industry. The rapid increase in extreme weather events means that “one-in-200-year” events are about to become one-in-100-year occurrences. Long-term investors are calling for a clearer picture of what their assets may face in the future and how to adapt to them. Standard insurance cover may not be sufficient anymore, while special cover is still too expensive and, in some cases, not even available.

The regulatory environment is also changing with incentives – and requirements – to undertake climate risk and vulnerability assessments springing up everywhere. This is relevant, for example, from 2024 for listed and large financial and non-financial companies under the EU Taxonomy. That regulation defines how physical climate change hazards and their impact on economic performance are to be assessed during a project’s lifetime and how the scenarios outlined by the United Nations’ Intergovernmental Panel on Climate Change must be considered.

Additionally, more international players are being driven by their own environmental, social and corporate governance requirements, for example, by following the UN’s voluntary Equator Principles, which provide criteria and methodology for assessing the materiality of physical climate risks on economic activity.

Data rules

Selecting reliable modelling data that meet the reporting requirements of particular climate-related frameworks is key. Typically, a dataset will cover acute and chronic climate hazards related to temperature, wind, water, and solid mass.

A range of annual average temperature forecasts enables a review of design tolerances for solar panel and battery cooling systems or an assessment of the risk of inverter derating. The expected number of heatwave days per year can provide a useful perspective on design resilience or intervention planning.

When it comes to precipitation, a number of key questions arise. For example, will there be more or less rain per day, cleaning the panels? What is the expected length of dry spells, which potentially increase soiling losses? Lately, industry headlines have featured an alarming rise in module damage due to a combination of larger hailstones and more fragile modules.

For large projects, a detailed flood or disaster risk assessment, based on historical data, will typically be available to inform civil-structure resilience and drainage systems. Amid the changing climate, however, reviewing forecasts of flood risk and other geographic factors relevant to a project site are key to understanding and mitigating risks more completely.

To counter some of the anticipated storm impact for solar projects, certain tracker manufacturers now offer active control systems, minimizing panel exposure angle during hail or storms. Some limits remain when assessing typhoon, cyclone, or tornado risk, however, since climate models don’t predict these.

There is currently a heated debate about the potential upsides and downsides of solar irradiation. While irradiation can be forecast to specific locations, standard energy yield assessments are based on historic data, not forecast models. This is mainly due to the future evolution of irradiance levels being less obvious to predict than expected temperature rises. Different models return different predictions.

Investors like to consider potential increases in irradiance in their financial models, but often a blind eye is turned to the risk of heavier storms, hail, and floods and all that may lead to earlier end-of-life for equipment and an increase in replacement costs.

Overall, a meaningful climate risk assessment provides more than just cost numbers and risk labels. Projects have to be considered holistically in the context of infrastructure, people, landscape, and biodiversity. Risk assessments imagine unexpected impacts and knock-on effects and, most importantly, link them back to performance.

Good news

So with all the doom and gloom lurking in the future, what is the positive news?

Many climate mitigation approaches are still technology-heavy and adding more concrete and drainage and larger barriers negatively affects biodiversity and wildlife.

The good news is that nature-based solutions (NBS) can actually provide amazing mitigation against extreme flooding, storms, and wildfire events.

NBS can add resilience to a decarbonized energy system and ecosystems. NBS can include sustainable drainage systems, permeable ground surfaces, natural rainwater harvesting and storage, and natural debris-control structures. For example, increased tree cover can absorb rainwater, prevent debris carried by overland flows, and storm inundation from damaging infrastructure. It provides natural shade for central inverters and battery energy storage system containers, too. Vegetation management could focus more on smaller areas close to equipment that has increased risk of electrical failures and ignition sparks.

There is still a lot that can be borrowed from nature’s creativity and resilience around us; we can find smart ways to holistically combine technology and nature for the coming decades.