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Setting up a Community Renewable Energy project can seem daunting. We’re here to help.
Welcome to our Handy Tips for Community Renewable Energy Groups. This guide is designed to help you make sense of all the insurance requirements during each stage of your project. You can read the information below or alternatively download the Handy Tips for Community Renewable Energy Groups, which includes case studies and an insurance checklist.
When choosing a renewable energy system and/or storage device, you should ensure that the equipment has been tried and tested before you purchase it. It would be sensible to find out the following information before deciding on any one particular system:
How many of the renewable energy systems that you are proposing to choose have already been installed in the UK?
- Has the technology of the system/model been tried and tested?
- Has there been any history of breakdowns or problems with the installed equipment?
- What experience does the installing contractor have with the renewable energy system/model proposed?
- Is the contractor/installer able to provide references from people/organisations that have installed such systems?
For example in the case of new renewable technologies, as an approximate guideline, each model needs to have completed over 8,000 hours of trouble-free operation before insurers are happy to insure them. Give us a call on01803 864390 and we can confirm that your proposed system is insurable
Insurance Matters For Community Renewable Energy Groups
Your organisation, whether it’s a Co-operative, a Community Interest Company or a Community Benefit Society, will need to ensure that its directors and/or trustees are protected against legal action from inadvertently committing “wrongful acts”. This type of threat and claim is covered under a Directors and Officers (D&O) insurance policy.
Naturesave’s D&O insurance protects company managers, directors, trustees or officers against liability claims, which arise from decisions and actions taken as part of their day-to-day duties. Essentially D&O insurance can provide protection for claims that result from errors in judgment.
Tighter UK and European regulation in the areas of Health and Safety, environment, employment and company structure/governance is fuelling growth in litigation against company directors and officers in areas such as:
- Fundraising and banking – e.g. errors in a share prospectus
- Financial reporting – e.g. failure to file tax returns correctly
- Disclosure of confidential information – e.g. proprietary information on renewable energy systems or personal data on members or shareholders
- Failure to comply with laws & regulations – e.g. planning regulations or Health & Safety at work
- Making decisions that exceed individual authority – e.g. incorrect procedure in agreeing which renewable system or model to use
In order to obtain terms for Naturesave’s D&O insurance, we require a completed proposal form along with copies of CVs for all the directors (or an A4 summary showing their credentials for being in the positions that they hold), along with formal accounts or draft 12 months financial forecasts.
Before the construction work begins, as you will have taken on the legal responsibility for the land upon which the system is to be built (assuming that you do not own it), you will need to put Public Liability insurance in place for non-contractors liability (as the contractors will cover the liability of contractors whilst at the site). Public Liability insurance covers any third party property damage and/or bodily injury.
When the site becomes operational, this Public Liability insurance will cover operational Public Liability insurance and the Operational All Risks element (material damage and mechanical breakdown AND loss of revenue from either). This will be added to your Public Liability policy, along with Employers’ Liability cover, in the event that you have any staff or volunteers (as is often the case with community renewable hydro projects – clearing foliage out of the intake etc.).
Please note that the system becomes operational from the moment the installing contractor has successfully tested and commissioned the system.
Prior to commissioning, any contractors and/or installers that are to work on your renewable energy system(s) need to demonstrate that they have the following insurance in place:
- Deposit and independent warranty insurance – to safeguard against the firm going into receivership during construction and/or once the system has been tested and commissioned (they may work on behalf of the manufacturer to rectify any faulty parts under the provision of the warranty).
- Contract works insurance – covers loss or damage to the equipment and materials brought to site until the completed system has been tested and commissioned.
- Employers’ and public liability – covers injury to their staff at the construction site and any third party property damage and/or bodily injury caused by their activities.
- Design and build professional indemnity – in respect of systems that they design on your behalf to your preferred/proposed specification.
NB – you should request sight of current insurance schedules for all of the above, as you may need to refer to them in the event that there is a problem.
Additionally, some lenders may oblige you to take out Single Project Renewable Energy insurance policies including transit, construction and operation.
Providing that you check that all your contractors carry the insurances above, it is debatable as to whether taking out single project insurance is practical, or economical. We can advise on what the most sensible and cost-effective ways of protecting you, as your community renewable energy project progresses, from concept, construction to operation.
Having spent a considerable amount of money and time on your renewable energy project, you must make sure that if something was to go wrong, you would be protected. Insurance will deal with the vast majority of sudden and unforeseen losses, but you also need to ensure that the warranty arrangements are solid, to safeguard against defective parts and inherent faults with your renewable energy system, as these types of losses are excluded from most insurance policies.
Ensure that the system will be installed with a full parts and labour warranty. You do not want to have to bear the cost of the dismantling and reconstitution costs for a component or part of your system that has ceased working due to an inherent defect. This cost should be met by the manufacturer or the contractor. Likewise, before commissioning contractors, make sure that they are complying with RECC (Renewable Energy Consumer Code) for domestic systems and MCS (Microgeneration Certificate Scheme) for commercial/community systems and that they have put in place deposit insurance and independent warranty insurance to safeguard the continuation of the warranty in the event that the installing firm goes into receivership, either during or after installation.
The insurance on systems out of warranty attracts higher policy excesses, and with age, may attract higher premiums depending on what type of claims experience insurers have with your chosen system.
Please note, that not establishing the warranty at the outset, could seriously affect the return on investment.
Insuring Energy Storage Systems
As part of our commitment to energy storage, we have compiled the following advice for developers and community energy groups seeking to augment their system with energy storage.
- If you would like to consider energy storage to enhance your renewable energy project, you will need to contact your insurance advisers at the earliest opportunity. This is relevant whether they are considering a stand-alone project or co-locating with an existing renewable energy asset. Insurance is relevant throughout, including planning, feasibility, funding, construction, operation and decommissioning.
- Insurances for most battery storage projects will likely follow the path established by renewables over the past decade, as per the checklist on the last page of this leaflet.
- In seeking to insure your energy storage system, your chosen manufacturer will be expected to demonstrate the reliability of the system(s) they are seeking to install, with 8,000 hours of testing being a fairly standard benchmark. This would include make, model and number of cells. Your component suppliers (batteries, converters, transformers, control and cooling systems) should be able to provide you with some of the evidence you need.
- Additionally, insurers will expect information about planned operational and maintenance contracts, periodic testing arrangements, fire protection, warranties provided by your suppliers, local grid conditions and data on the energy source (where renewables). Industry bodies such as IEEE or The Electricity Storage Network may be able to assist.
- An issue for insurers and funders will be notification and insurance cover for existing renewable energy assets. The addition of a battery storage system to an existing asset is a material fact which is notifiable under the terms of the asset insurance and failure to notify could lead to claims not being paid by insurers. Insurers have had a poor experience, with some large battery storage losses over the past 5 years, you will therefore need to ensure you have an insurer on board with you from the outset.
At Naturesave we are working with Regen to help shape future legislation and progress opportunities for communities to benefit from energy storage technology. With the removal of red tape, the drop in the price of batteries and more proven systems on the market, we envisage that community-scale energy storage will become more financially viable, therefore enabling local communities to take advantage of this new technology.
Here at Naturesave, we are happy to offer our advice to community renewable energy groups – just call and speak to one of our friendly team who will be happy to answer all of your insurance related questions. Alternatively you could try one of the organisations below: –
Regen – Regen offers independent expert advice on all aspects of sustainable energy delivery. The organisation uses their technical, financial and policy knowledge to support a range of public and private sector organisations to make the most of their clean energy opportunities. regensw.co.uk
Community Energy England -this not for profit organisation is a voice for the community energy sector and help create the conditions within which community energy can flourish. communityenergyengland.org
Community Energy Wales – a not for profit membership organisation that has been set up to provide assistance and a voice to community groups working on energy projects in Wales. communityenergywales.org
Community Energy Scotland – a registered charity that provides practical help for communities on green energy development and energy conservation. communityenergyscotland.org
Mongoose Energy – Mongoose has established themselves as a new concept in renewable energy. They identify, develop, finance, build and manage community-owned, renewable energy installations in the UK. mongooseenergy.coop
Sharenergy – helps communities to set up and own renewable energy societies. sharenergy.ccop
Energy4All – offers a combination of industry experience, community involvement, ethical investment and business acumen providing a package of sector, admin, and financial services to Co-ops in return for an annual fee. energy4all.co.uk
Community for renewables – helps communities set up local energy enterprises and supports them to develop, finance and manage their own renewable energy generation. cfrcic.co.uk
Forum for the Future – who have produced a guide to establishing and running low-carbon community revolving funds called ‘Funding Revolution’.
BHA – is the only non-governmental trade membership organisation dedicated to representing the interests of the UK hydropower. british-hydro.org
PlanLoCaL – A hands-on guide developed by the Centre for Sustainable Energy to support communities and groups that are planning for low carbon living. planlocal.org.uk
The Department of Energy & Climate Change (DECC)
DECC’s website has detailed guidance aimed at fledgeling community energy groups.gov.uk/guidance/community-energy