Solar operators, investors and insurers must "carefully consult" climate change scenarios to fully understand the future risks and opportunities from solar energy, according to Swiss Re.
The Swiss reinsurer's research division said in a report yesterday the growth of solar power has been impressive, with a global compound annual growth rate between 2022 and 2030 of 10%, and around half of future renewable capacity additions is expected to be solar.
But Swiss Re warned solar power technology can be vulnerable to natural catastrophes and extreme weather events, emphasising that wildfires, windstorms and tornadoes have been the leading causes of damage to solar farms over the past decade, comprising 80% of insurance claims.
The report said climate change is set to compound damages and affect the productivity of solar farms through intense heat.
Swiss Re explained solar panels function most efficiently in cool and sunny environments with efficiency decreasing between 0.3% and 0.5% per solar panel temperature degree increase above 25°c.
As global temperatures and heatwaves are forecast to increase in a range from 1.5-4°C by 2050, Swiss Re said "heatwaves could impact our dependence on solar power" and grid stability could be threatened. The reinsurer added that wildfire smoke and ash can also negatively impact solar energy efficiency.
Hail, meanwhile, accounts for 60% of total losses to solar farms, however, Swiss Re noted the impact of climate change on the frequency and severity of hail is not yet fully understood.
Swiss Re stressed the need for resilient solar panel designs, the consideration of a range of future climate scenarios, site specific assessment and cross-sector collaboration.
Earlier this month, Swiss Re also alerted insurers to the increasing risk of electric grid outages due to climate change.
Companies:Swiss Re