Insurance requirements as part of interconnection procedures continue to be an area of debate among utilities, legislatures and renewable energy cogeneration operators.
Utilities and regulators often start from the view that, if a customer's generator damages the grid, then, as a matter of fairness, the customer generator should pay for the damage.
From a cost causation standpoint, this view has intuitive appeal on fairness grounds: ratepayers should not bear the burden for damage to the utility grid caused by customer generation.
However, with over 70,000 solar arrays interconnected across the United States, the authors at the IREC are not aware of any case of line worker injury or significant utility property damage attributable to solar energy systems.
Property Owners Insurance..."Green Insurance?"
Moreover, solar arrays are expensive assets that are almost always covered under a property owner's insurance which would typically provide protection if damage or injury occurs.
Because of this, prohibiting additional insurance requirements in order to interconnect appears to have little practical cost impact for utility ratepayers, but requiring additional insurance does add cost for the system owner.
Virginia has recently implemented interconnection procedures which require customer-generators to carry insurance, but the amounts are no more than what property owners would generally carry:
- systems under 10 kW must carry $100,000,
- systems between 10 kW and 500 kW must carry $300,000, and
- systems between 500 kW and 2 MW must carry $2,000,000.