Solar Sector Struggles with Soaring Hail Damage Claims Amid Climate Challenges

The U.S. solar power industry, amidst its push for renewable sources, hit a record high with 15.8 GWac of photovoltaic capacity installed in the first nine months of 2023, a 31% increase from the previous year. However, this growth comes at a time when hailstorms, especially severe in prime solar farm locations, pose a greater threat to solar panels. These panels are particularly susceptible to hail damage, which can range from visible cracks to "invisible" impairments that reduce their efficiency and revenue generation.

In 2023, the property and casualty (P&C) market experienced its worst year in a decade, with a surge in $1 billion-plus weather events, predominantly severe weather and hail incidents. Reports highlight Texas, the Southeast, and the Plains as hotspots for both solar capacity growth and increasing severe hailstorm activity, with Texas being a significant player in the solar industry due to its standalone grid and high rate of new installations.

The financial impact is notable, with hail accounting for over half of all solar claims costs. Insurers like State Farm reported hail claims surpassing $6 billion in 2023, reflecting the mounting challenge for the industry. Experts emphasize the need for improved solar panel robustness, installation practices, and protective measures to mitigate future losses. Meanwhile, the insurance sector explores parametric solutions to offer more tailored coverage against hail risk, promising quicker claims settlement and addressing the growing demand for coverage in hail-prone areas.