Wildfire risks and vegetation management: why you need a plan!
Wildfire risks and vegetation management: why you need a plan!
Introduction: a world on fire!
1 .
Although not mentioned often in the news media, which has focused on the loss of lives, homes, and towns, wildfires have caused losses to the renewable energy sector, damaging geothermal plants and solar photovoltaic farms caught in their path. Although wildfire damages in California in 2020 are estimated in the billions of dollars, it has been difficult to determine the true extent of the damage to the renewable energy sector. The risk threat of wildfires to existing and new renewable energy projects is now a key discussion point for plant owners and their insurers. In addition to the destruction of physical property, wildfires have caused significant economic damage to renewable projects, including:
Forced curtailment and consequential loss of production of solar generation, due to utility grid shutdowns to prevent fires
Reduced output of non-exposed solar assets, as a result of reduced sunlight and soot from wildfires falling on the panels
Liability of third-party damages for fires originating from an energy generator’s physical assets
Similar liability due to failing IPP-owned transmission lines, resulting in a wildfire that causes economic harm to third parties
The need for a wildfire assessment Wildfire risks are not new to the power sector, and are common for utility sub-stations, even when they are situated in an urban area where ordinary weed growth can present a risk. While analyzing fire risks and developing a fire protection plan for a power generation facility is standard practice, the need to include a wildfire risk assessment for a renewable energy site with little wildfire history is not; however, it should always be advised for any renewable energy project.
In addition to the possibility of an external wildfire reaching your site, an important consideration is the risk of vegetation igniting from an event within the facility, whether natural or man-made; this can exist at a given location, even if it is not known for wildfire risks. If a risk assessment determines that a wildfire risk exists, effective risk mitigation will require a vegetation management plan.
Developing a vegetation management plan
2 .
Available resources There is no universally accepted standard for developing a vegetation management plan; however, there are several publicly available resources to assist in its development. Vegetation control limits will be site specific; one recent example called for a maximum allowable height for vegetation to be six inches (15 cm), with a defensible space in some locations stated at 11 yards (10m) around any solar array.
Basic steps The basics steps for a risk assessment are:
assess/identity
quantify
mitigate
reassess
Responsibilities The vegetation management plan must be written, and tasks should be automated in a computerized maintenance management system. Responsible personnel (more than one in case that individual moves on) need to be assigned to manage the plan, including:
implementation
planning
scheduling
inspection/monitoring
verification of completed actions
conduct of periodic compliance audits
implementing continuous improvement from feedback from the parties involved
Insurer requirements For insurers to accept the mitigation plan, it needs to be documented to prove you do indeed have one, that it is being managed and that someone is specifically responsible for it. Insurance companies have been asking for vegetation management plans for sites they are considering insuring and looking for details, including at what height will vegetation be cut, how often it will be monitored and by whom. To put it in direct terms: not having such a plan is a non-starter!
Furthermore, the insured should look for insurance terms that exclude losses due to failure to mow or cut. There are vendors who perform solar farm mowing for utility scale solar farms; a solar farm operator may also choose to utilize vendors who rotate goats or sheep to various locations, or provide mowing, clearing and chemical controls. However, the insurer will still expect the insured to manage, audit and verify the program. despite having a third party provide the service.
Conclusion: some recent loss examples
3 , we have identified below a number of recent vegetation-related losses which we hope will encourage insureds to consider creating a professional vegetation management plan.
In May, a recent solar farm loss, estimated at $25 million, has been attributed both to a cigarette and to COVID-19. A work crew went to the site for maintenance and vegetation control; they did not have the proper code to open the gate and then found that lodging was unavailable due to COVID-19; being unable to stay the night and work the next day, they went home. Prior to their return, vegetation had grown higher and a tossed cigarette led to the fire.
Wildfires were occurring near a geothermal plant. For on-site fire water the plant relied on two electrically driven fire water pumps, powered by two independent electric power sources. While the plant was not operating nearby, wildfires damaged the overhead lines supplying grid power to the plant. Once the fire reached the site, there was no electric power available to activate either of the electric fire water pumps.
In June a wildfire, reportedly started from a cigarette thrown from a car, resulted in damage to a solar farm, resulting in a loss reserve of $30 million.
Another loss last year was attributed to uncontrolled vegetation height, due to a failure to mow the site, with damages estimated at over $20 million.
One solar farm wildfire loss was attributed to poor vegetation control; a contractor’s grazing sheep used to control growth would not eat an invasive plant. Growth went unchecked and the loss occurred.
In the fall, construction work was underway on the final phase of a solar project, with earlier phases operational. A contractor doing hot work ignited vegetation, and the fire damaged solar panels staged near the trackers for installation. Grasses in the area were reported to be approximately 18 in/46 cm high.
One solar farm loss was attributed to a spark from a mower at a very arid site, and another was caused by a contractor’s cigarette butt.
Finally back in 2015, the California Valley Fire caused damage to several geothermal plants. The damages from the fast-moving wildfire at multiple plants included several cooling towers, power lines, pipe insulation, and communication systems, while the power houses were spared and capacity limited. Initial damage was estimated at approximately $35 million. A contributing factor to the loss was thought to be unprotected, combustible cooling towers. A critical lesson learned here was that due to the widespread destruction and local recovery operations, getting permits and approvals from local authorities took longer than expected4 5 .
Given recent sector wildfire events, the risk threat of wildfires to renewable energy projects is now a key discussion point for plant owners and their insurers. Renewable energy risk managers should give wildfire mitigation measures significant consideration for their risks, and proactively share such measures with their insurance partners, perhaps even including insurers in developing such programs.
