As the push for combining renewable energy projects and brownfield redevelopment gathers steam, environmental insurance providers are working to offer coverage that meets the needs of both types of projects.

“We’re actively looking at this market,” says Bob Hallenbeck, senior vice president with XL Insurance in Philadelphia. “We’re starting to see these renewable energy projects [on brownfields] come our way, and we’re glad. In many ways, it’s a pretty obvious market, especially for solar [energy projects].”

Coordinating coverage

Insurance providers may write separate policies for brownfield and renewable energy coverage, but often the policies coordinate with each other.

“Our policies overlap in that renewable energy does include some environmental coverage to it,” says Jon Peeples, vice president, ACE USA Environmental Risk, who is based in Denver. “It’s set up so that the renewable energy policy would cover the operational exposures [during construction]. Once the redevelopment is fully operational, [environmental risk] insurance would cover the operational exposure from a pollution standpoint, going forward.”

ACE Custom Casualty has been writing renewable energy policies for several years, but in May 2010 ACE USA formed a national specialized underwriting unit dedicated to the renewable energy sector.

“We repackaged a suite of products and merged our existing capabilities into a renewable energy department,” says Darren Small, vice president and national underwriting manager for the new department, based in Chicago.

Renewable energy and brownfield issues are two separate components of a project’s insurance coverage, agrees Ken Ratajczyk, head of Environmental Practice for Zurich North American Commercial in Schaumburg, Ill.

“You have the brownfield project and the associated risks around the brownfield in and of itself,” he says. “And you have the renewable energy component and the exposure that it presents based on its operation. Solar panels [for example] sometimes use hazardous components like arsenic. With a wind field, there’s very large machinery that requires certain types of lubrication that can create pollution conditions.”

“We’re starting to see these renewable energy projects [on brownfields] come our way, and we’re glad.” Bob Hallenbeck, senior vice president with XL Insurance in Philadelphia.

Hallenbeck says XL tailors its brownfield and renewable energy policies to meet each project’s specific needs.

“Basically, we’re still looking at the site itself and the exposures revealed on the site,” he says. “If we need to adjust or tailor the policy to then meet the unique needs of whoever’s putting in the [renewable energy] installation, we can do that with our policy.”

Landfill locations

The idea of using brownfield properties for solar, wind and other renewable energy sources got a big boost from the Environmental Protection Agency’s RE-Powering America’s Land initiative, launched in 2008. The EPA initiative encourages the development of renewable energy on contaminated land and mine sites that have been cleaned up and revitalized, rather than on greenfields.

With nearly 15 million acres of contaminated land considered to have potential for developing solar, wind, biomass and geothermal facilities, there’s lots of room for renewable energy growth on U.S. brownfields. And closed landfills can be one of the easiest and least expensive types of brownfields to insure for this type of project, say industry observers.

“If you have a closed landfill that has already been pretty well identified, it’s probably been insured at some point [already] in its use as a landfill,” says Hallenbeck. “And if it’s closed, for the most part you’re not going to need any further remediation [for a renewable energy project]. If you compare that to a brownfield project where you have demolition taking place . . . the activity level at an active brownfield is much higher than at a closed landfill.”

But there are still insurable risks inherent in such a landfill project, he says.

“We looked at a few landfills where a potential client wanted to take over the landfills, which were closed, and install a solar array on the site,” he says. “Usually the installation of solar panels doesn’t really disturb the cap [on the landfill] that much. But nonetheless, it’s an insurable risk because you have issues like, how much weight does the solar installation carry? You need to shore up the landfill against any kind of sliding or moving that might take place in the course of installation, or [during] operation after it’s done.”

Peeples says that although many of ACE’s renewable energy policies have involved municipalities adding renewable energy sources to buildings being renovated, the insurer also has provided coverage for several landfill projects.

“It’s usually a multi-use development for commercial purposes, but they’re collecting the methane gas coming from the landfill to use for energy, instead of flaring it,” he says. “We’re covering the latent liability, as well as the potential for any problems with the methane collection and any indoor air quality issues.”

Government business

Hallenbeck says XL is seeing interest from customers looking at renewable energy projects on closed military bases and on other unused pieces of government property.

“You have the brownfield project and the associated risks around the brownfield in and of itself” Ken Ratajczyk, head of Environmental Practice for Zurich North American Commercial in Schaumburg, Ill.Brownfield coverage basics

“Typically [closed military bases] are large, generally flat pieces of property,” he says. “After they’re closed, they may be converted to some type of private development, but that only utilizes a portion of the site in most cases. You have acres and acres that are not being used. It’s an ideal place for some type of solar installation.”

XL has had inquiries from the General Services Administration too, says Hallenbeck, about renewable energy projects on brownfield lands.

“They’ve got thousands and thousands of pieces of property that the U.S. government holds title to, and many are not being used,” he says. “A lot of states had older properties [that used to house] large facilities, such as mental health facilities, and there’s a big push for renewable energy usage [on the properties].”

No matter what kind of brownfield property is used for a renewable energy development, though, “there’s definitely a need for [insurance provider] expertise in both renewable energy and brownfields,” says Ratajczyk. “It’s a situation that will require risk management.”