Despite a tougher policy stance toward renewables from the Trump administration, the global solar energy industry is expected to continue expanding, and it’s doing so at a pace that is reshaping how insurers and brokers assess, price and manage risk.

Solar has become the fastest-growing segment of the renewable energy market and is on track to be the largest by installed capacity. However, for the insurance industry, the question is less about whether solar expands and more about where it expands, how it is built, and whether risk engineering can keep pace with worsening weather losses.

While US federal support may soften, growth drivers elsewhere remain intact. International Renewable Energy Agency (IRENA) data from 2025 shows Asia accounted for 71% of new renewable capacity added in 2024, far ahead of Europe (12.3%) and North America (7.8%).

And even in the US, state-level incentives, corporate power-purchase agreements and economics continue to underpin development. The US Energy Information Administration (EIA) projected 32.5 GW of new utility-scale solar capacity in 2025, with Texas (11.6 GW) and California (2.9 GW) accounting for nearly half of that growth.

Ease of deployment bolsters solar growth, but significant exposures abound

This expansion brings both opportunity and strain for the insurance market. Jan Pagán (pictured), renewable energy risk control engineer at Markel International, said solar’s technological maturity has helped the sector scale rapidly, but it has also exposed systemic weaknesses.

“Solar technology has been progressing consistently over the last 30 years,” Pagán noted, pointing to higher conversion efficiencies, new PV module designs and smarter inverters. “Projects are becoming ever larger and installed across every corner of the planet.”

Solar’s biggest advantage – its simplicity of deployment – also has downsides. According to Pagán, losses increasingly stem from manufacturing defects, poor electrical installation, inadequate structural design and exposure to hail, wind and fire.

“Some losses seen by the insurance sector cover manufacturing defects of inverters, fire or storm damage due to inadequate design, hail and poor or incorrect installation,” he said.

Unlike wind or battery storage, Pagán does not expect innovation itself to be a major loss driver. Instead, “losses will be dominated by weather events and poor design as the sector continues to expand across different areas of the world.”

Rapid obsolescence adds another layer of risk: changing module sizes and materials can make like-for-like replacement difficult after a large loss, potentially forcing owners to modify mounting structures at high cost and endure months of downtime.

Climate change sharpens underwriting

Weather is now the defining risk for solar, with climate change amplifying the challenges. Many new projects are being built in regions with limited historical data or using modelling that has not kept pace with the increasing frequency and severity of extreme weather events, said Pagan.

Developers, he noted, are often relying on “very optimistic” return periods for severe events. The result has been a rise in catastrophe losses running into tens of millions of dollars for physical damage alone. “These are projects that will be operational for at least 25 years, and any design inadequacy or error will stay with the project for the remainder of its operational life,” Pagán said.

Once a solar farm has suffered a major weather-related loss, insuring it again “becomes a challenging (and expensive) endeavour.”

What’s next for solar energy?

Chinese manufacturers still dominate the module and inverter markets, holding roughly 80% of the inverter market, and Pagán does not expect that to change over the next five years. Gradual capacity growth in Southeast Asia may ease future trade shocks, though short-term relief will be limited, particularly given long lead times for replacement inverters.

Crucially, solar benefits from a global oversupply of components, helping offset tariffs or policy challenges. “In the short to medium term, we do not see any financial difficulties for the continued rapid deployment of solar farms and expect the growth trend to continue,” Pagán said.

Insurance costs, however, are rising and will “dampen the party” until owners can demonstrate that assets are designed to withstand local climate risk and supply chain shocks. Brokers must expect tighter policy terms, higher deductibles and deeper scrutiny of design standards, weather modelling and contractor experience.

Those capable of advising clients on resilience (such as through hail-rated modules, improved trackers, realistic climate modelling and supply-chain planning) will be best placed to support a sector that, politics aside, shows little sign of slowing.