Energy in Crisis: Key threats facing the solar industry

Solar energy, like other renewables, has witnessed a dramatic surge in recent years, from private residential properties to the installation of substantial commercial solar farms.

It is now the third largest source of renewable energy in the world, with global solar generation in 2022 increasing 26% on the previous year, according to the International Energy Agency (IEA). China was the largest producer of solar energy in 2022, followed by the US, Japan, and India.

Whilst not in the top four countries for solar creation, the large swathes of desert and the abundance of sunlight, create a huge potential for solar development in Africa. According to the IEA, in 2022, Africa had 60% of the world’s best solar resources, but only 1% of solar generation capacity. However, although the opportunity is there, Africa requires a huge amount of investment to utilise their natural resources.

The creation of solar farms in Africa does pose some difficulties, as installing large numbers of solar panels often means clearing land to bare soil. This has an impact on land sustainability, affecting multiple aspects, including soil stability, water retention, carbon sequestration and biodiversity.

Additionally, there is often competition for land, which is also needed for food production. Instances that impact raw materials, the displacement of communities or food resources, can often be triggers for civil unrest or violence.

In Eastern Africa, experiments were conducted to address the challenges associated with land competition. This involved the cultivation of crops beneath the solar panels, harnessing the shade provided by the photovoltaic system and utilising rainwater harvesting. This innovative approach creates a more nurturing environment for crops compared to traditional open-field planting.

Risks

There are multiple general risks associated with solar energy globally.

Severe weather and natural disasters pose significant threats to the durability and effectiveness of solar panels. When exposed to harsh weather conditions, solar panels are at risk of micro-cracking and micro-fractures caused by strong winds.

The fragile silicon material used in these panels is prone to damage from expansion, contraction, wind impact, and debris strikes, resulting in decreased efficiency in light absorption and energy storage. The costs to the industry can be significant. For example, in the US, in March 2020, a tornado in Louisiana led to approximately USD30m in damages.

Meanwhile, the solar industry suffered a combined loss of USD67m due to West Coast wildfires between 2019 and 2021. However, the losses in 2022 far exceeded these figures, as summer hail in Texas alone resulted in over USD300m in losses. These incidents have significant impacts at multiple levels, from localised business operations and their insurers to the output of the energy grid.

In general, the insurance industry is having to adapt to a new normal whereby losses fuelled by climate change are now regularly exceeding USD100bn a year.

Moreover, there is a growing concern regarding the lifespan of solar panels. While they are designed to endure for 40-50 years, they currently only last around 20 years due to weather-related damage and material or construction issues. The impact of extreme weather events and natural disasters is expected to escalate, given the ongoing effects of climate change, including rising temperatures, sea level increases, and altered precipitation patterns, which make the world more vulnerable to such incidents.

Theft is another issue that looms over solar energy installations. Solar panels and associated equipment are enticing targets for criminals seeking to steal valuable items such as solar panels, copper wiring, inverters, and other components for resale on the black market or their scrap value. This not only leads to financial losses but also disrupts the operational continuity of solar farm operators.

In South Africa this year, Eskom’s inability to meet the energy demand resulted in rolling blackouts which prompted a surge in alternative energy systems. Subsequent load-shedding caused a surge in demand for solar panels, giving rise to a substantial black market. The swift growth in solar panel usage also led to criminals recognising the equipment's value, aided by the fact it was frequently inadequately secured making various parts susceptible to theft.

In addition, the increasing reliance on digital control systems and communication networks in solar farms, as observed throughout our energy series, leaves these installations often exposed to cyberattacks. Such attacks can potentially disrupt operations and compromise sensitive data, underscoring the need for robust cybersecurity measures in the solar energy sector.

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Each week, our Threat Intelligence team will be analysing a different energy industry as part of our Energy in Crisis series (including Nuclear, Wind, Solar, Hydroelectric and more). Follow us here or on LinkedIn to stay up-to-date with the latest analysis.