Solar and other renewable energy projects have experienced rapid growth in recent years. In fact, solar has been the leading source of new electricity-generating capacity in the United States for the past five years.
While these projects share many characteristics with traditional construction, they also introduce a new type of surety risk due to their long-term operational exposure, evolving ownership structures, and eventual decommissioning obligations.
As solar development continues to expand, evaluating the long-term financial strength and durability of project stakeholders is increasingly important for surety professionals. Below, we break down some common solar farm bond requirements and key underwriting considerations.
Solar farm projects may require surety bonds for a variety of reasons, depending on the project's structure, financing arrangements, and regulatory requirements.
During the early stages of solar projects, project owners often rely on engineering, procurement, and construction (EPC) contractors to design and build the facility. As a result, they may require these contractors to obtain solar project performance and payment bonds to protect against default, incomplete work, or payment disputes.
While most surety professionals are familiar with these types of bonding requirements, solar developments often involve more complex supply chains and highly specialized equipment. In turn, underwriters should look beyond standard construction risk and evaluate whether the contractor has the technical experience, supplier relationships, and financial capacity to complete the solar project successfully.
Read More: 6 Essential Bonds To Support Your Contractor Clients' Business Growth
Local governments and permitting authorities may require additional bonds to help ensure the fulfillment of the long-term obligations associated with solar farm projects. Depending on the jurisdiction, these bonding requirements may include:
Solar projects often involve significant capital investment. For example, a one-megawatt utility-scale solar project can cost approximately $980,000 to construct, not including land acquisition costs. For this reason, lenders, investors, and other financial stakeholders may require renewable energy surety bonds to help mitigate risks associated with:
Read More: Build Your Renewable Energy Book: An Agent’s Guide to Boosting Bond Submissions
While surety bonds can play an important role in the solar project lifecycle, specific risks evolve from one stage to the next.
Before construction begins, developers often need to:
During this stage, the greatest risks often center around the project’s feasibility and regulatory approvals, as well as the developer's ability to move the project forward.
The construction phase introduces many of the construction risks familiar to surety professionals. During this stage, EPC contractors must coordinate labor, materials, logistics, and project execution while meeting contractual requirements. Common risks include:
Read More: The Bonds Behind Community Solar: What’s Required at Each Stage
Once a solar farm is up and running, it can often generate revenue for 20 to 30 years or longer. The reliability of its ongoing performance depends on:
In this stage, a project owner's financial strength and operational capabilities become increasingly important, as they can directly influence the surety's long-term risk exposure.
At the end of a solar farm’s useful life, project owners may be responsible for removing panels and other equipment and restoring the site. Permitting authorities are increasingly requiring solar decommissioning bonds to help ensure the fulfillment of these obligations.
Read More: How Tower Decommissioning Bonds Help Manage End-of-Life Telecom Infrastructure Risk
While solar farms share many similarities with other types of infrastructure projects, they also present several unique underwriting challenges. These risks include:
Unlike some other areas of surety, there’s no national standard that governs solar bonding requirements. Instead, requirements can vary significantly across states, municipalities, permitting authorities, and project types.
Some of the most common variables include:
As solar development continues to expand, many jurisdictions are moving toward more formalized and enforceable financial assurance requirements.
Solar farm bonds represent a growing opportunity for surety professionals. If you want to support clients in this evolving sector, it's important to understand their unique underwriting requirements.
As you underwrite these bonds, pay close attention to:
For underwriters evaluating complex solar submissions, specialized reinsurance programs are also emerging to help expand capacity. The Renewable Energy Surety Program developed by UCS in partnership with GreenieRE Coalition, an impact-focused reinsurance company, is one example—built specifically to provide a second underwriting review and shared risk for solar projects that fall outside of conventional program structures.
Along with understanding solar farms’ key underwriting considerations, it’s equally important to anticipate the challenges that can arise during the underwriting process. Some common challenges associated with solar farm bonds include:
These challenges reinforce the importance of disciplined underwriting and thorough risk evaluation.
While solar projects present unique underwriting challenges, following these best practices can help strengthen risk management and improve underwriting outcomes.
Surety professionals can strengthen their underwriting outcomes by:
Agents and risk managers can also support better outcomes by:
In summary, solar projects introduce a unique type of infrastructure risk. While construction remains an important component, the most significant exposures often extend far beyond project completion. By taking a disciplined lifecycle approach to underwriting, surety professionals can confidently navigate the unique challenges associated with solar farm bonding.
If you need support evaluating solar farm bonds or other renewable energy projects, United Casualty and Surety Insurance (UCS) can help. As a nationwide surety provider, we bring a thoughtful, risk-aware approach to underwriting complex infrastructure projects across evolving markets.
EIA. Solar power generation drives electricity generation growth over the next two years.
https://www.eia.gov/todayinenergy/detail.php?id=67005
PBS News. Solar power hits new milestones in the U.S. even as Trump boosts coal over clean energy.
Solar Reviews. What is a Solar Farm? Costs, Pros, and Cons Explained.
https://www.solarreviews.com/blog/what-is-a-solar-farm-do-i-need-one
EPA. End-of-Life Solar Panels: Regulations and Management.
https://www.epa.gov/hw/end-life-solar-panels-regulations-and-management
LaBella. Lighting the Way: Solar Decommissioning Policies Gaining Traction.
https://labellapc.com/insights/lighting-the-way-solar-decommissioning-policies-gaining-traction/