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As solar energy adoption surges across the globe, businesses and homeowners alike are making the shift to cleaner, greener power. But while installing a solar system is a smart investment, it’s also a significant one—and like any valuable asset, it needs protection. That’s where solar insurance comes into play.

At Soleos Solar, we’ve helped industries across India, Europe, and the UK navigate the solar journey confidently. But one question we often hear from our commercial clients is, “Do I really need insurance for my solar power system?” The answer is a resounding yes—and in this guide, we’ll show you why.

What Is Solar Panel Insurance?

Solar panel insurance is a specialized policy designed to safeguard solar power systems from physical damage, performance loss, and financial risks. As solar energy adoption in India increases, it has become a crucial risk management tool for safeguarding long-term investments. It offers comprehensive protection tailored to solar infrastructure, going beyond typical home or commercial insurance.

Types of Solar Panel Insurance Coverage

1. Property Damage Insurance

Solar panel insurance covers physical damage to solar system components like panels, inverters, mounting structures, wiring, and batteries. It covers fire, flood, storms, hail, lightning, earthquakes, and theft. Ideal for rooftop and ground-mounted solar systems, it covers all risks unless explicitly excluded. Structured as “named perils” or “all-risk” policies.

2. Machinery Breakdown Insurance

This insurance policy safeguards against electrical or mechanical failures of critical solar equipment like inverters, transformers, cables, and energy storage units. It addresses internal faults due to voltage fluctuation, wear-and-tear, or poor maintenance, ensuring systems are protected against malfunctions in industrial and utility-scale solar systems.

3. Construction All-Risks (CAR) / Erection All-Risks (EAR) Insurance

This policy is a temporary insurance policy for solar plant installation and commissioning, protecting against construction-related risks, material handling and transportation risks, fire, flood, structural collapse, and third-party liability. It is ideal for solar EPC companies and developers during the project execution phase.

4. Business Interruption or Loss of Income Insurance

This policy, also known as shortfall or contingent business interruption coverage, compensates for lost revenue when a solar plant’s output drops due to insured damage or technical faults, particularly beneficial for revenue-linked commercial applications. It ensures continuity of revenue for businesses relying on solar energy to reduce electricity bills or sell power through PPAs.

5. Third-Party Liability Insurance

This coverage safeguards project owners or EPC companies from legal and financial liabilities in case of solar panel falls, fire spreads, or electrical issues causing damage to third-party equipment. It is suitable for rooftop solar in densely populated areas, solar carports, and C&I installations, providing legal protection for third-party liability and civil liability for installation/maintenance.

6. Module Warranty Insurance

Solar panel insurance offers additional assurance in case of manufacturer bankruptcy, premature module degradation, or long-term product failure, particularly beneficial for long-term investors and financiers in the Indian market. It covers module underperformance, degradation, or manufacturer defect beyond typical warranties.

Who Needs Solar Panel Insurance?

Solar energy is a high-value, long-term investment—especially for commercial and industrial (C&I) players. But with great opportunity comes real-world risks. From extreme weather to system failures and third-party liabilities, solar panel insurance acts as a safety net that ensures the continuity and profitability of your solar venture.

1. Industrial & Manufacturing Units with Rooftop Systems

Manufacturers rely on rooftop solar systems for uninterrupted energy supply, but they are vulnerable to storm damage, fire hazards, equipment failures, and power outages. Protecting these assets is crucial to prevent physical damage, equipment breakdowns, and downtime impacting production. A specific commercial solar policy is necessary, as conventional building insurance may exclude rooftop PV systems.

2. Ground-Mounted & Utility-Scale Solar Farms

Solar farms, spread across acres, face risks like theft, vandalism, weather extremes, and natural disasters. The larger the plant, the higher the financial risk. Suggested coverage includes all-risk property, performance guarantee, and parametric insurance. Custom “All-Risk” insurance and business interruption coverage help secure asset value and energy revenue.

3. EPC Contractors & Developers

Construction/Erection All-Risk (CAR/EAR) insurance protects against transit damage, installation mishaps, and third-party injury. Professional liability coverage also covers design or installation errors. EPC contractors face risks like transport damage, on-site fire, and worker injury. Policies like CAR, civil liability, and equipment transit insurance are essential.

4. Commercial Buildings & Institutions

Solar PV systems in offices, malls, hospitals, and educational institutions are liable for physical damage, injuries, fire accidents, and revenue loss. Most commercial property insurance doesn’t cover solar systems, so required policies include third-party liability, electrical fault coverage, and rider additions for fire/theft.

5. Homeowners with Rooftop Solar

Homeowners installing rooftop systems need protection from power surges, lightning strikes, panel theft, storm damage, and warranty issues. Solar is a lifetime investment, and minor damage can lead to major replacement costs. Check if home insurance includes solar coverage and add riders if needed. Rooftop panels are often covered under homeowner policies.

6. PPA or Lease Arrangements

If your solar system is financed through a Power Purchase Agreement (PPA) or leased to you by a third party, insurance is typically mandatory. This is because these contracts often include performance guarantees and uptime requirements, reducing risk exposure. System owners typically carry insurance, but users must verify coverage limits and liability terms.

7. Smart or IoT-Enabled Solar Assets

Modern solar systems, often connected to SCADA systems, remote monitoring software, and smart inverters, are vulnerable to hacking attempts, data breaches, and remote manipulation. Cyber liability insurance is emerging to protect these systems against these risks.

Why Solar Panel Insurance Is Crucial for ROI

1. Protects Against Physical and Technical Damage

Solar assets, including modules, inverters, and transformers, are susceptible to various weather conditions, including lightning strikes, fires, storms, hail, and vandalism. Without insurance, these costs can drain profits. Solar panel insurance provides coverage to cover these losses, ensuring quick repairs or replacements, maintaining energy flow and ROI.

2. Covers Business Interruption and Lost Revenue

Business interruption insurance is crucial for large-scale commercial and industrial setups, as it compensates for revenue loss during repair and ensures energy savings continue. It also maintains income flow even when the system isn’t operational, preserving profit margins. Solar systems generate daily returns by reducing grid power usage or selling electricity, making the financial loss real.

3. Reduces Equipment Lead Time Risk

Insurers are increasing coverage for solar components due to long lead times, resulting in delayed indemnity and extended waiting periods. This helps mitigate ROI dips when replacement parts take months to arrive. Insurance shields cash flows and ensures the investment remains viable within the expected financial model.

4. Supports Project Financing and Bankability

Banks and investors often require comprehensive insurance for project financing, PPAs, lease models, and O&M contracts. This insurance improves the project’s risk profile, enabling lower interest rates, faster loan approvals, stronger investor confidence, and a higher ROI impact due to reduced financing costs.

5. Mitigates Climate and Catastrophe Risks

Climate change increases the frequency of extreme weather events, making low-risk regions vulnerable, especially for solar systems. Solar insurance helps absorb these unexpected damages, preventing profit erosion due to rare but severe events, allowing businesses to pursue ROI goals confidently.

6. Enhances Long-Term System Performance

Solar is a 20-25 year asset, and uninsured systems can lead to major cost burdens. Insurance covers replacements, upgrades, and minimal downtime, ensuring predictable performance and lower maintenance costs. Insured systems are better monitored, maintained, and managed, resulting in fewer breakdowns and prompter repairs.

What Does Solar Panel Insurance Cover?

The exact coverage depends on the policy, but standard solar panel insurance typically includes:

Solar Panel Insurance for Rooftop Systems vs. Ground Mount

Cost of Solar Panel Insurance

The cost of solar panel insurance depends on various factors:

Annual premiums for a 1 MW plant costing ₹4 crore could be ₹8-12 lakhs, equivalent to ₹0.20-0.30/kWh, and could be 0.5% to 1.0% of CAPEX.

How to Choose the Right Solar Panel Insurance Policy

1. Assess Your Project Profile

• Identify your solar project’s specifics, including rooftop or ground-mounted systems, residential, commercial, or utility-scale use, battery storage, and grid-tied elements. Larger projects require comprehensive insurance, while installation types and capacity vary. Construction and operational plants require long-term equipment coverage, while construction requires CAR/EAR coverage.

2. Define Your Coverage Requirements

• Prioritize policies that cover property damage, machinery breakdown, business interruption, third-party liability, performance guarantee, and performance guarantee for advanced systems. Customize coverage based on your location’s weather profile and system complexity. These policies should cover all-risk scenarios like fire, storm, theft, and flood, as well as natural catastrophes like cyclones, earthquakes, and floods.

3. Compare Premiums, Terms & Exclusions

• To choose the best insurance policy, compare annual premiums with insured value, check for exclusions and limitations, evaluate deductible clauses, and claim settlement ratios. Consider sum insured, deductibles, waiting periods, and evacuation/replacement delays. Analyze exclusions and compare cost vs. benefit, as higher premiums may be more economical over time.

4. Evaluate the Claims Process

• Choose insurers with strong renewable energy claim handling experience for swift digital claims, ensuring timely site inspection, documentation guidance, and payout. Consider digital claim support, dedicated relationship managers, on-ground inspection turnaround time, and past client testimonials for efficient claim filing.

5. Ensure Integration with EPC & O&M Schedules

• Collaborate with EPC partners like Soleos Solar to select the right insurer, coordinate inspections, audits, documentation, integrate insurance requirements into O&M protocols, and align risk measures, preventing coverage gaps and lowering premiums throughout the system lifecycle.

6. Calculate the ROI of Insurance

• Bundle insurance for construction and operational phases, consider higher deductibles for lower premiums, use risk mitigants like alarms and CCTV for better rates, and regularly re-evaluate insured value and system performance. Insurance is an investment that protects ROI during asset downtime, secures lender confidence, and ensures consistent returns.

Government & Regulatory Incentives for Solar Panel Insurance

India’s government has introduced initiatives to incentivize solar insurance, particularly in the solar sector. The Ministry of New and Renewable Energy (MNRE) and the Insurance Regulatory and Development Authority of India (IRDAI) have issued guidelines recommending solar insurance coverage for various installations, including rooftop and utility-scale systems. IRDAI ensures that insurance companies develop solar-specific products with fair pricing, relevant coverage, and clear terms.

Government subsidy programs like PM Surya Ghar Yojana, PM-KUSUM, and Rooftop Solar Phase II mandate or encourage insurance as part of project financing or subsidy eligibility. Insurance has become a requirement in many state-level approvals, particularly with power purchase agreements and grid interconnection processes. Innovative insurance products like weather-indexed and parametric insurance provide enhanced protection in regions prone to weather unpredictability.

Solar Panel Insurance for Residential Systems

Rooftop solar is becoming increasingly popular in India, with policies designed to protect homeowners against financial losses caused by natural disasters, theft, system malfunction, or accidental damage. Leading insurers like Tata AIG and HDFC Ergo offer affordable home solar insurance packages, covering natural perils, theft and vandalism, equipment breakdown, and third-party liability. Premium plans for systems up to 10 kW start at around ₹999/year with HDFC Ergo, while others offer multi-year options. While residential solar insurance is not currently mandatory, it is recommended, especially for systems larger than 3 kW or when financed through banks or NBFCs.

The Indian government has encouraged residential solar adoption by offering subsidies and simplified financing. While insurance is not yet mandatory for residential users, it is increasingly recommended, especially for systems above 3 kW capacity, where the upfront investment is significant. Insurers like HDFC Ergo, ICICI Lombard, New India Assurance, and Bajaj Allianz are offering affordable and accessible solar insurance packages for homes.

Solar Panel Insurance vs. Warranty: Know the Difference

Solar warranties and insurance are two types of insurance policies that protect solar energy investments. Warranties come from manufacturers or installers and cover product defects, workmanship issues, and long-term performance guarantees. They typically include a product warranty (10-25 years) and a performance warranty (25+ years) for power output. Installation/workmanship warranties are usually 1-10 years for errors in grid connection or mounting. Solar insurance is purchased from an insurance company and protects against external risks and financial losses, such as natural disasters, theft, vandalism, equipment failure breakdowns, business interruption, and third-party liability issues.

Warranties are typically long-term, covering defects in manufacturing or performance issues, while insurance safeguards operational performance by covering financial risks, physical damage, and liabilities caused by external factors. Combining both is essential for C&I solar investments in India to maximize asset resilience, secure bankability, and protect ROI. Solar insurance, offered by licensed insurance companies, protects against real-world risks such as fire, lightning, floods, storms, vandalism, theft, inverter failure, and third-party liability claims.

Solar Panel Insurance in the UK, Germany, and Other Global Markets

In the UK

• In the UK, solar panels must be insured like other home and business assets, with providers like AJG UK offering tailored renewable energy policies. The phasing out of feed-in tariffs has increased the importance of insurance for maintaining asset value and safeguarding revenue streams. Cyber risk and performance shortfall due to weather variability are becoming rising concerns, especially for larger installations. Solar insurance is a standard part of asset management for both residential and commercial installations, covering physical damage, theft, third-party liability, and business interruption losses. Leading insurers like Aviva, AXA, and Allianz UK provide customizable solar insurance solutions to meet the growing demand.

In Germany

• HGermany, a pioneer in solar energy, offers comprehensive insurance coverage for rooftop, utility-scale, and agrivoltaic systems. The market includes performance guarantees, manufacturer insolvency cover, and equipment failure protection. Insurers like Munich Re and HDI Global provide module warranty insurance and parametric insurance, which are attractive to investors and banks financing solar projects. Germany’s insurance frameworks are often used as benchmarks by emerging solar markets worldwide. Germany’s strong regulatory support and advanced insurance products, particularly for utility-scale and distributed rooftop PV, enhance bankability and risk profile.

In the UAE

• In the UAE, solar projects face environmental challenges like heat and sand storms. Insurers like Oman Insurance, AIG UAE, and Zurich ME offer heat and dust damage coverage, module degradation riders, custody liability, and performance-linked policies under PPA models. Large solar parks rely on comprehensive operational policies and CAR/EAR during installation. Policies typically include panel degradation, desert-specific risk insurance, performance coverage aligned with irradiation levels, and third-party liability for commercial rooftops and carports. Leading providers offer customized products for residential and utility-scale projects.

How Soleos Solar Helps You with Solar Panel Insurance

Soleos Solar is an integrated provider of solar EPC, finance, insurance, and O&M services. They connect clients with specialized insurance partners approved by MNRE, ensuring their rooftop or ground-mounted systems are protected against natural disasters, equipment failures, business interruption, and liability issues. From project ideation through commissioning, Soleos designs insurance coverages, including contractor’s All Risk (CAR/EAR) during construction and module-performance or parametric policies in operation, to safeguard investment and ROI. The company collaborates with India’s leading insurers, such as ICICI Lombard, HDFC Ergo, Bajaj Allianz, and Tata AIG, to offer tailor-made packages. Soleos also handles documentation, audit support, and claims coordination, ensuring minimal downtime and faster resolution.

FAQs on Solar Panel Insurance

1. What is solar panel insurance?

Solar panel insurance is a specialized policy designed to protect solar energy systems—rooftop or ground-mounted—from risks such as natural disasters, theft, fire, equipment failure, and revenue loss due to downtime. It ensures financial protection and peace of mind for system owners.

2. Is solar panel insurance mandatory in India?

Solar panel insurance is not legally mandatory in India; however, it is highly recommended—especially for commercial and industrial (C&I) projects, as well as for those financed through loans. Many lenders and DISCOMs require insurance as part of project documentation.

3. What does solar panel insurance cover?

Typical solar panel insurance policies in India cover:

• Property damage (fire, storm, flood, lightning, etc.)
• Theft and vandalism
• Equipment breakdown (inverters, panels, cabling)
• Business interruption (loss of income due to downtime)
• Third-party liability
• Construction All-Risk and Erection All-Risk (CAR/EAR) during installation

4. How is solar panel insurance different from a product warranty?

A warranty covers only manufacturing defects in specific components like solar panels or inverters. In contrast, solar panel insurance covers broader external risks such as weather damage, fire, theft, and loss of income—making it more comprehensive.

5. Who needs solar panel insurance in India?

• Commercial and industrial unit owners
• Residential solar users with high-value installations
• EPC contractors during project execution
• Solar investors and developers
• Financiers, banks, and NBFCs providing project loans

6. What is the cost of solar panel insurance in India?

The cost typically ranges between 0.2% to 1% of the total project cost annually, depending on location, system size, type of coverage, risk exposure, and insurer. Customized quotes are provided based on detailed site and project risk analysis.

7. Which companies provide solar panel insurance in India?

Some of the top insurance providers offering solar policies include:

• ICICI Lombard
• HDFC Ergo
• Tata AIG
• New India Assurance
• IFFCO Tokio
  These are often partnered with EPC companies like Soleos Solar to offer bundled or tailored insurance packages.

8. Can I insure a residential solar system in India?

Yes. Homeowners can either include their solar setup under their existing home insurance policy or opt for a standalone solar panel insurance plan that covers physical damage, system breakdown, and third-party risks.

9. How can I claim solar panel insurance?

To file a claim:

1. Notify your insurance provider immediately after the incident.
2. Submit necessary documents: policy copy, photos of damage, FIR (if required), and installation reports.
3. Cooperate with the insurer’s inspection and survey process.
4. Your claim is processed and settled as per policy terms.

10. Does Soleos Solar help with solar panel insurance in India?

Absolutely. Soleos Solar provides complete support—from risk assessment and policy selection to claims assistance. We partner with India’s leading insurers to offer you project-specific, cost-effective solar panel insurance plans, whether you’re a residential user, C&I client, or a solar park investor.

Conclusion

In a rapidly evolving energy landscape, solar power stands out as one of the most promising and profitable solutions. But like any long-term asset, it is vulnerable to external risks—natural disasters, theft, equipment failure, and more. Solar panel insurance bridges the gap between performance and protection, ensuring that your clean energy investment continues to deliver value, even when the unexpected occurs.

Whether you’re a manufacturer with expansive rooftop systems or a business investing in ground-mounted solar infrastructure, protecting your solar assets is no longer optional—it’s essential. From policy selection to claims management, the right insurance plan is your safety net, enabling uninterrupted power generation and long-term ROI. At Soleos Solar Energy Private Limited, we specialize in building more than just solar projects—we build solar confidence. With 12+ years of industry experience, 160+ completed projects, and a footprint in India and global markets, we offer more than EPC services. We deliver peace of mind.

The global energy landscape is undergoing a transformation, driven by the urgent need to combat climate change and reduce dependency on fossil fuels. Distributed Renewable Energy Bilateral Procurement (DREBP) is emerging as a strategic and scalable solution to enable the adoption of clean energy. As countries transition to greener energy sources, DREBP offers a decentralized, cost-effective, and flexible procurement model. This blog explores the concept of DREBP, its benefits, challenges, and the potential it holds for businesses, governments, and communities around the world.

What is Distributed Renewable Energy Bilateral Procurement (DREBP)?

Distributed Renewable Energy Bilateral Procurement (DREBP) is a decentralized energy procurement model that allows consumers to directly purchase renewable energy from producers through systems like rooftop solar installations, wind turbines, and microgrids. This approach promotes a localized and efficient energy ecosystem, reducing transmission losses and enhancing energy security without traditional utility companies or competitive bidding processes.

Key Components of Distributed Renewable Energy Bilateral Procurement

1. Decentralized Renewable Energy Generation
   • Energy is produced close to the point of consumption using small to medium-scale renewable sources like rooftop solar panels, wind turbines, and microgrids.
   • This proximity reduces transmission losses and enhances energy security.
2. Bilateral Power Purchase Agreements (PPAs)
   • Direct contracts between energy producers and consumers outline terms such as pricing, duration, and delivery specifics.
   • These agreements provide price certainty and can be tailored to the specific needs of both parties.
3. Digital Platforms and Smart Technologies
   • Integration of technologies like blockchain, Internet of Things (IoT), and smart meters facilitates transparent and efficient energy transactions.
   • These tools enable real-time monitoring and management of energy flows.
4. Supportive Regulatory Frameworks
   • Policies such as net metering, open access regulations, and incentives for renewable energy adoption are crucial for DREBP implementation.
   • Governments play a pivotal role in creating an enabling environment for bilateral procurement models.
5. Consumer Empowerment and Participation
   • DREBP empowers consumers to take control of their energy sources, promoting active participation in energy generation and consumption decisions.
   • This model supports energy independence and can lead to cost savings for consumers.
6. Grid Resilience and Reliability
   • Distributed energy systems are less susceptible to large-scale outages, enhancing the overall resilience of the energy grid.
   • By diversifying energy sources, DREBP contributes to a more stable and reliable energy supply.
7. Environmental Sustainability
   • Utilizing renewable energy sources reduces greenhouse gas emissions, aligning with global sustainability goals.
   • DREBP supports the transition to a low-carbon economy by promoting clean energy adoption.

Benefits of Distributed Renewable Energy Bilateral Procurement

1. Empowerment of Small-Scale Renewable Energy Producers

DREBP facilitates market access for small-scale renewable energy projects, such as solar installations up to 5 MW and wind projects under 10 MW. By allowing procurement without competitive bidding, it encourages broader participation in the renewable energy sector.

2. Streamlined Procurement Process

The elimination of competitive bidding processes under DREBP reduces administrative burdens and accelerates project deployment. This streamlined approach benefits both energy producers and consumers by simplifying contract negotiations and implementation timelines.

3. Enhanced Energy Security and Resilience

By promoting decentralized energy generation, DREBP reduces reliance on centralized power grids. This decentralization enhances energy security and resilience, particularly in remote or underserved areas.

4. Economic Advantages for Consumers

Direct procurement agreements can lead to cost savings for consumers by offering stable and potentially lower electricity prices. This financial predictability is especially beneficial for industries with high energy demands.

5. Support for Renewable Energy Adoption

DREBP aligns with broader environmental objectives by facilitating the integration of renewable energy sources into the power supply. This support contributes to the reduction of greenhouse gas emissions and the advancement of clean energy initiatives.

6. Regulatory Support and Incentives

In regions like Gujarat, India, regulatory frameworks have been established to support DREBP, including waivers on domestic content requirements and predefined tariffs for renewable energy projects.

Challenges in Implementing Distributed Renewable Energy Bilateral Procurement

1. Regulatory and Policy Barriers

• Different states and countries have varying regulations for open access, grid interconnection, and renewable energy procurement, leading to uncertainty. The absence of standardized policies can delay project approvals and increase compliance costs. Bureaucratic hurdles and ambiguous guidelines can stall project timelines. Inconsistent regulations across regions can complicate the implementation of decentralized energy procurement (DREBP), creating uncertainty for producers and consumers. Policy gaps in some areas also hinder the growth of DREBP models.

2. Grid Integration and Technical Challenges

• Existing grids may not be designed for two-way power flows, causing congestion, voltage fluctuations, and reliability issues. Interconnection delays can postpone project commissioning. Balancing supply and demand requires advanced grid management and forecasting tools. Existing grid infrastructure may not handle the bidirectional flow of electricity in distributed renewable energy generation (DREBP) systems, leading to voltage fluctuations and overloading. The complex process of connecting distributed energy systems to the grid can cause delays in project timelines.

3. Financial and Investment Challenges

• Renewable energy installations often face high upfront costs, limited financing access, uncertain revenue streams due to fluctuating energy prices and evolving tariff structures, and financing difficulties due to perceived risks and lack of investor confidence. These factors can deter smaller players from participating in distributed renewable energy projects, hindering growth and causing uncertainty in project returns.

4. Market and Economic Obstacles

• Market Volatility: Fluctuations in energy prices can affect the economic viability of DREBP agreements, making it difficult to predict long-term returns.
• Economic Uncertainty: Broader economic factors, such as inflation and supply chain disruptions, can impact the cost and feasibility of renewable energy projects.

5. Technological and Operational Challenges

• The renewable energy sector faces several challenges, including supply chain constraints, workforce shortages, interoperability issues, innovation gaps, maintenance and operations challenges, and cybersecurity risks. Supply chain constraints include delays in components like solar panels and batteries, while workforce shortages can lead to delays in installation and maintenance. Interoperability issues involve seamless communication among different technologies, while innovation gaps can lead to obsolescence of existing systems. Maintenance and operations are further complicated by the need for ongoing monitoring and skilled personnel.

6. Consumer Awareness and Engagement

• DREBP adoption is hindered by limited understanding, behavioral resistance, and capacity building needs. Many potential buyers and producers lack technical knowledge about its benefits and processes. Traditional energy procurement methods and cultural attitudes can also slow adoption. Training and education are necessary for stakeholder participation. Cultural attitudes and resistance to change can also hinder DREBP adoption.

7. Environmental and Social Factors

• Renewable energy projects may face land use conflicts due to land availability, environmental concerns, or community resistance. Engaging local communities to build trust and support is crucial, but often overlooked. Land use disputes, especially in agricultural areas, can arise from concerns about aesthetics, noise, or environmental impact.

Global Trends in Distributed Renewable Energy Bilateral Procurement

Distributed Renewable Energy Bilateral Procurement (DREBP) is rapidly transforming the global energy landscape by enabling direct transactions between renewable energy producers and consumers. This decentralized procurement model aligns closely with worldwide sustainability goals, offering enhanced flexibility, cost savings, and energy resilience. One of the most significant drivers of DREBP’s growth is the surge in corporate commitments to renewable energy, with over 400 major companies pledging to switch entirely to renewable electricity, many targeting completion by 2030.

This corporate push is fueling the rise of power purchase agreements (PPAs), particularly in regions such as the Middle East and Africa, where countries like Morocco, Egypt, and South Africa lead in facilitating distributed renewable energy projects. Furthermore, distributed solar photovoltaic (PV) systems are expanding rapidly, accounting for nearly half of global PV capacity additions in 2023, propelled by declining installation costs and supportive policies. Another notable trend is the rise of Virtual Power Plants (VPPs), which aggregate distributed energy resources to provide grid stability and improved energy management, particularly evident in the United States.

Small and medium enterprises (SMEs) are also increasingly participating in renewable energy procurement, motivated by cost reduction and sustainability goals, with half of voluntary clean energy procurement attributed to new energy customers as of 2021.Governments worldwide are backing this momentum through policy frameworks encouraging distributed generation; for instance, India aims to install 500 gigawatts of renewable capacity by 2030. Technological advancements such as smart metering, blockchain, and IoT are further enhancing the efficiency, transparency, and reliability of DREBP transactions by enabling real-time monitoring and management.

Market projections reflect this upward trend, with the Distributed Energy Generation market expected to grow from USD 372.6 billion in 2023 to nearly USD 971 billion by 2031, driven by increasing demand and cost-effective distributed technologies. Overall, DREBP is emerging not only as a procurement method but as a strategic approach to achieving sustainable, resilient, and economically viable energy systems worldwide.

Policy Recommendations for Scaling DREBP

1. Streamline Regulatory Frameworks

• Governments should streamline licensing, approval, and interconnection procedures for distributed renewable energy projects to reduce administrative burdens and facilitate quicker project deployment. Standardized contract templates for Power Purchase Agreements and interconnection agreements can lower transaction costs and legal complexities, promoting easier bilateral negotiations between producers and consumers. Implementing clear and expedited procedures for small-scale projects can also reduce bureaucratic delays. Waiving Domestic Content Requirements (DCR) for small-scale projects can also encourage quicker deployment and reduce costs.

2. Enhance Financial Incentives and Support

• Policymakers should introduce feed-in tariffs (FiTs) to encourage investment in distributed renewables, providing fixed payments for renewable energy producers. These incentives can offset initial capital costs and provide predictable revenue streams, making projects financially viable. Green financing platforms and low-interest loan programs for small and medium enterprises (SMEs) can enhance access to capital and broaden market participation. Additionally, providing tax incentives and subsidies can offset initial capital costs for renewable energy installations. Lastly, establishing green financing mechanisms and low-interest loans can support SMEs in adopting renewable energy solutions.

3. Promote Market Access and Participation

• Policies should encourage corporate renewable energy procurement, such as RE100, by committing companies to 100% renewable energy sources. This creates demand for distributed renewable energy projects. Supporting renewable energy cooperatives can democratize energy production and consumption. Virtual Power Purchase Agreements (VPPAs) can enable businesses to procure renewable energy from distributed sources without physical infrastructure. Governments can incentivize corporate commitments to 100% renewable energy, driving demand for distributed renewable energy procurement arrangements.

4. Invest in Smart Grid Infrastructure

• A robust, flexible grid is essential for efficient integration of distributed energy resources. Policymakers should promote the use of advanced metering infrastructure for real-time monitoring and settlement of transactions. Investment in bidirectional energy flow technologies and local flexibility markets will enhance grid stability and generate new revenue streams for distributed energy producers. Smart metering systems, bidirectional energy flow technologies, and local flexibility markets can help establish markets where distributed energy resources can provide grid services, thereby enhancing grid stability.

5. Foster Public Awareness and Capacity Building

• Scaling Distributed Renewable Energy Projects (DREBP) requires raising awareness among businesses, communities, and regulators about its benefits and opportunities. Educational campaigns and technical training programs can equip stakeholders with the necessary knowledge and skills for project development. Involving local communities in planning and decision-making ensures projects align with local needs and gain public acceptance. Technical assistance and training programs can also be provided to build local capacity in renewable energy technologies.

Future Outlook of DREBP

The future of Distributed Renewable Energy Bilateral Procurement (DREBP) is bright and promising, fueled by a combination of corporate sustainability commitments, advanced technologies, evolving market models, and supportive policy frameworks. As more global corporations join initiatives like RE100, the demand for bilateral procurement mechanisms is expected to surge, with an estimated 290 TWh of additional renewable electricity needed by 2030 to meet these clean energy goals. Technological advancements, particularly in smart grids, blockchain, and the Internet of Things (IoT), are revolutionizing the DREBP landscape by enabling real-time energy tracking, improving transaction transparency, and enhancing system efficiency.

Additionally, the rise of Virtual Power Plants (VPPs) is helping aggregate and optimize distributed energy sources, offering increased grid flexibility and reliability. On the policy front, governments are starting to implement forward-looking regulations—such as Gujarat’s scheme for distributed bilateral solar purchases—which simplify access to clean energy for small-scale investors and developers. Moreover, small and medium enterprises (SMEs) are becoming increasingly active in renewable energy procurement, with nearly half of voluntary clean energy deals in 2021 coming from new market participants. As these trends converge, the global distributed energy generation market is projected to grow significantly, positioning DREBP as a cornerstone in the transition toward a cleaner, more resilient, and decentralized energy future.

Conclusion

Distributed Renewable Energy Bilateral Procurement (DREBP) is more than a trend—it’s a transformative model that’s redefining how energy is produced, distributed, and consumed. With its ability to empower consumers, accelerate clean energy adoption, and reduce dependence on centralized grids, DREBP stands at the forefront of the global energy transition. From large corporations and SMEs to community cooperatives, the opportunity to participate in a cleaner, more resilient energy ecosystem is now within reach.

At Soleos Solar, we are committed to unlocking the full potential of DREBP by offering tailored solar EPC solutions that empower industries, businesses, and communities to take control of their energy future. Our team of experts is here to help you navigate the technical, regulatory, and financial aspects of bilateral energy procurement with ease and confidence.