Construction Insurance for Utility-Scale Solar in Latin America | NextGuard
⚡ Specialty Insurance · Latin America
Construction Insurance for Utility-Scale Solar in Latin America
By Adolfo Segovia · NextGuard Insurance Agency LLC·Published July 17, 2026·~10 min read
CAR / EARDSU / ALOPMarine CargoLloyd's MarketsBrazil · Chile · Mexico · Colombia · Peru · Argentina
If you are developing, financing, or operating a utility-scale solar project in Latin America, the construction phase is when your exposure is highest and your coverage options are most consequential. A 200 MW solar plant under construction in Colombia, Peru, Argentina, or Brazil represents hundreds of millions of dollars in equipment, labor, and financing at risk — before a single kilowatt-hour reaches the grid.
Most domestic insurance markets in the region cannot fully service that exposure. This guide explains what coverage is required, where the gaps appear, and how international market access changes the equation for developers and lenders working at scale in LATAM.
Why Construction Is the Highest-Risk Phase
During construction, a utility-scale solar project faces risks that simply do not exist once it is operational:
Equipment in transit and on-site — hundreds of thousands of solar panels, inverters, transformers, and racking systems moving through ports, customs, and unpaved access roads
No revenue to offset a loss — a delay caused by a major incident before commissioning can eliminate project returns entirely
Lender exposure — construction loans and green financing packages are fully drawn but generating nothing; lenders carry maximum exposure and their covenants reflect it
Local supply chain concentration — in markets like Colombia and Peru, limited local EPC capacity means contractor defaults or delays cascade quickly
Political and regulatory risk — permitting delays, grid connection uncertainty, and regulatory changes can halt construction in ways that are partially insurable
BESS integration risk — projects incorporating battery energy storage (now common in Chile and increasingly in Brazil) add technology-specific failure modes that standard construction policies rarely address
Real-World Context
Latin America commissioned over 2,800 MW of new utility-scale solar in Brazil alone in 2025. Projects like Zelestra's La Joya complex in Peru (700 MW total), ContourGlobal's Quillagua+Victor Jara portfolio in Chile (452 MW + 2.5 GWh BESS), and Scatec's Barzalosa project in Colombia (130 MW) represent the current build wave — each with distinct coverage requirements that domestic markets cannot fully service.
The Core Coverage Stack for Solar Construction
Coverage
What It Covers
Priority
CAR / EAR
Physical loss or damage to the project during construction — panels, racking, inverters, transformers, civil works
Required
DSU / ALOP
Lost PPA revenue during the period an insured event delays commercial operations
Required
Marine Cargo
Panels and equipment in ocean transit, port, inland transit, and on-site staging
Required
Third-Party Liability
Bodily injury and property damage to third parties during construction
Required
Contractor's Equipment
Heavy machinery and tools on site, owned or rented by the EPC
Critical
BESS Extension
Battery storage systems — thermal runaway, cell failure, performance degradation
Critical if BESS
Political Risk
Expropriation, political violence, currency inconvertibility — especially for Colombia, Argentina
Recommended
1 Construction All-Risk (CAR) / Erection All-Risk (EAR)
This is the foundation. A CAR/EAR policy covers physical loss or damage to the project during the construction period — from ground-breaking through commissioning and testing. For utility-scale solar, key considerations include:
Panels and trackers — bifacial panels and single-axis trackers require underwriters who understand PV-specific failure modes, not just standard construction equipment
Natural catastrophe sublimits — flood, earthquake, and windstorm sublimits must reflect actual exposure; default market caps often understate risk in the Atacama region, the Andes corridor, and Brazil's northeast
Testing and commissioning coverage — many standard CAR policies exclude damage during initial energization, which is a high-risk moment and must be explicitly endorsed
Maintenance period extension — coverage should extend through the defects liability period post-commissioning
2 Delay in Start-Up (DSU) / Advanced Loss of Profits (ALOP)
DSU is the coverage that most developers underestimate and most domestic markets underprice. It pays for lost revenue during the period that an insured physical loss delays commercial operations.
DSU Sizing Example
A 300 MW solar project with a 20-year PPA at $45/MWh generating 700 GWh annually generates approximately $31.5 million per year in contracted revenue — or roughly $2.6 million per month. A 6-month delay in commissioning caused by an insured event that is not covered by DSU means $15.75 million in lost revenue with no recourse. DSU must be sized to this actual revenue stream, not a generic percentage.
DSU for LATAM solar projects must also address grid connection delay — in Colombia, Argentina, and Peru, grid connection timelines are highly variable, and DSU should explicitly cover delays caused by an insured physical event that prevents timely grid connection.
3 Marine Cargo
Solar panels manufactured in China, the United States, or Europe travel thousands of miles before reaching a construction site in Arequipa, Antofagasta, or Bahia. Marine cargo coverage must address: ocean transit from port of origin; inland transit from port of entry to site; staging area storage; and customs delay exposure where applicable.
4 Third-Party Liability During Construction
Construction sites generate significant third-party exposure: local communities, access roads, neighboring agricultural operations, and public infrastructure. Public liability and employer's liability must be structured to local regulatory requirements while meeting the standards of international lenders.
Where Domestic Markets Fall Short
In Brazil, Chile, Mexico, Colombia, Peru, and Argentina, local insurance markets have improved significantly. But for utility-scale solar projects — particularly those above 100 MW — several structural limitations remain:
Capacity constraints — A single 300 MW solar project may have an insured value exceeding $300M. Most domestic LATAM markets cannot provide full capacity for a single site at this scale without co-insurance arrangements that are opaque to the buyer.
Technology gaps — Underwriters in local markets often apply generic construction language to solar projects, creating coverage gaps around bifacial panel performance, tracker failure, and BESS integration.
DSU sophistication — Correctly structuring DSU for a PPA-backed project with project finance debt requires underwriters who understand both renewable energy and structured finance — rare outside London and specialty markets.
Currency and valuation — Projects financed in USD but operating in local currency create valuation complexity at claims time that domestic policies often do not address explicitly.
The Role of International Market Access
Lloyd's of London and the broader international specialty market have significant capacity and expertise in utility-scale renewable energy construction across every major LATAM market. London-market underwriters understand risk profiles from seismic zones in Chile and Peru to the regulatory environment in Argentina under the RIGI regime to the logistics challenges of large-scale construction in Brazil's northeast.
What International Market Access Means in Practice
For a developer building a 242 MW solar project in Arequipa, Peru — like Zelestra's Babilonia project, backed by $176M in green financing — accessing Lloyd's markets means: higher per-risk capacity without co-insurance complexity; underwriters with specific PV construction experience; DSU wording designed for PPA-backed project finance structures; and policy terms that satisfy lender requirements from IFC, IDB Invest, and international commercial banks.
Lender Requirements for Green-Financed Solar Projects
For developers working with international lenders — IFC, IDB Invest, BNDES, HSBC, Santander, or commercial banks offering green financing — international market access is often not optional. Lender insurance schedules frequently specify:
CAR/EAR at full replacement value with no sublimit gaps
DSU/ALOP sized to projected PPA revenue for the full indemnity period
Third-party liability minimums exceeding local regulatory requirements
The lender named as additional insured and loss payee on property covers
Carrier minimum credit ratings (typically A- or better by AM Best or equivalent)
Policy terms in English or bilingual, with a governing law clause acceptable to the lender
These requirements — standard in project finance globally — are difficult to satisfy through domestic LATAM markets alone. A broker with wholesale and international market relationships, including Lloyd's capacity, is typically required to place the full program.
Pre-Construction Insurance Checklist
Before Breaking Ground on a Utility-Scale Solar Project in LATAM
Review the financing agreement's insurance schedule — lender requirements take time to place and should be identified at financial close, not after
Model monthly PPA revenue and size DSU/ALOP accordingly — confirm the indemnity period covers the full construction schedule plus buffer
Confirm all named insureds: project company, EPC contractor, lender as loss payee, O&M contractor, and any equity sponsors
Verify EPC contractor's own insurance and identify gaps between the EPC policy and the owner's CAR — these gaps are common and expensive at claims time
Confirm BESS coverage explicitly if the project includes battery storage — do not assume a standard CAR policy covers thermal runaway or cell-level failures
Assess political risk exposure — Colombia, Argentina, and Peru each have country-specific considerations that may warrant standalone political risk cover
Confirm marine cargo covers the full transit chain — from factory in China or the US to the construction site, including inland legs and staging
Engage a broker with international market access early — Lloyd's placements take longer than domestic placements and should not be left to the week before financial close
Frequently Asked Questions
The core coverage stack for utility-scale solar construction in Latin America includes: Construction All-Risk (CAR/EAR) covering physical loss or damage during the build period; Delay in Start-Up (DSU/ALOP) covering lost PPA revenue if an insured event delays commercial operations; Third-Party Liability during construction; and Marine Cargo for panels and equipment in transit. For projects above 100 MW, domestic markets in the region often lack sufficient capacity — international market access including Lloyd's is typically required.
DSU stands for Delay in Start-Up, also called Advanced Loss of Profits (ALOP). It covers the revenue a solar project would have earned under its Power Purchase Agreement (PPA) during the period that a covered physical loss delays commercial operations. For utility-scale projects with long-term PPAs, every month of delay at commissioning can represent millions of dollars in lost contracted revenue. DSU must be sized to the actual PPA revenue stream, extended to cover grid connection delays where relevant, and aligned with lender debt service requirements.
Not automatically. Many standard CAR policies exclude or sublimit battery energy storage system components. Coverage for BESS must be explicitly endorsed and should address thermal runaway risk, cell-level failure, performance degradation events, and the interaction between the BESS and the solar generation system. Projects like ContourGlobal's Quillagua (221 MW + 1.2 GWh) and Victor Jara (231 MW + 1.3 GWh) in Chile require specialized policy language that goes well beyond standard solar construction coverage.
Lenders financing utility-scale solar projects — including IFC, IDB Invest, BNDES, and commercial banks with green financing programs — typically require: CAR/EAR at full replacement value; DSU/ALOP sized to projected PPA revenue; third-party liability meeting local regulatory minimums; marine cargo for equipment in transit; the lender named as additional insured or loss payee; and policy terms from carriers meeting minimum credit rating thresholds (typically A- or better). For green financing packages, lenders often specify Lloyd's or equivalent international market standards.
Generally not at full capacity. Domestic insurance markets in Latin America have improved, but for single-site solar projects above 100–200 MW, local markets typically face capacity constraints, limited experience with advanced solar technology (bifacial panels, single-axis trackers, BESS), and less sophisticated DSU structuring for projects with project finance debt. International market access — particularly Lloyd's and the London specialty market — is usually required to place the full program at adequate limits.
Argentina's RIGI (Régimen de Incentivo para Grandes Inversiones) creates specific insurance requirements for large-scale solar investments. Projects approved under RIGI — such as El Quemado (360 MW, Mendoza, YPF Luz) and the upcoming Anchoris and San Rafael projects — often have contractual and lender requirements demanding international-standard coverage, with insured values structured to address Argentina's currency considerations. Domestic Argentine market capacity for projects at this scale is limited; international market access is typically required.
CAR (Construction All-Risk) is typically used for civil construction — earthworks, foundations, structures. EAR (Erection All-Risk) covers mechanical and electrical equipment installation. Solar farms involve both: civil work (grading, foundations, access roads) and erection (racking, panels, inverters, transformers). Most solar project policies are written on a CAR form with EAR extensions, or a combined form covering both activities. The key is ensuring the policy form matches the actual construction scope — a mismatch creates coverage gaps that only become apparent at claims time.
NextGuard Insurance Agency is a specialty commercial brokerage based in Hollywood, Florida, licensed in Florida and New York. We hold wholesale and international market relationships — including Lloyd's capacity — for utility-scale renewable energy construction projects across Latin America. We work with project developers, multinational operators, and financial sponsors in Brazil, Chile, Mexico, Colombia, Peru, Argentina, and across the region. Our team is trilingual in English, Spanish, and Portuguese. Contact Adolfo Segovia at adolfo@nextguardinsurance.com, call 754-337-9710, or message on WhatsApp +1 786-597-0780.
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Whether you're breaking ground on a 50 MW project in Colombia or closing green financing on a 700 MW complex in Peru, we can structure the coverage your lenders require.
Disclaimer: NextGuard Insurance Agency LLC is a specialty commercial brokerage licensed in Florida and New York. This article is for informational purposes only and does not constitute insurance advice or a binding coverage offer. Coverage terms, conditions, availability, and pricing vary by market, project, and underwriter. Consult a licensed insurance professional for advice specific to your project.
