As Australia accelerates its renewable energy rollout, cargo damage and supply-chain disruptions pose growing risks to solar project delivery.
In this Q&A, AXA XL head of marine – Australia Tom Hughes and AXA XL senior marine claims specialist Sameen Naveed discuss the challenges facing developers, the complexities of insurance claims and how stronger risk management can help keep projects on schedule.
These lessons are not only pertinent for solar farm developers, but renewable energy developers more broadly.
What risks do Australian solar projects face from a cargo perspective – and are they unique?
Tom: Solar modules can look robust, but they are precision equipment and surprisingly fragile. A dropped pallet or sustained vibration on an unsealed road may leave no visible damage, while microcracks only show up in electroluminescence testing or later underperformance. That makes causation difficult, so we look closely at packaging, handling, condition surveys and quality-control records at every handover.
These risks are not unique to Australia, but the combination here is distinctive. An oversized transformer may complete the ocean leg safely, then face bridge limits, tight bends, flooding or rough access roads inland.
In practice, the final 500km can matter more than the first 8000. That is why we treat cargo risk as an engineering and scheduling issue from procurement through to energisation, not just a transit issue.
Sameen: The first question is often not how fragile the equipment is, but which contractual remedy should respond. The same symptoms could point to transit damage, a manufacturing defect, installation damage or a warranty issue – each with different evidence requirements and potentially responsible parties.
For solar modules, a claim should therefore distinguish between:
accidental physical damage during the insured transit;
inherent or manufacturing defects;
defective packing or preparation;
installation damage;
ordinary degradation; and
failure to achieve a warranted performance level.
A defect alone does not establish an insured marine loss. Electroluminescence testing can identify microcracks, but causation remains the key claims question.
Are cargo risks having a material impact on project delivery?
Tom: Absolutely. The damaged item’s replacement value may be only a small part of the loss.
If a critical transformer is damaged and must be rebuilt against a long production queue, the project can miss its commercial operation date, leading to extra contractor costs, debt-service obligations, liquidated damages and lost revenue.
So we not only ask, “What is it worth?” but “What happens to the critical path if it does not arrive intact and on time?”.
Sameen: The challenge is separating delay caused by insured damage from delays already affecting the project.
Projects may already be behind because of approvals, civil works, grid connection, labour or procurement. If damaged cargo is then found, the delay in start-up (DSU) analysis must show whether it actually moved the completion date and by how much.
That requires a disciplined review of the program immediately before and after the loss. The assessment should identify:
the pre-loss completion date;
existing float and concurrent delays;
when the damaged item was genuinely required;
whether unaffected work could continue;
the reasonable repair or replacement period; and
the date on which the insured damage ceased to affect completion.
What geopolitical risks do Australian solar projects face?
Tom: The main issue is concentration. Much of the solar value chain sits within a small number of Asian manufacturing hubs, so two named suppliers may still depend on the same factory, sub-supplier or port. We look beyond the Tier 1 name to where components are made, whether substitutes are approved and how long recertification or redesign would take.
Maritime security also matters. A rerouted vessel does more than arrive late – it can disrupt port slots, customs clearances, heavy-haul permits, crane bookings and site labour. A two-week delay at sea can become a much longer delay on land, and Australia’s distance from manufacturing centres leaves less room to recover.
Sameen: The key issue is whether recoveries and warranties can be enforced against an overseas counterparty.
A cargo insurer may gain recovery rights against a carrier, supplier, packer or manufacturer, but foreign contracts, short notice periods, liability caps, arbitration clauses and difficult jurisdictions can make those rights hard to use.
Manufacturer solvency is another concern. A long warranty offers little protection if the provider no longer exists or cannot meet its obligations. Munich Re Specialty notes that warranty insurance can protect buyers where a provider is no longer in business, highlighting consolidation risk in the solar sector.
Claims teams should preserve evidence and issue notices early, rather than waiting for causation to be finalised. They should also confirm that contractual rights, warranties and recourse remain usable.
Supply-chain disruption has become the norm. Will it abate?
Tom: I don’t expect a return to the old idea of “normal”. The shocks will change, but volatility will remain. Technology also moves quickly: an inverter specified at financial close may be obsolete by the time a loss occurs, and a replacement may need new grid studies, firmware validation or compliance approval. Available manufacturing capacity does not always mean a technically acceptable replacement is available in time.
The better question is whether a project can absorb disruption without losing its commercial case. We look for practical resilience: schedule float, alternative manufacturing slots, local spares, the ability to commission unaffected sections and genuinely interchangeable suppliers. Those details tell us more than a broad claim of “dual sourcing”.
Sameen: The key claims point is that supply-chain delay alone is not necessarily an insured marine cargo loss.
Delay from congestion, rerouting, factory issues or component shortages is different from delay caused by insured physical damage. Standard cargo cover mainly responds to physical loss or damage; consequential delay usually needs specific cover and an insured trigger.
That distinction should be clear from the outset, so the insured does not assume every cost arising from disruption forms part of the cargo claim.
Where insured damage has occurred, claims teams should record separately:
physical damage costs;
investigation and testing costs;
preservation and mitigation costs;
ordinary logistics or procurement expenditure;
increased costs intended to reduce an insured delay; and
commercial costs that remain outside the policy.
Keeping these costs separate avoids mixing insured and uninsured expenditure and makes the adjustment clearer.
What levers can Australia pull to reduce cargo and supply-chain risk?
Australia does not need to manufacture every component locally. A more realistic approach is to build capability where we have an advantage or where failure would cause disproportionate delay – for example, module assembly, frames, glass, selected power electronics, testing, repairs and strategic spares.
The Federal Government’s $1 billion Solar Sunshot program is a useful step because it supports the wider manufacturing and deployment ecosystem.
Practical controls can make an immediate difference. For modules, keep original pallets intact, use shock and tilt indicators, photograph each handover and quarantine wet, crushed or tilted loads. For heavy equipment, complete route surveys before shipment and confirm the port, trailer, hardstand and crane can handle the actual load.
Contracts should also be clear on damaged cargo, replacement orders and supplier warranties. Resilience usually comes from disciplined early decisions, not one dramatic fix.
Sameen: Australia could improve outcomes by strengthening the post-loss service ecosystem, not just manufacturing new equipment.
Useful measures would include:
access to independent solar forensic specialists;
consistent testing and evidence standards;
local facilities capable of controlled module testing;
transparent repair and refurbishment certification;
stronger warranty-support arrangements;
viable recycling pathways for damaged modules; and
clearer protocols for determining whether modules can safely be reused, sold or must be destroyed.
A claim does not end when damaged modules leave the site. The insurer and insured still need to decide whether they have residual value, can be reused safely and how disposal costs should be treated.
Australia’s solar recycling network is still developing, and disposal options vary by location. That directly affects salvage, storage, transport and disposal costs.
Could cargo and supply-chain risks affect Australia’s 82 per cent renewables ambition?
They can affect the pace, cost and reliability of delivery, although cargo risk is only one factor alongside approvals, transmission, grid connections, workforce capacity and community support.
Renewables supplied roughly half of National Electricity Market generation in the final quarter of 2025 according to the AEMO’s Quarterly Energy Dynamics report for Q4 last year, so the transition has momentum. The question is whether projects can maintain it as delivery becomes larger, more complex and more time-sensitive.
Cargo risk will not decide the target on its own, but repeated delays can erode the timetable one shipment at a time. A project may have thousands of modules installed, yet still be unable to export power because one transformer or switchgear package is late.
The 2030 objective is therefore also a logistics challenge. Projects that identify these single points of failure and allow realistic replacement lead times will be better placed to deliver dependable power on schedule.
Sameen: The bigger issue is what repeated losses do to the sector’s insurability, rather than whether one shipment affects the national target.
Where claims reveal recurring defects, poor installation practices or inadequate loss controls, insurers may respond through:
higher deductibles;
narrower defect provisions;
testing or survey requirements;
reduced limits;
more restrictive DSU terms; or
lower appetite for particular technologies or counterparties.
Well-managed claims can also provide reliable loss data and show that damage can be accurately scoped, repaired and recovered, which builds confidence in the risk.
Reaching the 82 per cent target requires rapid growth in renewable generation and supporting infrastructure. A mature claims framework helps by producing credible evidence on loss causes, repair costs and effective controls, rather than treating each event in isolation.
Is there anything else you’d like to add?
Tom: The strongest projects are not always those with the cheapest equipment or shortest schedule. They understand where time and value are concentrated and protect those points.
Pre-shipment inspections, serial-number traceability, tested contingency routes, realistic weather allowances and a credible replacement plan all make a real difference. Insurance adds the most value when it is involved early, while packaging, routes, storage, testing and contingency plans can still be influenced.
AXA XL’s Risk Consulting capability can support clients at this stage through transport planning, route assessments and stowage advice.
Learn more here.