Largest Renewable Energy Claims of 2011

Renewable Claims

Offshore wind insurance has fortunately not had the industrial mega claims yet, but there are a few close calls around that raise concern in the insurance sector.  As construction accelerates towards the green energy targets set for the end of the decade it is important that the insurance market works even more closely with projects for capacity to be confidently and commercially dispatched.

A Close Call

Largest Claims of 2011What do the biggest claims of the year portend for the future?

Earlier this year, a flaw in the design of offshore wind turbine structures was discovered at one European wind farm. Upon further investigation, engineers diagnosed the same problem on 600 offshore wind turbines. The outcome is that affected turbines are slipping up to 1cm per year which has lead to significant changes in the previously agreed grouting standards, a noteworthy defect. Lessons have been learned but not all of the costs are destined for the insurance market.

Cable Trouble

Then there are cables, export cables and array cables have provided more frequent losses to the insurance market. Cables usually come out of factories wound on to carousels and seemingly spend most of their time trying to get back in to a coil! Many projects have had cables claims and some unfortunately have had multiple cable claims.

This is an area requiring significant attention if insurers are to take this risk; failures in 2011 extend to other sub sea power interconnectors, not just those attached to offshore wind farms.

Choice of equipment and laying methodology as well as an experienced and skilled crew and vessel are high priority, but looking at it from the insurance perspective, I think projects have to be prepared to sacrifice some of the time schedule and wait for the best conditions to ensure that cables can be laid successfully.

EPC Mega Losses

And finally, you only need to look at the quarterly reports of some of the world’s largest engineering, procurement and construction (EPC) contractors to understand just how challenging offshore wind can be. Weather delays and heavy cost overruns at some offshore wind projects have taught EPCs an expensive lesson, some to the tune of over half a billion dollars.

At this magnitude, the quantum of loss as an insurance claim could dramatically redefine offshore wind insurance. With plenty of chances to try again I think the insurance market will stick around for the long haul, in fact, we all should hope they do, because if you can’t assuredly transfer some of the risk pot then you’re not going to stay in the game.

About Michael Buckle

Michael is an Executive Director of Global Markets and leads Willis' Renewable Energy practice. Based in London wit…
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6 Responses to Largest Renewable Energy Claims of 2011

  1. Jarmo Gillberg says:

    Hi Michael,

    Ref: Largest renewable energy claims 2011.

    Can you elaborate a bit. I don’t fully understand what is meant with “The affected turbines are slipping up to 1cm per year which has lead to significant changes in the previously agreed grouting standards”. What part is slipping and what has been done to prevent this?

    • Michael Buckle says:

      Many offshore wind turbines sit on a monopile. The connection between the pile and the wind tower is known as a transition piece and this is placed on the pile and grouted to secure and level the tower. This grout is the problem as it is no longer sufficiently holding the tower and the transition piece and tower is slipping and creeping slowly down the monopile. This may be due to the constant pressure on the grout and the oscillation and vibration of the WTG. The grouting standard J-101 is now changed, various new methods are being deployed including the use of sheer keys (used in the oil industry). There is no agreed way to stop the slippage other than to reinject the grout and for these windfarms it is an added operational cost. If the grout loosens to the point of the tower become dangerous then we have a big problem. In short, the WTG are getting shorter by a 1cm per year and slipping into the sea.

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