Claims data from offshore wind renewables insurer show foundations, cables and natural catastrophe risks are areas of concern
Asset owners and investors buying offshore wind insurance are increasingly exposed to technical and supply chain risks, alongside natural catastrophe and extreme weather, according to GCube.
The specialist renewables insurer has analysed the past 12 months of claims data, gathered from construction projects and operational offshore wind farms, highlighting five trends to keep an eye on.
“Many of these claims trends could be marked down as ‘growing pains’ linked to global expansion and a drive for cost parity with conventional energy,” said Jatin Sharma, president of GCube Insurance Services.
“However, if they are not properly managed, they will put these goals at risk,” Sharma said.
Five claims trends
A number of costly inter-array cable faults caused by malfunction of fibre optics designed to monitor cable performance has been observed.
These cabling losses accounted for 55% of total claims handled by GCube in the past 12 months.
Secondly, GCube noted a rise in the frequency and severity of claims relating to foundations – particularly monopiles installed at deep water sites.
Foundation-related losses now account for 35% of total claims, according to GCube.
Thirdly, significant mechanical breakdown losses have been incurred at all but one of the floating wind installations currently in operation worldwide, GCube said.
Next, the insurer noted increased exposure to natural catastrophe in the Taiwanese and US offshore wind markets, as well as losses involving extreme weather events that cause significant project damage but do not fall under conventional definitions of natural catastrophe.
Finally, GCube highlighted ongoing issues related to contractor error as the industry drives to reduce the levelized cost of energy in established markets.
These issues put pressure on the supply chain, the insurer noted, particularly for inexperienced local teams in emerging markets.
Human error is involved in some 70% of total claims over the past 12 months, GCube concluded.
Sharma said: “If the industry continues to squeeze the supply chain, while at the same time commercialising new technologies in new global markets, it will become increasingly vulnerable to large-scale financial losses that dent investor confidence and put projects at risk.
“A long-term, responsible outlook is required – both from offshore wind asset developers and owners, and from insurance providers – to ensure that lessons are learnt quickly, and take into account the changing risk profile of construction and operation,” he added.