Riding on the winds of change

We met up with Patrice Nigon, Head of Engineering Asia, Swiss Re, on reinsuring wind energy projects in Asia.

Q: What are some of the risks associated with the erection of offshore wind turbines and farms, and how can we mitigate them?

Patrice: The actual construction of offshore wind farms is a complex undertaking. Demanding technical requirements, construction risks, high costs and extreme weather conditions are just some of the challenges these projects typically involve.

In addition, the actual project management presents another trial. New offshore wind energy projects congregate companies which have never worked together before and are not used to each other's working methodologies. There can be a myriad of cultural differences and ways of approaching the structuring and realisation of the projects resulting in different project management cultures.

Recent incidents in Asia - like floating turbines sinking or capsizing, cranes mounted on barges with insufficient stability, blades falling in the water during erection, survey boats sinking and others - could possibly have been avoided with a joint risk management approach; and not to forget the Nat Cat exposure. These risks are permanently exposed to inclement weather, variable tides and the like.

Q: What is the role of Swiss Re in projects like offshore wind farms?

Patrice: Financial support and understanding risk are essential for the development of offshore wind farm projects. In addition to capacity, Swiss Re Global Engineering team works closely with our clients to understand and manage risks, and ultimately insure them.

We have the products: from basic machinery breakdown insurance to complex wind resource volatility or lack of solar irradiation index-triggered covers for the plants in operation. We leverage local presence with global expertise and tailor engineering and insurance technical solutions together with our clients. In addition, we offer them dedicated training and risk management services.

Q:  What is Swiss Re's experience with wind energy projects so far? Any challenges or opportunities in this renewable energy sector in Asia?

Patrice: When Europe first started to develop wind energy some 10 years ago, the market felt that there was a need to have a dialogue amongst all parties involved to understand this type of risks and, most importantly, the losses that came thereof. That is why Swiss Re launched the European Wind Turbine Committee (EWTC) with the intention to provide a platform for manufacturers and insurance representatives to discuss and exchange technical know-how and the issues related to the wind power industry.

The EWTC then worked on consolidating this knowledge in the form of the Offshore Code of Practice (OCoP) to obtain a common understanding of the risks involved in such projects and how to mitigate possible losses (e.g. cable laying, foundation issues, large blade transportation and the like). This proved to be extremely effective as it has enabled Swiss Re and the industry to focus their attention on the most difficult issues with regards to the wind farm construction.

Currently, Asia is growing its offshore wind ambitions at different paces: much faster in China and at a relatively slower pace in Japan. Can the industry in Asia – and with industry, I mean manufacturers, construction companies, financial institutions, insurers, etc. - benefit from the experience gained from this field in Northern Europe? Probably, but only to a limited extent. Typhoons, earthquakes, tsunamis, and even thunderstorms seem to have different patterns in Asia, rendering any safety devices and precautions ineffective. These are what we call "new" exposures.

Q: What are some of best practices when it comes to constructing an offshore wind farm?

Patrice: Early detection of possible risks is crucial for the healthy development of this type of projects. Swiss Re led a task force of members from the German Insurance Association (GDV), wind power manufacturers and contractors to jointly produce the OCoP in 2014. The OCoP helps insurers and project participants reduce their risk exposure and ensures the quality of the offshore wind projects. It encourages all sectors in the industry to introduce and carry out risk management procedures, and supports our clients worldwide. It is available in English, German and Chinese.

Q: Why is having a marine surveyor critical and how do they value add in a project?

Patrice: The "marine" operations that take place while erecting offshore wind farms are the trickiest and often result in huge insurance claims. To avoid this, we require qualified expertise. Marine surveyors are in a position to review all designs, calculations and procedure documents. They perform vessel and equipment controls, as well as on-site surveys. In addition, marine surveyors review and approve high-risk marine operation works, such as transportation, installation, cable laying etc, from the planning to the execution phase of the project.

In a nutshell, marine surveyors evaluate the compliance with the technical requirements of marine operations in order to identify and mitigate risks, thus increasing the reliability of project performance from a technical and economic standpoint.

(Re)insurers need to select the right Marine Warranty Surveyors (MWS), not just according to their knowledge of the region, but also based on their offshore wind farms and cable laying experience. In addition, it is important to work together with the marine surveyors to define their activities according to the specificities of the project. This is extremely important, as it will ensure the success of the project. At Swiss Re, we call it being smarter together.

For more information on the engineering projects undertaken by Swiss Re Global Engineering, please click here.

 

 


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