turbines. Turbine manufacturers are investing in R&D to increase turbine capacities, and ambitious offshore projects – such as Moray East, off the north coast of Scotland – now include turbines of 9.5MW capacity and more. And this is set to grow further; the renewable energy developer Ørsted (formerly DONG energy) stated in April 2017 that its zero-subsidy bids at Germany’s government auctions were predicated on the assumption that 13-15MW turbines would be available by 2024.
Larger turbines naturally offer the opportunity to benefit from decreased installation costs and economies of scale. However, they also introduce risks as compared to their smaller counterparts, and require serious consideration of whether the infrastructure of a project site is sufficiently equipped to deal with them. This burden largely rests with the supply chain; harbours, ships, and installation contractors must all consider the potential for risk and reward which is inherently tied up with such developments.
For risk managers and advisors, this will also present the challenge of supporting the industry to develop, while minimising risk. Insurers must recognise the necessity of completing due diligence on new technologies and the exposures they introduce. Meanwhile, marine surveyors are likely to feel the strain of working with maritime contractors struggling to adapt to the new demands on their services, as well as a potential increase in the intensity of surveys requested, as these more ambitious projects prepare for construction.
FLOATING WIND
Aside from the pressures caused by increasing turbine sizes, a discussion of current technological developments in offshore wind would not be complete without the inclusion of
40 | The Report • March 2018 • Issue 83
floating wind technology.
Following six years of successful testing on a prototype off the coast of Norway, the first utility-scale floating wind, Hywind, came online off the shore of Aberdeenshire, Scotland, in late 2017. In the aftermath of this milestone, the market is only set to grow, as an increasing number of developers begin to recognise the benefits offered by floating technology.
Yet the ambitious nature and unproven status of the technology is naturally cause for concern. New risks range from the stability of the subsea platforms to environmental risk from tidal waves, and a lack of precedent has forced developers and engineers, as well as insurers, to apply fixed-foundation rationale to floating projects. This is likely to apply, too, to the marine contractors working on these first floating projects. While there are certainly many similarities between fixed-foundation and floating offshore wind, it is the differences which pose a threat – and which the entire sector needs to remain aware of.
Fortunately, the sector is in a good position to combat these risks – and, additionally, floating wind projects are in a unique position to benefit from lessons learnt in the oil and gas industries. Maritime contractors with half a century’s experience servicing offshore oil rigs and drilling platforms will be able to apply their knowledge to floating wind platforms, benefitting from legacy knowledge which adds immense value to projects. From an insurance perspective, when determining premium prices, insurers consider not only quantifiable risks, but also ‘soft’ assets such as experience and track record. If project developers enlist the assistance of marine contractors with a successful record in offshore oil and gas, the project will be able to secure lower premium prices, loosening profit margins and alleviating cost pressure on the supply chain.
Ultimately, floating offshore wind offers a multitude of benefits, including – crucially – the opportunity to access deeper water sites. At GCube, we insured the very first floating pilot projects off the coast of Japan and Portugal and we’re engaging closely with the fast pace of development. Through working to understand the technology, we will be able to support current customers, and new entrants to the market, to the best of our ability.
The next big generation of wind energy projects will be not only offshore, but floating, and solid communication between all parties is necessary to protect this nascent – and hugely promising – sector.
OPPORTUNITIES
While risks to the sector demand attention, the offshore wind industry is in a strong position, and has been building on the experience of the offshore oil and gas industries with success. For maritime contractors, the principles of engineering which have created service vessels for oil rigs and drilling platforms can now inform the development of the many vessels working in offshore, and floating, wind.
Crucially, the risks named above are all ultimately by-products of the exciting and ambitious development which is driving the sector forward – and which is simultaneously creating a multitude of opportunities for all those working in offshore wind.
These opportunities include the creation of many more jobs, the chance to expand and gain experi- ence in other areas of operation, and the opportunity to alleviate the pain of job losses associated with the declining oil and gas in- dustries. Assuming that renewable energy is indeed the future, vessel operators and maritime contrac- tors must act on lessons learnt to be in a strong position throughout 2018 and beyond.
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