A recent technical report, co-authored by Green Insurance’s international partner Price Forbes, provided important insights into some of the challenges of insuring wind projects.
It commented that “over the past two years we have seen increasing delays in closing of project financing due to insurability issues. At this stage of the project construction contracts are typically already closed, leaving equity investors potentially critically exposed to construction and operations risks left by insurance exclusions”.
One of the key recommendations was the involvement of an experienced project insurance broker at the earliest phase of the project development (site evaluation).
This is to develop an understanding of not just potential fatal flaws, but construction and operations requirements which may need to be contemplated in project design, contracting and financial modelling, to address insurable risks such as:
- Natural catastrophe risks – insurer flood design requirements, seismic requirements, etc.
- Technology risks – site or environmental concerns related to WTG performance, and specific WTG platform claims histories related to defects
- Construction risks – Due diligence on the EPC contractor and proposed sub-contractors based on past experience and insurance market feedback
- Operations risks – potential constraints and indicative costs for unplanned or out of scope maintenance
Click here to view the full report