Offshore installations and insurance
From the point of view of insurers, the main problems of offshore installations are to be found in risk management. Even the construction of these installations is a risky operation. At the Nysted offshore wind farm in the Danish Baltic Sea, for example, the wind turbines stand on foundations consisting of 1300 t concrete blocks, each with a further 500 t of rock as ballast. These concrete foundations are cast onshore and transported to the installation site by special vessels. Such vessels have already managed similar and even more difficult tasks in the oil industry. Accidents can still happen though. For instance, a ship at the Horns Rev wind farm tore the heavy power cable in a row of wind turbines with its anchor. The ensuing repairs cost much more than a comparable repair job onshore.
Installing the towers has now become quite manageable, with as much work as possible being done onshore. Every job carried out offshore costs up to a hundred times as much as onshore. For this reason, only the large components are still assembled at sea. Assembly crews used to working together can now assemble one of the huge offshore power plants in less than six hours. Short assembly times for the wind turbines mean that wind farm con structors are not reliant on long periods of fine weather.
This results in considerable savings, as exemplified by the two Danish wind farms, where 400 men and 25 boats were deployed at peak times – it would have been very costly if they had been inactive for any length of time owing to bad weather.
Servicing the installations presents special problems too. When there is a swell of a few metres, repair teams have problems simply docking at wind farms. Specialist firms are looking to remedy this, however. A new type of boat that is considerably less vulnerable to heavy seas is currently being developed for use at offshore wind farms.
In addition to the loss scenarios that apply to onshore wind farms, there is also the problem that offshore foundations can shift. And that the installations may be hit by a vessel if it has become disabled, or if visibility is impaired by fog, or if ocean currents have led to navigation errors. The tower and rotor may be also damaged by the weather, for example by hundred-year storms.
Insurance companies have not gathered much experience with offshore wind farms yet. It is obvious, however, that the cost of insurance for damage caused by storms or collisions is far higher than in the case of onshore installations. We know from the insurance of oil rigs how costly it is to repair damage. Insurance products that meet these special requirements therefore have to be developed for offshore installations.
Munich Re’s specialists for traditional offshore installations like oil and gas platforms work very closely with wind farm experts. This has permitted a sound assessment of the risks associated with these plants even at this early stage, so that premiums and conditions have been developed that are commensurate with the risk. Munich Re was the leading reinsurer of the EAR insurance for the biggest offshore wind farms to date – Horns Rev and Nysted – and is also taking a principal part in negotiations on insurance solutions for other projects.
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