Offshore wind cost reduction must not come at expense of risk management

As the offshore wind sector expands and prices fall, asset owners and investors are becoming increasingly exposed to technical and supply chain risks, alongside natural catastrophe and extreme weather.

According to GCube Insurance, a provider of renewable energy insurance services, an analysis of claims data gathered over the past year highlights several key trends that must be carefully managed in order to ensure project success. These include costly inter-array cable faults caused by malfunction of fibre optics designed to monitor cable performance (cabling losses account for 55 per ent of total claims handled by GCube in the past 12 months), a rise in the frequency and severity of claims relating to foundations and significant mechanical breakdown losses incurred at all but one of the floating wind installations currently in operation worldwide.

“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, GCube Insurance Services. “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.”

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