The only insurance without any fear of heights Coverage for the renewable energy industry
Renewable energies – quite possibly the most crucial issue of our time – have been associated with courage, innovation, and a passion for all things new from the start. We have been involved from the start, too, with ground-breaking products for ground-breaking industries. We live in the world of renewable energies, we know the requirements of the market participants, in particular banks and investors (e.g. with international project finance). Against this background, we develop coverage concepts based on the needs of your company. This is how we became one of the leading insurance brokers, e.g. in the wind power industry. Our expertise includes in particular:
- On- and offshore wind projects around the globe
- Solar and photovoltaics – from barn roofs up to mega-plants
- Biogas and biomass – we are well established on the market and have developed coverage concepts that exceed the market standard by far
- Electro-mobility – comprehensive risk analyses and insurance solutions
In the field of geothermal energy, we provide comprehensive assistance. From contract review to active risk management and international placement of the risks up to due diligence for banks and investors. We find ways to facilitate projects that are otherwise considered to be uninsurable. For example, we developed a new exploration insurance within the framework of a cooperation with the Leibniz Institute for Applied Geophysics (LIAG): It covers the risk of a new drilling being unsuccessful or having limited success – and it is often the prerequisite for such a venture to be undertaken at all.
Whatever the project: A team of experts with many years' experience takes care of our clients all around the world with enthusiasm and zeal. Our clients include renowned turbine manufacturers, project developers, operators, foundation specialists, cable suppliers and layers, renowned logistics service providers, banks and investors, service and maintenance companies, and suppliers from the entire value chain.
IMPOSSIBLE? WE'LL SEE ABOUT THAT.
Tales from the world of a Global Broker
Taiwan is moving offshore to generate power: The 640 MW Yunlin project is one of the country's first offshore wind power projects to be realised. The farm comprising 80 turbines and located eight kilometres off the western coast is planned to generate power as of 2021. In 2018, the project developer asked us to develop an insurance concept for the erection and operation stage and place it on the global insurance market. One policy for all: Within the framework of the master contracts for turbines, foundations, submarine cables and substations, all the parties involved get a common coverage for the erection stage.
It is no small task. Due to local requirements and provisions, we need reliable cooperation partners on site. Cultural aspects and customs in particular have to be observed in the discussions and negotiations in Taiwan. This is a basic precondition for successful cooperation – intercultural management plays an essential role. Furthermore, we have to understand the legal framework perfectly and integrate it into our concepts.
The location of the project is not without risk, either. The western coast of Taiwan is often hit by typhoons, and conceivable events such as earthquakes and technical risks need to be calculated and quantified. We assess such damage scenarios, including the resulting business interruption risks, analyse them in terms of quantity and quality, and summarise them in a report that allows the parties involved in the project to clearly see the risks and develop management strategies. In this context and on this basis, we also prepare the detailed insurance concept, for which we bring together and align a huge number of stakeholders.
We are right in the middle of it all. In the negotiation and draft of supply and service contracts. In financing discussions. In the coordination with law firms all around the world. Providing expertise that we, as one of the leading insurance brokers in this area, have.
After intense negotiations, we eventually place the risk with an international consortium of insurance companies from Switzerland, Germany, Denmark, Norway, Taiwan, Great Britain, Japan and Singapore. By the financial close on 30th May 2019, everything is wrapped up: The erection of the Yunlin wind farm can begin.
In the autumn of 2017, one of our clients got an unusual call: Their photovoltaic power plant in Italy was buried beneath tons of snow when the winter set in unexpectedly. Nobody could have seen this coming – the region between Bologna, Florence and San Marino had not seen this kind of snow in ages, if ever.
The damage was enormous. Foundations were broken, earth anchors were damaged at more than 300 joints, and power lines were torn – a dual total loss, sind in addition to the equipment having been destroyed, the power supply had also been interrupted. Fortunately, we had included the unlikely event of such a snow load in the coverage, so that all that was needed now was for the claim to be settled as quickly as possible.
Together with the client, the construction company and a loss adjuster with experience in this industra, we came up with an economically reasonable plan: Within just a few months, an entirely new construction was erected, in the course of which the anchors of the PV modules were refurbished and most of them replaced. In this case, detailed knowledge of the matter at hand and close cooperation of all the parties involved was decisive for a quick solution, smooth logistics and a transparent cost structure.
Because of their location and technical properties, photovoltaic power plants are always individual cases, which is why their coverage has to be customised in each case. As specialists in this area, we establish coverage concepts that prove to be absolutely effective in the event of damage – even if the event of damage is highly unlikely.
During the planning of our client's offshore wind farm in the North Sea, a big risk was discovered: The feed-in tariffs granted for the wind farm are closely tied to the farm's initial commissioning – if the turbines are connected to the grid late, the feed-in tariff is reduced throughout the entire service life. Over a period of 20 years, the impending loss in the case described above would amount to approx. EUR 5 million per turbine. Consequently, the return for the investors involved drops significantly; the entire economic concept of the farm would be in jeopardy.
Part of the impending loss is regulated by means of service-level agreements, which we help to draft in many cases already during the tendering stage – if one of the subcontractors delivers too late, they have to pay damages up to a certain limit.
Tailor-made insurance coverage is another important component. If a loss occurs, it covers the subsequent financial losses – the loss of subsidies resulting from the delayed initial commissioning.
To find a suitable insurer, we prepare a detailed risk map identifying and assessing potential losses. The clear picture we obtain this way enables us to find solutions relatively quickly and place the offshore wind farm on strong foundations, economically speaking.
After about 20 years, geothermal power being the only energy form suitable as base load (i.e. always available) in Germany, continues to be a sleeping giant of the heating transition. So far, about a dozen power plants produce hot water for power generation. The growth prospects are immense, in the field of heating in particular, there is still a lot of unused potential. The industry has been struggling in the past years because a crucial risk was considered to be virtually uninsurable: Who pays if after drilling down 5 km into the earth, which costs several million euros, the water pressure and the temperatures are too low and building a power plant turns out to be impossible? Some insurances had paid dearly for the so-called "new exploration insurance" due to problematic coverage concepts, causing them to eschew the issue. Consequently, many projects were never realised because where international groups of companies are able to recoup such losses, small communities cannot bear this kind of risk.
In connection with a drill near Garching an der Alz in Bavaria 2018, we developed a concept that makes such a new exploration insurance possible again. For this purpose, we implemented two conditions. Firstly, a specially appointed Exploration Warranty Surveyor monitors and advises the entire drilling project, ensuring the best practice is applied for the project. For the second condition, the world-renowned Leibniz Institiure for Applied Geophysics (LIAG) puts its expertise at our disposal. The Institute has a vast amount of data on the geophysical conditions in the three German regions that are relevant for geothermal power, the Molasse basin, the North German Basin, and the Upper Rhine Graben. These data enable the scientists to make reliable statements on the probability of success of a planned drill. Our rule: Coverage is worth discussing only if there is at least an 80% probability of success. The example of Garching sets a precedent: Several insurers follow our reasoning and underwrite new exploration insurance coverage for other geothermal power projects.
Until ten years ago, anyone who built a wind turbine bought an all-around package. As a rule, the manufacturers not only produced and erected, but also maintained and repaired the turbines. But then the young industry diversified. More and more companies offered full maintenance contracts, independently from the construction and operation – and they were usually able to operate more flexibly than the manufacturers.
At the beginning of the 2010s, one of the first companies in this sector asked us to develop insurance coverage to back up their service commitment. What happens if several turbines suffer expensive machine failures at the same time? Such a financial challenge could have meant serious difficulties for the company, which was still small at the time.
In close cooperation, we defined the risks by combining technical expertise and experience with probabilities of occurrence of loss. There was much that needed to be explained to facilitate the involvement of the insurance companies.
For example the fact that there were experts at work here who learned the craft from the manufacturers and had vast experience. Furthermore, these experts had developed their own technical solutions and improvements that had a positive effect on the turbines' service life. In addition, they had a pronounced understanding of the service concept: While maintenance was only one of many mainstays for the manufacturers, here it was the business foundation. Based on this insight, we contacted insurance companies who recognised the potential of these services in the course of intense discussions and agreed to underwrite the corresponding risks. Gathering positive facts, clarifying issues, assisting the client in establishing their position on the market: We are translators, pioneers, consultants and technological sparring partners.
Today, our client is among the German top 5 in the industry, which has grown immensely by now – a strong tailwind for first-class service!
A client from the biogas industry has a problem: The insurance policy for their plant is about to expire, but the insurance company does not want to cover the risk anymore in the future. The claims are too high and too frequent. The financing bank, which demands complete insurance coverage, is growing restless.
The industry is well aware of this problem. Many plants are old and outdated. If anything breaks, the costs skyrocket quickly. Our client, a farmer in Lower Saxony, also experienced this. Once, his woodchip heating system caught fire, and another time, his operation ground to a halt due to engine failure. The initial damage is followed by secondary losses: The loss of income and loss of investments, e.g. for the purchase of manure or corn, quickly rises to an alarming level.
A large-scale call for bids produces nothing but a series of refusals. But eventually, we find a provider who specialises in biogas plants. A meeting with the farmer shows: The preconceptions of some companies do not apply here. The plant is well cared for and regularly maintained by a third party in accordance with a maintance concept. Furthermore, the farmer himself has taken additional safety measures.
The intense search for a suitable partner and the personal meeting on site are the key to success: The parties understand each other and find a solution that they did not see from behind their desks. Just in time before the existing policy expires, new insurance coverage has been concluded.
Heavy winds, high wind speeds, long transport routes: An onshore wind farm in Finland poses a particular challenge to all the parties involved. On behalf of one of our biggest clients in the renewable energy industry, we assisted with the planning and erection of two wind farms with a total of 34 turbines and a substation that was to be equipped with two transformers with above-average performance. The connection to the utility's high-voltage substation is an intriguing issue: It is connected via an 18 km line to which several other wind farms are connected as well. Damage to this line would mean that both farms cannot supply their power to the grid. Business interruption insurance is essential in this case in order to compensate losses of income.
We are consultants and risk managers for our client: What happens if one of the transformers is damaged en route from the place of production in Slovenia to the construction site in Finland? How can the turbines be reached in the event of damage when they are snowed in? We identify the risks and make them transparent for the insurer, creating the basis for optimal coverage.
The industry expertise of NW Assekuranz
The industry expertise of NW Assekuranz
The industry expertise of NW Assekuranz
Do you have questions, or would you like to get a personal quote?
We are at our disposal by phone at +49 (0)421 9896070. Or you can send us a message and we will get back to you as quickly as possible.