POWER March 2017 - 50

MANAGING RISK
been providing specialty insurance since the
17th century, offers some of the most unique
policy options. The company says it has more
than 60 lines of insurance and reinsurance
from which
it
can
develop
liability;
tailor-made
policies for nearly any customer. It covers
such things as accident and health; crime;
contingency; cyber; directors and officers;
employers
energy; engineering;
extended warranty; legal expenses; medical
expenses; general liability; nuclear; political
risks, credit, and financial guarantees; power
generation; property; and terrorism.
Renewable Power Project
Insurance
Often, people think of renewable energy as
a recent phenomenon, but many renewable
projects have been around for more than
three decades. One company that specializes
in renewable energy insurance is GCube.
The insurer focuses solely on renewable energy
projects-mainly wind and solar. Sam
Walsh, senior vice president with GCube,
noted that 2017 is the company's 25th year
of offering its WindPro product.
" We're backed primarily by Lloyd's of
London paper, as well as Swiss Re, and that
allows us to write pretty much in any country
that they have the legal capability to write
within, so that is the vast majority of the
world, " Walsh told POWER.
3. Grounded. A winter storm damaged one of the wind turbines at the Cronalaght wind
farm in Donegal, Ireland. Courtesy: Michael Murtagh/Creative Commons
ment stage to protect against leased-land exposure,
among other things.
Once a project comes to fruition, construction
all-risk and liability policies are the
norm. Many things can go wrong while construction
is in progress, so lenders generally
have very specific insurance requirements
that owners must meet. Most wind farms
have a large number of turbines that make
owners. And it's a risk that shouldn't be overlooked.
" In
2015, there were large swathes of the
U.S. that had much lower wind speeds because
of El Niño, " said Walsh. As a result,
a lot of wind projects throughout the southwestern
U.S. under-produced by as much as
40%. For small- and mid-sized independent
power producers, a lack of production such
In 2015, there were large swathes of the U.S. that had much
lower wind speeds because of El Niño, " said Walsh. As a result,
a lot of wind projects throughout the southwestern U.S. underproduced
by as much as 40%.
GCube gets between 40% and 45% of its
business from U.S. projects, but it also has a
large presence in Europe, South Africa, and
Australia. Walsh said its business is growing
in the Middle East and in a few countries in
Asia (he specifically mentioned Thailand).
The company's goal is to offer as many insurance
options as possible for the full lifecycle
of a renewable energy project.
For a typical wind power project, for example,
a development policy will be the first
step. Usually, meteorological data will need
to be gathered from a site to gauge the viability
of a location. That doesn't involve a lot
of equipment, and potential losses are fairly
small, so the development policy offers relatively
inexpensive coverage to get through
the process. Companies are also wise to have
a general liability policy during the develop50
up
the project. Naturally, they don't all get
done at the exact same time, so there is usually
a clause in the policy that allows continued
coverage of operational turbines on the
construction side, until the entire project is
complete.
" The goal is to be as seamless and cohesive
as possible, so GCube can be a one-stop
shop for the insured, " said Walsh.
Weather Risk Transfer
One of the complaints often railed against
renewable energy is that it doesn't generate
power when the sun doesn't shine or the wind
doesn't blow (or the rain doesn't fall, which
has affected some hydropower facilities).
Weather variability poses a problem not only
for the grid and those charged with keeping
the lights on, but also for renewable energy
www.powermag.com
as that can be a massive hit to the bottom line.
To provide some assurance of revenue,
owners have been searching for ways to
transfer that weather risk. One product that
GCube offers to address the problem is a
weather hedge mechanism for the wind and
hydroelectric energy markets. It enables
buyers to guarantee a floor on financial performance
and unlock additional value for
projects and their stakeholders.
" It differs a little bit from insurance in the
sense that it's more of a financial product
versus simply an insurance product, " Walsh
said. " But I think a lot of project owners are
looking to weigh whether that's a coverage
they now want to supplement a standard
property and general liability program with
to make sure that they're getting enough revenue
in a given year. "
POWER | March 2017
http://www.powermag.com
POWER March 2017

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