Enabling renewable energy projects

The rise of renewables is one of the biggest changes in the global energy supply. With increasing awareness on the negative impact of fossil fuels, the focus is on the transition to renewable energy. In the past ten years, there have been significant advances in renewable energy, especially in solar and wind power.

In Europe, and more specifically in the Nordic countries, companies and governments have made strong commitments to invest in renewable power and the infrastructure required to support this. Today, as the cost of producing wind and solar energy is decreasing, the investment case is increasingly attractive.

The stormy weather over the oceans has become an asset and offshore windfarms can be found all around the world capturing the energy of the wind and converting it to electric energy with a turbine. Subsea cables then transport this power to the onshore grid to serve millions of consumers with renewable energy.

Constructing these offshore windfarms out at sea requires specialknow-how in offshore risk management Currently, there are many complex renewable energy projects under construction, completed or in the planning phase in Northern Europe and in the Nordics. To realise these projects, there are multiple efforts that are underway to ramp-up renewables.

For example, many countries will need to re-design the electric grid and the production of subsea cables is in top gear as they are in high demand, providing an integral part to renewable energy production by way of interconnecting nations with new offshore wind turbine parks.

As an example, National Grid and Energinet.dk are working together to build the Viking Link, a 1,400 MW HVDC submarine power cable that will connect Bicker Fen in Lincolnshire in the United Kingdom with Revsing in southern Jutland, Denmark.

Overview of grid-connected offshore wind power projects at the end of 2018

Country	No. of wind farms connected	Cumulative capacity (MW)	No. of turbines connected
United Kingdom	39	8,183	1,975
Germany	25	6,380	1,305
Denmark	14	1,329	514
Belgium	Not included	1,186	274
Netherlands	Not included	1,118	365
Sweden	Not included	192	79
Finland	Not included	71	19
Ireland	Not included	25	7
Spain	Not included	10	2
France	Not included	Not included	2
Norway	Not included	2	Not included
Total	105	18,499	4,543
Source: Wind Europe

Demand for infrastructure growing

The Nordic region has a long history in renewable energy and has a unique, long-standing co-operation in the energy field.

Of the Nordic countries, Denmark is leading the way on electricity generated by wind, with 40% of its total electricity created by wind power. Currently, the largest operational wind farm in the world is the 659MW Walney Offshore Wind Farm located in the Irish Sea. In fact, this project is currently being extended.

Two of the world’s largest wind energy projects are the Hornsea 1 and 2 projects. Hornsea 1 is currently under construction and will be the first gigawatt-scale offshore wind farm, which will (upon completion) deliver 1.22 GW using 174 wind turbines off the coast of Yorkshire. Putting this into perspective, Hornsea 1 will produce the same amount of power as a nuclear power plant. As for Hornsea 2, this project is expected to be completed in 2022, producing 1.39 GW of power and will be the world’s largest offshore wind project when operational.

Renewable energy will continue to grow. From turbines to electric interconnectors, the future energy mix demands that the required infrastructure is developed and installed to ensure the most efficient distribution of renewable energy.

To install and transport, as well as ensure efficient use of offshore wind energy, new infrastructure is needed. The scale and amount of investment is enormous as energy companies are moving away from fossil fuels and investing billions in new infrastructure in renewables, estimated to be as much as fifteen billion euros by 2025.

According to Siemens Gamesa, offshore wind farms provide up to 40% higher output than onshore wind farms.

Offshore wind farms provide 40% higher output than onshore wind farms.

Offshore projects carry risks

As the cost of wind power production is decreasing rapidly, the competition is also increasing. While state-sponsored funding is declining, the industry is growing. Simultaneously, the technologies involved are pushing ahead as well. Turbines are getting bigger, and overall wind energy is becoming a powerful force in the energy mix. As more and more projects head out to sea, it is important to consider the risks involved.

The construction and erection phases of offshore wind projects face multiple risks. When undertaking a complex project in a harsh environment, the exposure to unexpected risks is high and if something goes wrong the possible impacts are both severe and expensive. From worker safety, to the reliable supply and transportation of materials, to the installation of cables on the sea bed, as well as the maintenance and care of these installations carry many risks.

Generally, working with wind turbines already carries certain risks, including working in a confined space and at great heights, both onshore and offshore. However, offshore projects face increased hazards from powerful winds and stormy weather, posing a threat to both personnel and equipment. Even a small task in an offshore environment carries higher risks in comparison to onshore execution of the same task.

Risks for personnel

For personnel, risks include exposure to noise, appropriate safety equipment including ear protection is critical to reduce the risk of hearing loss. Slips, trips and falls are a serious risk when conducting operations at sea, slippery surfaces and working at height are just some of the immediate points of consideration for staff working in an offshore setting.

Risks in transportation

Another risk lies in transportation to and from the work site. Whether travelling to the location by ship or helicopter, employees must be trained and wear the appropriate gear when facing the hazardous conditions during their journey to work and when returning to shore. Perhaps the most significant risk is access to medical treatment when things go wrong. All personnel must be trained to support first aid as the nearest hospital services are onshore and will take considerable amounts of time to reach if there is an emergency.

Risks in equipment

There are also significant risks when it comes to the equipment itself. As Mikko Etelämäki, Complex & International Claims at If P&C Insurance notes, “When installing a windfarm, the risk of losing a single wind turbine is not a major concern. The real risk lies in losing power altogether when there is a fault in the subsea cabling which has been laid on the sea floor. One bad subsea cable can knock out the entire farm from production.”

“Wind energy is a global trend, which continues to grow,” says Pekka Miettinen, Chief Underwriter, CAR/EAR, Property at If P&C Insurance.

“Today, wind and solar have reached the point where they just make good business sense. These projects are profitable and less dependent on government support. In the end, we are talking about providing a cleaner, greener energy future for Europe and the world, at an affordable price to the consumer. Offshore projects pose significant challenges and many of these risks can be assigned to an insurer. Having Project Insurance will add an extra level of protection to the investor’s project and any ensuing financial losses resulting from possible damages.”

Contributors: Kristian Ehlern, Pekka Miettinen, Carl-Johan Silfwerbrand, Håkan Larsson, Trym Hauge, Mikko Etelämäki /If

Sources: Wind Europe and OECD