These risks primarily fall into two categories: design maturity, and logistics and supply chain challenges.
‘Race to scale’ inhibits standardisation
The foundation structure for floating wind turbines requires a robust design, capable of withstanding harsh weather conditions, including high winds, waves and storms.
However, an already squeezed supply chain and escalating costs have kept floating technology in a prototypical phase of development.
One of the greatest contributors to a lack of standardisation within the industry is the ‘race to scale’, which brings larger turbines and the necessity for new dynamic cable designs along with complex logistics.
Towing structures to shore
Initially, undertaking maintenance and repair operations by bringing the turbines temporarily onshore seemed to be a more cost-effective and practical solution that worked in favour of floating wind projects. Repairing structures offshore comes with a higher price tag, mainly due to the increased costs associated with transporting personnel by vessels to the offshore location.
However, challenges arise when considering the upright model’s need to return to shore in its original upended state, which demands a substantial water depth of 40-50 metres.
Alongside the ever-increasing scale of the triangular foundation model, difficulties have arisen in finding ports suitable for operations and maintenance (O&M) in floating offshore wind.
To this end, we have seen floating structures being towed across vast distances in the North Sea to reach a suitable harbour. Transportation itself poses significant risks and places strain on the turbine structure as it navigates the relatively shallow North Sea and the harsh ocean environment.
Improve standards to reduce insurance costs
Inevitably we have seen losses arising from buried but insufficiently stabilised cables in the more established fixed-bottom offshore wind industry. Alternatively, dynamic cables with, for instance, a plug and unplug option could offer a possible solution for floating wind projects. However, these are yet to be developed and tested on a commercial scale and therefore there is a cautious approach to be expected in terms of insuring this vital part of the projects.
Now read: Floating wind’s ‘embryonic state’ means small contribution this decade
To put this into perspective, manufacturing defects are already subject to more exclusions on floating offshore wind projects and coverage is quite restricted in comparison to fixed bottom structures. Without a conscious effort to improve project standards, insurance will remain more restricted and offered at a higher price.
Re-evaluation of Opex versus Capex
If we look in terms of insurance rates as part of project Capex, insurance for floating wind is already more costly than fixed-bottom structures. In light of this, there also may need to be a revaluation of investment into Opex versus Capex, especially in the context of floating wind technologies, which demand a distinct O&M approach compared to fixed-bottom structures. Although insurance capacity is abundant, there are limitations in the breadth of coverage that can be offered.
In addition, terms under turbine supply agreements and maintenance management agreements may be revisited and modified for floating wind systems, considering the unique set of maintenance requirements associated with floating wind turbines.
Such adjustments will impact warranties from manufacturers and contractors to reach a level of acceptable risk sharing between clients and insurers.
Developers must move first
The potential of floating wind projects is significant as installation capacity continues to grow. However, floating wind developers will need to concentrate on standardisation first, to find reliable cable solutions, adapt turbine designs to the unique floating environment, and make industry-wide decisions on manageable and maintainable size.
Andries Veldstra, is senior underwriter at GCube Insurance, specialising in renewable energy
.png)
.png)
