With the environment and global energy transition ever higher on the agenda, insurers’ focus is switching increasingly to green technologies and the new opportunities these bring. The global expansion of offshore wind is probably the biggest and most accessible.
When discussing offshore wind, we are always being asked about cables. Most people in this market are familiar with some of the loss statistics concerning cables, such as they account for roughly 60% of the total number of offshore wind construction claims and about 40% of their quantum; 45% and 30%, respectively for operating claims. We know it typically costs up to USD7m to undertake an unplanned repair or replacement of an inter-array cable; potentially USD27.5m for an export cable loss. Damage to an export cable can also give rise to a significant BI exposure.
We also generally understand what causes these claims, with handling issues and manufacturing faults being the prevalent root causes. A great deal of work has been undertaken to understand why cable claims are common. At a basic level the reasons for cable losses fall into a number of key areas:
• Choice of vessel or
equipment
• Lack of experience in
working in the environment
• Workmanship
• Short programme times
• Complex task or operations
Whilst it would be accurate to say that the market has suffered a large numbers of cable losses, some of them significant, it would be disingenuous not to acknowledge the positive developments in the industry. Important lessons have been learnt, including:
• More training needed to
overcome poor workmanship
• Better cable catenary
management
• More attention and care
during sensitive cable operations
• Better modelling of site-
specific characteristics leading to better planning and scheduling of operations
• More stringent QA/QC,
including involvement of Marine Warranty Surveyor
• Better weather forecasting
and stricter restrictions on workable conditions
Another important factor is that offshore vessels are more sophisticated and better suited to the environment. Generally speaking, the contractors involved are more capable than they were, and major contractors are now attracted to the sector bringing with them valuable experience learnt in other sectors like oil and gas. One might draw synergies between cables and oil and gas risers, the latter having generated many claims during their design evolution and in-service operation. As with risers, cable design – especially HVDC cables – has matured, with design and manufacturing vulnerabilities largely engineered out.
As the appetite for offshore wind increases in new territories and offshore construction of wind farms ramps up, as in the US and Asia, it remains to be seen whether the industry learns from past experiences. Issues around supply chains, qualified contractors, vessel suitability/availability and technical expertise have all been identified as critical, as well as local regulatory requirements: the Jones Act in the USA springs to mind. Demand for providers will likely outstrip supply, especially early on, and might translate into a continuation of the issues which had previously been responsible for cable loss.
The questions being asked of insurers are a positive sign that the market is in transition, but also clear evidence of concern. Close co-operation and dialogue will be key to addressing these concerns and challenges and CTA plans to take steps to provide insight and regional experience in this field.
Chris Brown
Managing Director – Natural Resources, UK, Europe and Singapore
chris.brown@charlestaylor.com
EXPERTISE:
Loss Adjuster, Mechanical Engineer, Marine Engineer, Offshore Construction, Mechanical & Electrical Rotating Machinery, Natural Resources, Drilling & Production
LOCATION:
London
