Wave Power and Tidal Energy

As part of the fast growing renewable energy industry around the world wave and tidal energy production becomes more attractive to investors and stakeholders. Because of the fact this is still from the fact that early devices/projects suffered a number of losses and claims, some of which it is thought may not have materialised had further testing taken place. In essence, insurers do not typically want to insure “trade risks” pertaining to the research and development of any pioneer industry.

Despite the fact that currently there is limited data available for insurers to technically rate a wave or tidal insurance submission to the same level as other more established renewable energy sectors, we’ve put together our best knowledge to understand this specialist sector and offer policies tailored to its unique needs. FirstNRG Insurance Services provides access to carriers coverage among the most comprehensive available and we have the capacity to underwrite tidal and wave projects of any size, in any market.

Risk Criteria

The typical key losses whether insurable or not emanating from wave and tidal devices/projects are as follows:

Key Loss Description

– Wave Tidal Marine collision

– Blade damage – foreign object ingestion and stress failures

– Cable drag

– Cable laying – at the moment this is not so much of an issue because most devices are currently connected to cables supplied by The European Marine Energy Centre (EMEC) Ltd. However, going forwards cable laying during the construction phase of larger commercial project developments will be a key insurer focus area, particularly as such losses have been frequent in the construction phase of offshore wind developments

– Mechanical and electrical breakdown

Insurers tend to focus on the following risk criteria that can broadly be grouped under the following three headings:

1. The insured’s profile (manufacturers/technology supplier, contractor, developer, owner):

• Curriculum Vitae – What relevant experience does the insured and its Project Team possess, how credible are they?

• Balance sheet – What is the financial strength of the Insured? – Warranties and Maintenance contracts – What package is being offered?

• Contractors/Sub-Contractors track record – It should be noted that insurers capture loss statistics on various construction and maintenance contractor performance and premiums will reflect their level of experience and track/loss record

2. The deployment and maintenance of technology:

• Testing – how much testing has been performed? For instance with wind turbines, the general rule of thumb is that once a device has exhibited 8,000 successful operating hours, it is no longer viewed as prototypical. Leading insurers have advised that more than 8,000 hours would typically be required for wave and tidal equipment.

• How easy is it to repair or replace the device?

• What are the costs of repair and replacement?

• The types of specialist vessels are required to deploy, install and maintain the technology – What is the suitability/ availability of the vessel(s)?

• Spares strategy – How readily can spares be sourced? Currently, most manufacturers are building devices to order for a particular location and therefore a significant pool of spares are unlikely to be readily available.

3. Location:

• How suitable is the device to the intended location? Are there any test results available for the intended device and location combination?

• How limited are the weather/ tide windows – particularly for maintenance? • How far offshore is the device and how far does generate power need to be exported?

• Any location-specific environmental concerns. The following is the list of project documentation ask for when conducting contractual risk review on behalf of a wave and tidal client:

• Regulator development zone/lease contracts

• Any Special Purpose Vehicle (SPV)/ Joint Venture/Consortium contracts

• Power Purchase Agreement (PPA), Off-take agreements

• EPC contracts

• Technology Supply and Balance of Plant Agreements

• Lenders Clauses and Bond Wordings (if applicable)

• Operations and Maintenance (O&M) Contract.

Example Wave and Tidal Device/Project Insurance Proposal Form Questions

1. Full details of the design/build of the technology (including safety mechanisms, how will the device be illuminated once in the water (i.e. flashing light on top, warning siren, marked on admiralty charts, etc) and any other warning systems when installed).

2. Details of the Original Equipment Manufacturer (OEM) manufacturing strategy
3. Have there been any previous sea trials of this device, if so what was the outcome

4. The sum to be insured – which should cater to all costs to reinstate the technology plus all costs involved in transit, installation, vessel charges, divers (if applicable) and debris removal costs

5. Details of the Project location including distance from shore, depth, maritime traffic survey and confirmation that the relevant authorities will be alerted

6. Details of the cable laying process (i.e. whether this is on the seabed or drilled under the bedrock), who the cable manufacturer is and what the exact cable installation method is to be, inclusive of vessels

7. Details of how the device will be secured to the seabed

8. Details of any Navigational Risk Assessments carried out/to be carried out

9. Details/intervals of frequency that the technology will be in the water in any twelve-month period

10. Details of the installation and testing & commissioning strategy and period including method statement and Gantt chart

11. Details concerning use and type of vessels and divers

12. Details on who will carry out the installation and do they have Contractors All Risks insurance and Public Liability insurance

13. Details of the contract terms agreed for the installation

14. Lead times for vessels and or divers in the event of damage.

Our Wave and Tidal cover is built upon proven underwriting, technical knowledge and claims expertise offering A Rating from A.M. Best, and S&P ‘A’ Rated or better capacity

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