Insurance, Protection and New Contractual Service Agreements to Safeguard Wind Turbine Investments

Investments in wind energy are becoming increasingly safe. Insurers are once more willing to put wind farms in their portfolios again, whereas in recent years many insurers had moved out of wind farm business because they believed the risks were incalculable. The change has come because all the big manufacturers of wind turbines are now offering service agreements or full-service maintenance concepts, mostly guaranteeing the agreed output of the generating system over the term of the financing agreement. At WindEnergy 2004, the industry’s premier international trade fair, manufacturers such as GE Wind Energy and REpower, and also insurance brokers such as Marsh and the Quickborn based VfU company, are offering appropriate concepts and service packages. In addition, component suppliers, planners, financing institutes and measurement and certification bodies will be exhibiting in Hamburg from 11 to 14 May.

A completely new product in the policy market for wind energy generating systems is the CSA concept (Contractual Service Agreement) from GE Wind Energy, now available for all new 1.5 MW turbines and when these are ready for series production also for their new 2x MW turbines and for the 3.6s MW turbine. The manufacturers are to receive payment of 1.2 cents per kilowatt hour generated, in return for which they will cover all maintenance and repair costs, including possible replacement of expensive components such as rotor blades, gearboxes or generators. They point out that this also significantly reduces insurance costs for the operator. The guaranteed technical availability of the system in the CSA concept is 97%; the term of the contract is 12 years, which normally covers exactly the financing period for the generating system. There is also an extension option. Similar full-maintenance and service agreement concepts are available, with terms of between 8 and 15 years, from manufacturers such as AN Windenergie, DeWind, Nordex, NEG Micon and REpower, all of whom will be exhibitors at WindEnergy 2004. In general, the manufacturers offer their contractual service agreements only in the German and Austrian markets. But Nordex recently signed a five-year full-service agreement in the Netherlands. Expansion of the whole of the European market is quite probable wherever high powered wind farms are being installed.


Even though such service agreements permit a reduction in insurance premiums, the insurance brokers still benefit from this initiative by the manufacturers, because the agreements ensure the security of investments in wind projects and reduce the risk. Thomas Haukje of Marsh GmbH notes “a return of insurers to the wind energy market”. Marsh is an insurance broker operating throughout Europe, and is the continent’s market leader, with insured wind energy output of some 5000 MW, mostly in Denmark, Germany, the UK, Spain and Italy (where Marsh’s market share is 80%). “The insurers are gradually moving away from the rigid restriction clause, from specification of component replacement after 5 years operation or 40,000 operating hours, and are moving towards repeated examination by independent experts and regular on-site inspections”, explains Haukje. Marsh believes that performance requirements for the engineering operating companies for wind farms have increased significantly – with annual vibration measurements on the power train, and regular rotor blade maintenance, in order to conduct scheduled maintenance of these components in good time. That includes measurements of vibrations and status by means of Condition Monitoring Systems (CMS), of which six have now been certified by the Allianz-Zentrum für Technik (AZT, Ismaning), and also by video endoscopy. “That is like a flexible eye which is inserted into the power train, and can detect wear effects such as pitting and micropitting on tooth flanks and in the gearbox”, explains Haukje. According to their own information, Marsh has been involved as an insurance broker in “all offshore projects so far realised”.

The German market leader VfU (Versicherungsbüro für Umweltprojekte Peter Paulowski) from Quickborn, takes a more reticent view of the situation. VfU has insured some 25% of all turbines in Germany, and has about 50% market share in the Netherlands, through its office there. Following the first project implemented in Spain, VfU also wishes to set up an affiliate in Paris, “to be ready for the growing market in France”. Company owner Peter Paulowski takes a rather more cautious view of the German insurance market following the departure from this market by Württembergische Versicherung and Victoria-Versicherung last year: “Maybe the situation will calm down in 2004. The first rehabilitation measures are now coming into effect for older turbines. But,” he added, putting a damper on excessive optimism, “we should not overlook the fact that there is no experience yet with the new contractual service agreements”. There is still a problem with insurance for older systems where the new service packages of the manufacturers are not applicable, or where damage is already apparent.

The situation is different in the US market, where policies invariably have a term of one year only, with a new agreement needed at the latest every twelve months – in Europe the agreements are always for a period of several years.

WindEnergy 2004 will be held from Tuesday 11 May to Friday 14 May. Opening times are 9am to 6pm, with extended opening to 8pm on the Thursday. The international trade fair gives manufacturers and suppliers, planners, finance institutes, measurement and certification bodies and experts from research and development an international platform for further expansion of this market of the future. The official international partners of WindEnergy are the EWEA, AWEA and InWEA, and at national level VDMA and DEWI. Further information at www.windenergy-hamburg.de

Editorial:
Gudrun Blickle, Tel.: +49 40 35 69-2442,
e-mail: gudrun.blickle@hamburg-messe.de