Resource risk to remain biggest threat for wind sector - GCube

Resource risk will be the most pressing concern for the wind energy sector “for a number of years”, according to renewable energy underwriter GCube Underwriting Ltd.

Low wind speeds are hurting the performance of wind farms in a number of markets and resource risk has now surpassed mechanical and electrical breakdown as the top potential cause of financial losses. GCube expects increased interest in revenue protection mechanisms such as Weather Risk Transfer (WRT) and Proxy Revenue Swaps (PRS) from companies in the wind power generation area.

Mechanical and electrical breakdown rank second among the top threats to wind performance and profitability. GCube calculates that the industry has to deal with 3,800 incidents of blade failure annually, on average, at a cost of up to USD 1 million (EUR 908,000) per occurrence. There are also about 1,200 incidents of gearbox failure, costing between USD 200,000 and USD 300,000, and about 50 turbine fires, where the average claims go to around USD 4.5 million.

The third, fourth and fifth most prominent threats to wind farm performance, according to GCube, are political and regulatory risk, project development in remote locations, and extreme weather and natural catastrophes (NAT CAT). It also mentions the emerging threat of cyber attack, and the potential for increasing personnel turnover to inhibit knowledge transfer in its report “Risky Business: Assessing Future Threats in Onshore Wind Development, Financing and Operations”.

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