Bruce Stevenson Risk Management, a GEN Supporter, is one of the UK's leading independent specialists in insuring renewables projects. We put a number of general questions about insuring renewables projects to Andrew Johnstone, their Renewable Energy Account Executive.
GEN> What are the key insurance related issues around small to medium scale renewable energy generation projects?
AJ> The key issue to consider at the outset is the manufacturer and reliability of the machine. Ideally a machine with a proven track record , the necessary accreditation ‘MCS / IEC’ and a strong warranty package would be desirable although they are not always the most cost effective to install. Our advice would be to consider not just the cheapest machine on the market as potential problems once operational may cost more in the long run.
GEN> What is typically not covered by an insurance policy? For example, we’re aware that some insurance policies for wind turbines do not cover their transport to site and build phase, only once the turbine is installed – is that because they are covered on someone else’s insurance policy?
AJ> Specifically designed insurance policies for renewable energy equipment should be sought in the first instance. If you rely on basic Material Damage cover as an extension of say a farm insurance policy, cover will not be in place for mechanical or electrical breakdown as well as loss of FiT payments due to damage. Cover for transport and construction would normally be provided by the installers (we would advise ask for confirmation in writing from your installer) but will not extend to cover you again for loss of FiT payments due to delays. Specific policies are available for developers and operators. Damage by wear and tear is a typical exclusion across the insurance industry.
GEN> Does the size/scale of my project affect insurance issues and premiums?
AJ> Yes. Premiums tend to be based on capital expenditure, estimated annual revenue and the technology utilised. A general rule of thumb is the larger the project, the larger the risk to an insurance underwriter therefore the overall costs reflect this. Multiple installs can however attract economies of scale and better deals. This is where an experienced insurance advisor can add additional value when negotiation is required. Site location is another issue to consider as proximity to nearby buildings and roads must be considered form Third Party Property Damage point of view.
GEN> What are the most likely scenarios where I’ll need to call on my insurance cover?
AJ> Mostly notably storm damage & lightning strikes to blades and component parts of wind turbines are a common occurrence.
GEN> Would insurance cover my loss of income in such circumstances?
AJ> As previously mentioned, a good insurance policy with a reputable underwriter should cover your loss of income. The damaged parts will need to be replaced as well as loss of FiT payments during the down-time. Excesses will apply for both down-time and damage.
GEN> Would it cover 100% of the income I have lost?
AJ> The indemnity period should cover at least 12 months of revenue subject to an time excess (for example the first 5 days would not be covered).
GEN> If my solution is based on technology that is all covered by warranties, should I still take out insurance?
AJ> Yes, warranties typically will not cover such events noted above along with lost revenue.
GEN> How should I go about getting suitable insurance cover?
AJ> Developers (whether companies or private individuals) should always approach an experienced insurance advisor to provide guidance on more specific key insurance issues. Bruce Stevenson Risk Management (BSRM) have over 20 years experience within the farming and renewable energy sector and have assisted over 300MW of installed capacity to date. Our team are recognised as the leading and most proactive insurance advisors in the UK. BSRM also have exclusivity agreements in place with a global insurer which means the developer benefits from a household name, competitive rates and experience in dealing with claims if when required.
If you have other questions you'd like to ask Andrew or specific areas where you'd like insurance advice then please add your comments below and we'll ask Andrew to respond.