The total capital value of wind farms worldwide has reached approximately £1.9 trillion, according to a new study from global specialty re/insurance firm Chaucer.
The transition from coal and oil-based energy generation to low carbon energy sources such as wind and solar farms has required an unprecedented level of investment in infrastructure.
With so much capital being invested in clean energy assets, Chaucer states that it is vital that those windfarms and solar farms are “adequately insured.”
Moreover, greater levels of insurance cover could expedite the flow of capital from investors into the clean energy sector.
However, offshore wind farms in tropical and subtropical regions, including those on the US Eastern Seaboard and in Southeast Asia, can find it harder to get competitive insurance cover.
At the same time, those regions also suffer higher risk from tropical storms such as hurricanes and typhoons, as climate change drastically increases the impact of these weather events.
Another important factor to highlight, is that older windfarms and windfarms with larger turbine sizes usually tend to find it harder to get the most cost-effective insurance cover.
Further, a recent study also found that even by 2017 natural events were the largest global contributor to wind turbine accidents, taking the spot from human factors or mechanical failures.
Strong wind was the leading cause of damage causing 32 incidents, followed behind closely by lightning, which is increasingly frequent in more intense storms, with nine incidents.
Two key examples of the damage that can be caused by extreme weather on renewable energy projects include, a £20 million turbine in South Wales collapsing in February 2022 during record high winds produced by Storm Eunice.
Then, a more recent event, involved a sandstorm in Dubai causing $200 million worth of damage to solar facilities in the region.
The unpredictability of weather patterns made more extreme by climate change and the inability to test renewable assets in those conditions make it more difficult to model the risk posed to wind and solar farms.
Alex Nelson, Class Underwriter at Chaucer specialising in renewable energy projects, commented: “Wind farms are facing a growing threat from the new normal of extreme weather caused by climate change.
“At the same time some of the global windfarm stock is reaching the end of its originally intended lifespan which makes those windfarms more vulnerable and more costly to insure.
“The surge in construction activity combined with cost inflation over the last two years has pushed up the cost of building, maintaining and repairing.”