A wide range of insurance products and services are available to wind farm developers.
Here are some guidelines that developers can follow to help when making insurance purchases for their unique needs:
- Lifecycle coverage: Can your insurer provide coverage as the
farm evolves through each stage?
Having one insurer who can cover all aspects of wind farm
development can help simplify and strengthen the insurance process. Using different insurers could leave some grey areas
or even gaps in coverage.
- Growing with the business: Wind farm developers may seek new opportunities to expand their business operations, whether it is to increase power
output at a given location or start new construction projects. Will your insurer cover wind farms of all sizes so that
the relationship can grow as the business expands?
experts: Working with an insurer with expertise in the renewable energy industry can have significant pay-offs
for wind farm developers.
This encompasses having underwriters who can assess risk accurately
based on their extensive industry knowledge and provide appropriate coverage for competitive premiums, risk control advisors
who can deliver guidance on best practices and claim professionals who understand the contractual language and industry processes
to help mitigate losses.
As the shift to renewable energy and wind farms continues to gain momentum,
those looking to join the growing industry will be faced with many decisions.
Among the most important
is the plan a new developer creates to minimize exposure and ensure that they are well protected from unexpected loss
by having the right contracts and insurance coverages in place. Working with an informed insurance agent
and insurance carrier with deep knowledge of the renewable energy market can help their business grow and prosper.
One of the most difficult and dangerous elements of wind
farm development is the installation of the towers and turbines. Developers should work closely with construction contractors
at the outset to make sure the appropriate risk management processes and procedures are in place. The relationship with
an experienced general contractor with a positive reputation for safety and management and education of employees and sub-contractors
As construction starts to move ahead, this is another good point in the process for
developers to again renew their insurance, contractual and bonding requirements, and work closely with an agent who understands
the best coverages, risk management, and claims services to meet the needs of the project. Complex projects like this
may need additional coverages for builder's risk, workers compensation, general liability, auto liability, and an umbrella
policy, among others, as the farm is being built. Reviewing insurance protection throughout wind farm construction will
serve to help mitigate and protect against multitude of potential risks.
As the site is
being assessed for wind energy potential, a developer should also consider other factors in site selection:
- An environmental analysis of the proposed location helps determine how the development and operation of a wind farm
may impact the environment such as noise, wildlife, plants and soil, endangered species, and the flying patterns for migratory
- Flood and earthquake potential should be analyzed for the site under consideration.
Building a farm in a designated flood zone or an area prone to earthquakes can have a long-term significant effect on turbines.
- The accessibility of the site should be considered. Farms are often located in remote areas
or even mountainous terrain, so owners and operators need to ensure that adequate roadway infrastructure is in place to get
heavy equipment and supplies to the project site, and to provide accessibility for workers and emergency responders.
Contractual Requirements After site selection and land assessment has occurred - a myriad of contracts should be
in place before construction begins, starting with the construction contract. Another document important to consider
is the Power Purchase Agreement, or PPA, which is the agreement between the developer / owner and an energy buyer, such as
a public utility. The PPA outlines expectations about the price and production for the energy being sold.
In addition to detailing what the buyer will pay for the promised production, the contract also contains other important
information such as insurance coverage requirements, and may have clauses limiting the liability of both parties or even waiver
of subrogation. Assignment of financial responsibility for differing types of required insurance coverage and other
clauses are important to consider, as each contract is unique. How the contract is structured may impact long-term revenue.
Developers should be aware of other contracts as well, such as an Interconnection Agreement, which specifies the
terms and conditions under which the wind farm's system can be connected to the utility grid.
agreements are often contingent upon the successful placement of insurance and bonds, so management oversight in this
area is critical. It's also important to involve your legal counsel in all your contract matters.
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