Transcript The Wind Farms Are Coming

September 19, 2011
The Windmills are Coming;
“Offshore”
Steven Harris
Vice President
EQECAT, Inc.
510.817.3105
America’s First Offshore Wind Farm
Will it be Cape Wind Project ?
Hyannis
Martha’s
Vineyard
Nantucket
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America’s First Offshore Wind Farm
Or Galveston - Offshore Wind ?
"This is Texas. We don't have
Walter Cronkite and Ted Kennedy
whining about their back yards,"
Texas State General Land Office
Jerry Patterson - Commissioner
Wind Park Site
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What are Offshore Wind Farms?
• Wind turbines and foundation structures
• Underwater high voltage cables
• Offshore substations and operations
• Onshore substations
• Onshore high voltage transmission
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Why are they Coming?
Projected Energy Use
Global energy
use by fuel
type
1990-2035
Renewables
will double in
the next 25
years
From US DOE
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The United States has
Ambitious regional growth targets
• State and Federal incentives
• Green energy renewable portfolio
standards
– Texas
~7% by 2025
– New Jersey ~20% by 2021
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– California
33% by 2020
– Hawaii
40% by 2030 !!
Offshore Wind Farm
Siting and Economics
• Siting Requires
– Good wind resource
– Close to load demands
– Onshore transmission
capacity
• Total Cost of Energy
– Cost of generation
should be around
$0.10 / kWh
• Most wind farms are
financed and require
adequate insurance
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U.S. Offshore Wind Resource and
Transmission Grids to U.S. cities
Cape Wind
Others?
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Galveston-Offshore
What are the
Catastrophic exposures?
• Gulf of Mexico and Caribbean
hurricane
• West Pacific Typhoon
• European winter windstorm
• Earthquake in Japan, Western US and
Canada, Caribbean, South America,
and others
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What is the Onshore
Catastrophic Loss Experience?
Typhoon Maemi Okinawa Japan 2003
(Ishihara et al., 2005a)
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Tropical Cyclone 03/A India 1998
(Winter-Jensen et al., 1999)
Hurricane Risks to Offshore Farms
• Hurricanes have damaging wind
speeds for wind farms located
offshore and near the coast.
• Hurricanes have wind speeds more
than 76 mph over widths of 60 to
120 miles
• Hurricanes are also accompanied by
large wave loadings on structural
foundations
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Power Generated by Turbine
Wind is the Source of Power and
The Peril!
Hurricane Wind and Waves
are a
Survival Threat to
Offshore Wind Turbines
Turbines Shut-in
Not Generating Power
Turbine Power
Operating Range
Cut-in
Speed
Cut-out
Speed
Tropical and Hurricane Wind Speeds
Wind Speed
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Technology Trend for Wind Turbines
Each generation is a bigger “prototype”
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Direction in Offshore
Wind Technology
• Capital and Energy Costs are declining
– Higher capital costs than land based
installations are dropping rapidly
– Installed capital costs, reliability, and energy
capture are all improving
• Technical and Infrastructure Challenges
– Transmission from windy areas to the load
centers are being built
– Specialized vessels, purpose built portside
infrastructure, robust undersea electricity
transmission lines will come with development
– Resource characterization is improving
© EQECAT, Inc. 2011
Challenges Facing Offshore Wind
Deployment (Cont.)
• Permitting Challenges or
NIMBY – Not In My Back Yard
– New and untested permitting processes
– Uncertainty and risk faced by potential project
developers and financiers
– State and federal entities have authority over
siting, permitting, and installation of offshore
wind facilities
© EQECAT, Inc. 2011
Emerging technology Risk
• Rapid paradigm shifts with growing
technologies like wind turbines
– Larger wind turbines and blades
– Identical installations and new technologies
– Highly correlated loss potential
• Limited cat loss damageability data makes
engineering expertise critical to rate these
exposures
• Potentially expensive coverage
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Onshore Insurance Structures
Typical Retentions / Limits Structure
• Common deductible structures
– 2-5% for CAT
– 15 – 45 days Business Interruption (BI)
• Limits driven by lenders, corporate or partnership
property program, (MFL, PML studies)
• CAT exposures and limits can drive the overall
premium
• Manufacturer’s warranty period
for defects (2 - 5 years)
• Contingent business interruption
• Hedges can provide some BI/CBI protection
© EQECAT, Inc. 2011
Insurance Questions
• Who will insure this new technology?
• How will the infrastructure be
insured?
– Offshore wind turbines
– Offshore substations
– Submarine cables
– Onshore Transmission lines
• What will the insurance cost be?
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Business Interruption Risks
• Potential impact of transformers and
transmission cable losses with long lead
times
• Limited numbers of available marine
vessels and cranes
• Damage to onshore transmission and
distribution, without damage to turbines,
poses contingent BI issues
• Rapid obsolescence of turbines results in
spare parts and extended BI issues
© EQECAT, Inc. 2011
Future technology Insurance Issues
• Wind farms will go further offshore
and into deeper waters
• New and technically challenging
design concepts
– Floating structures
– Cable moored structures
– And others
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EQECAT’s Approach to Offshore
Wind Farm Risk
• EQECAT and ABS Consulting are sister
companies of the ABS Group
headquartered in Houston
• EQECAT is a catastrophe modeling
company that provides cutting edge
natural hazard models to the insurance
industry
• ABS Consulting is a global risk, safety, and
integrity management firm
• ABS Consulting provides full life cycle
engineering, operations and maintenance,
and in-service inspection services to the
wind energy industry
© EQECAT, Inc. 2011
ABS Group Wind Energy Services
• Technology
Development/Qualification
• Offshore Expertise
– Structure
– Stability
– Mooring/soils
• Certification Authority
• Certified Verification Agent
(CVA) Services
© EQECAT, Inc. 2011
Wind Energy Life Cycle Services
VII. IN-SERVICE
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Operational Data Management
(Wind Speed, Turbulence, Wake, Power Performance)
Maintenance Management
Mechanical Integrity Management Systems (MMS)
Inspection Planning including RBI
(Wind Turbines and Foundations)
Gear Box Condition Monitoring and Inspections
Rotor Blade Condition Monitoring and Inspections
Coating and Corrosion Protection Monitoring
End of Warranty — Consultancy and Inspections
HSE Consultancy
VI. COMMISSIONING
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Monitoring and Supervision
Functional Safety and Safety Tests
Commissioning Supervision
HSE Consultancy
I. CONCEPTUAL PHASE
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Technical Due Diligence (Energy Yield,
Permits, Technology Grid)
Consultancy and Project Management
II. DESIGN BASIS & SITE ASSESSMENTS
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Owner’s Representative
Tender Support and Consultancy
Project Management
V. INSTALLATION
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Monitoring and Supervision
HSE
Project Management
IV. MANUFACTURING
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Manufacturing Quality Audits
Supervision
HSE
Project Management
© EQECAT, Inc. 2011
III. SITE SPECIFIC DESIGN:
WIND TURBINE & FOUNDATION
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Owner’s Representative
Technical Consultancy
HSE Design and Consultancy
Project Management
EQECAT Vulnerability Models
Developed by Engineering Studies
EQECAT uses a ground
up engineering
approach in the
development of
vulnerabilities.
• Claims data incorporated into
vulnerabilities
• Failure modes of power
system components, support
and foundations
• Manufacturing processes,
and control systems effects
• Extreme natural hazard
performance measures
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EQECAT Hazard Models
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Key EQECAT Model Attributes
• Fully Probabilistic results
• Scenario loss simulations
• Underwritting and Portfolio
aggregation
• Extra-Tropical Wind & Storm Surge
• Gulf of Mexico hurricane wind, and
wave models
• Earthquake models including time
dependency in California
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Examples of EQECAT Projects
• Offshore wind farm portfolio
for European winter storm
• Onshore wind farms analyses for
earthquake peril
• Hurricane and earthquake risk
models for onshore transmission
grids
• Hurricane risk models for offshore
oil & gas platforms
• Hurricane risk models for Gulf of
Mexico oil and gas pipelines
• And more
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Questions?
© EQECAT, Inc. 2011