WIND ENERGY Underwriting and Risk Management Considerations

Transcription

1 WIND ENERGY Underwriting and Risk Management Considerations March 29, 2011

2 Presenters Property Issues and Considerations Michael Fusselbaugh Senior Vice President Renewable Energy The Hartford Steam Boiler Inspection & Insurance Company Andrea Ezerins Assistant Vice President Corporate Underwriting The Hartford Steam Boiler Inspection & Insurance Company Michael Roy Principal Engineer Emerging Technologies The Hartford Steam Boiler Inspection & Insurance Company 2

3 Agenda Overview Growth End users Manufacturers / Cost Technology Maintenance Risk Drivers Insurance Considerations 3

4 Wind Resources Wind resource data developed by AWS Truewind, LLC for windnavigator Source: USDOE 4

5 Wind Energy by State 5

6 MICHAEL ROY Principal Engineer, Emerging Technologies

7 Wind Turbine Size 301 ft 50 ft 7

8 Small Wind vs. Large Wind How are wind turbines measured? Size = Output Small Wind is <100 kw Large Wind is >100 kw 8

9 Small Wind Turbines End Users Homes, farms, schools, communities, and small factories generally in rural areas Owned by facility located on site Supplements the electrical needs: Homes & battery chargers (<15 kw) Farms (15 30 kw) Office buildings (30 50 kw) Manufacturers, schools, municipalities ( kw) 9

10 U.S. Small Wind Power Growth U.S. is world s largest market for small wind 9,800 small wind turbines sold in U.S. in 2009 Two thirds (2/3) were manufactured in U.S. Growth of U.S. Small Wind Market 20,000 Year Units kw Sales $U.S. 15, ,100 2,100 (not avail.) 10, ,100 3,200 3,100 3,200 (not avail.) (not avail.) ,671 4,878 $1,489 5, ,324 8,329 3,285 8,565 $990 $3,320 0 Small Wind Units Sold Capacity Sold (kw) Sales of Units Sold ($U.S. x 10,000) ,092 10,386 9,800 9,737 17,374 20,300 $4,197 $7,266 $8,240 Source: American Wind Energy Association (AWEA) * $U.S. x 10,000 10

11 What s driving the growth? Fossil fuel prices Demand for sources of green energy is increasing DOE: 5% to be renewable by states Renewal Portfolio Standards Production Tax Credit renewed through 2012 Investment Tax Credits = 30% 11

12 Barriers to Small Wind Growth Zoning Performance Supply chain National net metering policy Permitting & regulations Fossil fuel prices Intermittent power generation Energy storage as a solution? Back-up power generation? 12

13 Grid Integration Small wind turbines may be installed as stand-alone or connected to the utility grid, requiring approval of the utility. Technical & insurance requirements vary state by state, as do metering arrangements Grid-Connected Systems Source: USDOE 13

14 Hybrid Power System Off-Grid A hybrid system combines a wind system with a solar and/or diesel engine-generator and can provide reliable off-grid power around the clock. Hybrid Power Systems Combine multiple sources to deliver non-intermittent electric power Source: USDOE 14

15 Wind Turbine Overview How does a wind turbine work? Wind across blades Pressure difference Blades rotate Turns generator Produces electricity 15

16 Small Wind Turbine Cost Cost varies by company, design type, size (height), and kw rating Generally about $3 $5,000 per kw If tall tower add $30 40,000 for foundation Residential pay back 6 to 20 years depends on $$ incentives Estimate 20 year life span The majority carry a 5 yr. warranty, Bergey Wind recently raised to 10 yr. Image Courtesy DOE/NREL 16

17 Small Wind Turbine Components 10 kw Wind Turbine Source: Bergey Windpower Source: HSB 17

18 Advancements in Technology Technology Evolution and Adaptations High efficiency airfoils Neodymium-iron-boron super-magnet generators Pultruded Fiberglass Reinforced Plastic (FRP) blades Graphite-filled injection molded plastic blades 18

19 Advancements in Technology Tilt-Down Tower Design Tilt-up tower in the normal operating position Tilt-up tower in the lowered position for maintenance or hurricanes 19

20 Power Curve & Capacity Factor Power Curve for the Endurance S kw Wind Turbine 5,000 Power Delivered to Grid (Watts) 4,000 3,000 2,000 1, mph m/s Hub-Height Wind Speed 20

21 Small Wind Turbine Types Horizontal Axis Wind Turbine (HAWT): Requires smooth wind Requires a tail or yaw control Vertical Axis Wind turbine (VAWT): Functions in shifty wind Functions in gusty wind Quiet & bird friendly Current limited capacity 21

22 Small Wind Turbine Examples Horizontal Axis Wind Turbine (HAWT) Bergley 10 kw BWC Excel America's best selling residential wind turbine (3-bladed) Vertical Axis Wind Turbine (VAWT) Helix 1 kw D361 residential wind turbine Horizontal Axis Wind Turbine (HAWT) Home Energy Ball 0.50 kw V100 residential turbine Vertical Axis Wind Turbine (VAWT) Mariah 1.2 kw Windspire residential turbine 22

23 Towers, Turbulence & Durability Short towers result in: Reduced wind speeds, and less electricity Compromised reliability more wear and tear from turbulence 30 Rule rotor should be 30 above any obstacles to get above turbulent wind shear Wind Turbulence Turbulence slows and degrades the wind resource, both upwind and downwind of obstructions. Note the height (H) and distance of turbulence behind an obstruction an unsuitable area for a wind turbine. Wind Direction 2H H 2H 20H Source: Home Power magazine 23

24 Small Wind Turbine Maintenance Follow OEM maintenance guidelines Tilt down towers = easier maintenance Periodic inspection & maintenance (owner vs. OEM certified contract): Blade cracks Dings & dents Cleaning debris off the blades Re-tightening all bolts Lubrication/greasing/oiling 24

25 ANDREA EZERINS Assistant Vice President, Corporate Underwriting

26 Wind Turbine Risk Drivers Rapid technology change Turnover in manufacturers Parts no longer available? Weather Property concerns Site layout construction/repair issues Operational risk 26

27 Wind Turbine Property Exposures Weather Icing/Hail High Winds Lightning Earth Movement and Flood Property Concerns Fire Vandalism Theft Tower Collapse 27

28 Wind Turbine Equipment Breakdown Exposures 3.5 kw Blade damage Foreign object impact Erosion of leading edge Blade tip deflection hitting tower Cracks and fatigue failure Tower collapse structural fatigue Overspeed damage Rotor / generator bearing failures Gearbox lubrication viscosity and cleanliness Miscellaneous electrical apparatus: slip rings, brushes, inverter, controls Image Source: Photo by J.D. Redinger 28

29 Wind Turbine Loss Experience Cause of Loss, Percent Lightning Breakdown Wind Damage Unknown Cause by Component, Percent Gearbox Blade Generator MEA Transformer Image Courtesy DOE/NREL 29

30 Keys to Reducing Exposure Experienced installers Established manufacturers No experimental, prototype New equipment under warranty Some sort of service agreement, regular inspection Turbine is visible and accessible Properly designed for climate (temperature, lightning, wind) 30

31 How Do You Identify Risks with Renewable Energy Exposures? Homeowners BOP Commercial Package Farmowners 31

32 How Do You Identify Risks with Renewable Energy? Do you generate power for your own use or to sell to others? 32

33 Insurance & Underwriting Considerations Manufacturer & model Size (kw output) # of units Age (retrofit date?) Warranty Service & maintenance agreement Monitoring agreement Loss history (serial loss issues) Tower height TIV & value per unit Business Income & Extra Expense Annual power production Value per unit 33

34 Coverage in the Marketplace Customized Renewable Energy Forms All risk forms Renewable experts Designed to address exposures associated with larger renewable risks Standard Commercial Property Non customized, standard forms Most address smaller renewable exposures that are ancillary to a commercial risk 34

35 Players in the Renewable Market Dedicated Team/Product Approach Travelers Chubb GCube The Hartford Chartis New companies every day Many brokers including Marsh, Willis and Holmes Murphy 35

36 Loss Example 36

37 More Information Andrea Ezerins Michael Roy Contact your Munich Re Client Manager or HSB Client Company Manager for additional information. 37

38 THANK YOU FOR ATTENDING.

39 Copyright 2011 Munich Reinsurance America, Inc. All rights reserved. "Munich Re" and the Munich Re logo are internationally protected registered trademarks. The Hartford Steam Boiler name is a mark owned by The Hartford Steam Boiler Inspection and Insurance Company. The material in this presentation is provided for your information only, and is not permitted to be further distributed without the express written permission of Munich Reinsurance America, Inc., Munich Re or Hartford Steam Boiler. This material is not intended to be legal, underwriting, financial, or any other type of professional advice. Examples given are for illustrative purposes only. Each reader should consult an attorney and other appropriate advisors to determine the applicability of any particular contract language to the reader's specific circumstances.