Large Offshore Wind Turbines Leading To Unsustainable Market Risks, Says Report  

A recent report by GCube, a leading underwriter for renewable energy projects, claims that all is not well with the deployment of large wind offshore turbines. The report titled “Vertical Limit: When is bigger not better in offshore wind’s race to scale?” talks about several market vulnerabilities created by using the latest technology meant to increase wind energy. 

The report claimed that in the last five years, as several wind turbines went from their capacity of 8MW to 18MW, risks have also risen. The report was based on ten years of the company’s claims data and drew on evidence from experts across the offshore wind sector. The report demonstrated how offshore wind’s risk landscape has significantly shifted as manufacturers push to develop bigger machines faster.

The report said that such rapid commercialization of these technologies is now leading to a concerning number of losses and subsequently piling financial pressure on manufacturers, the supply chain, and the insurance market.  

“Underwriters are concerned that 55 percent of all claims by frequency come from component failures during construction from 8MW+ machines, which now represent a larger share of Total Insured Values (TIVs). This, combined with an increase in average offshore wind losses, up from 1 million GBP in 2012 to over 7 million GBP in 2021, create unsustainable financial risk when scaling is needed to bring about the energy transition,” the report said. 

Another significant finding the report indicated was that these 8MW+ machines suffer from component failures within the first two years of operation. It is juxtaposed against the significantly shorter timeframe (5yrs) for component failures during operation in the 4-8MW category of turbines and points to the urgent need to address product quality and reliability – a key recommendation of the report. 

“The situation may create issues for the insurance market as traditional energy underwriters deploy capacity into the renewables market by offering broad policies and low premiums. GCube argues that new entrants must learn from challenges in the onshore renewables market by taking a more realistic approach to price and T&Cs, otherwise risk substantial losses that would further exacerbate the current instability in offshore wind markets,” a media statement from GCube said. 

The warning shot comes when the insurance market for onshore renewables continues to harden after a string of costly losses from Nat Cat and supply chain issues. In addition, the report states how new turbine equipment issues in the offshore market may need to be recognized on account of other prominent sources of losses, such as cable failure.