Background 3
Types of Wind Turbines 5
Wind Turbine Major Components 6
Offshore Wind Turbine Projects 19
Summary 23
Other Issues
Delay in Start-Up (DSU) coverage is often required for energy projects, as these projects
often involve substantial penalties, if the start-up date is not met. This can also take the
form of Advanced Loss of Profits (ALOP), Business Interruption (BI) and Consequential
Financial Loss. DSU provides the insured with coverage for the loss of Profits,
(generally defined as loss of gross revenue – variable costs saved), or additional expenses
incurred, including penalty fees, for the project not being completed by the project’s
designated start-up date, due to physical loss or damage to the machinery or equipment in
transit, from a covered peril. Machinery or equipment whose loss or damage might delay
the start up of the entire project is called Critical Cargo, and is generally declared by the
insured at the start of the project. For wind turbine projects, the major components of the
turbines (including the blades) are often considered Critical Cargo, esp. the step up
transformer.
If DSU coverage is requested, underwriters should obtain information about the time
required to replace damaged or lost equipment. Often, the project contractor will have
this information developed and estimates for time to replace critical cargo will be
included in the application. It should be noted that DSU indemnity period is measured by
the time the completion of the project is delayed and usually contains a deductible,
typical 30 or 60 day, depending on the project contract requirements.
Damages and subsequent claims reporting procedures should be established early in the
project, especially if DSU coverage is in play. One of the first questions is to determine
if the damaged equipment can be repaired on site, or if it needs to be returned to the
manufacturer. Often, a manufacturer’s representative will need to make a field inspection
of the damaged equipment to make this determination. It would not be unusual that this
representative would have to travel from his/her home base to the site at some expense.
The turbine blades are the components most at risk to handling damage. However, the
blades are often of fiberglass construction and smaller chips, gouges and fractures can be
repaired on site or by local manufacturer-authorized repairers. The blades are also
subject to manufacturer’s quality assurance inspection, prior to being installed at the job
site. Other wind turbine components are also subject to damage in transit, particularly the
nacelles and transformers. Nacelles have a light fiberglass shell and can easily be
damaged. Transformers can sustain damage to their internal components or active parts
from vibrations and/ or impacts, during handling and transportation, especially if dropped
or subjected to an impact beyond the design limits (esp. acceleration force).
Manufactures will typically place impact recorders on transformers that can record the
magnitude of the impact, as well as the date and time.
Since wind turbine projects generally involve multiple shipments over a period of time,
lost or damaged critical cargo in the early phases of the project, often can be replaced
with subsequent shipments, which would minimize the cost of a potential DSU claim.
Major wind turbine manufacturers have reported back orders of 1 – 2 years, but
sometimes a project using the same components can encounter major delays (due to, for
example, environmental permit problems or financing problems), which can lead to
surplus equipment available that could be used to replace lost or damaged equipment.
Today, wind turbines are bought and sold, as virtually a global commodity and
sometimes replacements for damaged components can be found available on the market.
Most critical run terms of lead time is are bigger step up transformers with a capacity of
several hundreds of MW.
DSU claims should always be handled by adjusters that are familiar with time element
claims and, sometimes, forensic accountants are contracted to assist in the evaluation.
To identify deviations from the time schedule of a project, DSU cover requires a
thorough project survey, which enables the insurer to determine delays caused by insured
losses in cargo or construction from other uninsured delays, e.g. caused by bad planning.