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Unpicking the price of health and safety

WORLDWIDE: Businesses no longer approach health, safety and environmental (HSE) issues as a financial burden and the wind industry is no exception. HSE investment is more often embedded in all parts of a wind developer's business. Onshore wind farms are planned a safe distance from habitation in case of a rare but potential danger of thrown blades or toppling turbines. Offshore wind farm substations are fitted with fire prevention and alarms. Engineers are trained, and so on. All of these embedded investments make it hard to extricate the real value of HSE spending for a wind power producer.

UK-based Risktec Solutions, a risk-management consulting firm, works with renewable energy producers as well as high-hazard industries such as petrochemicals. Director Steve Lewis says: "To try and quantify HSE expenditure as a percentage of turnover is quite an old approach, which many industries have moved away from. HSE cost is integral. It is not an add-on."

Intangibles

Chris Streatfeild, director of health and safety at industry body RenewableUK agrees: "While some explicit HSE costs, such as training, safety wear and equipment, can be quantified on a project balance sheet, a significant part of HSE investment is bound up in intangibles — no different from other industries that invest in HSE proportionately."

Many wind power producers are subsidiaries of energy utilities with decades of experience in oil and gas, nuclear or other types of energy production — industries replete with risks. "Utility-invested wind power developers are able to exploit a legacy of HSE knowledge, experience and investment decisions already gained in other energy sectors," says Lewis. "Wind has different risks and hazards, but you want to see HSE considerations given as much credence as any other energy industry. Wind, especially offshore, is a relatively new industry and most organisations do everything they can to mitigate HSE risks and opportunities for accidents and incidents."

This can be as minimal as ensuring compliance with relevant legislation or as thorough as investing in HSE teams to work closely with existing engineering, construction and maintenance teams. But, as the focus increasingly moves offshore, many large developers are expanding their investment in HSE teams and expertise to manage risks of assembling, transporting and installing heavy, huge towers and turbines in the sea.

Professor Martin Skiba, director of offshore wind energy at energy producer RWE Innogy, says: "HSE has a direct impact on profitability. Reducing the risk of injury or death requires investment. However, a fatality could set back a project for weeks. Therefore, every euro spent on HSE is a euro well spent. The bigger issue at stake here, though, is that people have a basic right to work in an environment devoid of unnecessary risk."

RWE Innogy will increase its nine-strong offshore HSE team as construction begins on two large offshore wind farms. The company sees this as a worthwhile investment as offshore projects can require many different contractors that use large machinery for lifting and moving heavy parts. Developers can be liable for accidents among their own and contractors' staff. "In case of a breach of the HSE rules, we certainly would send workers off our construction sites," says Skiba. "As last resort we would even cancel contracts."

Construction halt

Serious HSE incidents can stall construction for days — potentially weeks — and the costs soon pile up. They include ongoing leasing costs for equipment, such as cranes, while not in use. For large projects, this can grow to as much as €354,000 a day, covering costs from jack-up vessel leasing to maintaining the construction sites offshore and on the harbour.

Insurance allows wind farm developers to reduce exposure to the financial impact of HSE and other risks. Typically, insurance accounts for 2-3% of a wind farm's total cost. But, nothing can replace ensuring that HSE awareness is integral to a business and investing, if need be, in experts to help lead and embed HSE strategies.

Skiba, Streatfeild and Lewis agree that a serious accident in financial, commercial, reputational and other terms will always cost a company more than any proportionate HSE investment to reduce the risk of it happening in the first place: a risk not worth taking.

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