Experience is key to reduce cable claims

WORLDWIDE: Whenever insurance for offshore wind is mentioned, the much-quoted statistic is that 80% of claims in the sector relate to problems with cables.

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Given the challenges associated with installing foundations in deeper waters and ensuring turbines operate successfully in a harsh marine environment, it may seem surprising that it is cables that run into trouble time and time again. Cables are, after all, a rather standardised technology often laid at sea for other sectors such as oil, gas and telecommunications.

Yet the 80% figure is accurate, insist insurers. Niels Kragelund, head of wind energy at Danish insurance firm Codan, says that cables account for 90% of the number of offshore wind claims and 70% of the actual cost of all offshore wind claims. The 80% figure comes from the average split between these two numbers.

Tim Halperin-Smith, divisional director of renewable energy at global insurance brokers Willis, agrees with the 80% figure. Of all the offshore wind claims relating to cables his firm receives, he adds, most incidents occur during installation, half of them due to human error.

Complications often occur when the cable is being buried in the seabed, for example not burying it deep enough, Halperin-Smith explains. Also, as the cable is laid, it naturally wants to return to the shape it took on the carousel it has just come off, so if it is not being monitored and the appropriate tension kept during installation, looping can occur. This can lead to the cable bending beyond the limit known as its maximum bend radius. If this happens, the cable's longevity may be damaged and it has to be replaced.

Care required

Such issues are all too common, says Kragelund, who believes that the main problem is the lack of experience among many sea and cable contractors. "Some of the claims we have seen are so stupid you can't imagine," he says, citing one case where a contractor working on a turbine did not know the cable's location and put two legs of its jack-up barge directly on top of the cable.

Jack-up barge legs can reach depths of 10 metres below the seabed surface, while cables are typically buried around one metre deep, so the cable was crushed by the jack-up barge. "They are not careful enough," adds Kragelund. Many vessels used by contractors are more suitable for near-shore operations rather than the high seas, he adds, making it more difficult to effectively install cables in deeper waters.

Mark Liddiard, power-sector business manager at engineering consultant HR Wallingford, says there is also ignorance about the effect of environmental factors - such as scour caused by highly moveable sediment on the seabed - on cable damage. The firm's own research has shown that scour can develop quickly and may not have been anticipated by the project developer. In many cases, the key problem is lack of awareness of the mobility of sediment in the area, Liddiard says.

"We have seen evidence of cables free-spanning (floating freely) under the water," he says. "To deliver the required protection, cables are often installed by trenching, and buried a metre below the seabed surface, generally in soft sediments. If the sediment is highly mobile, you may end up with a cable exposed and that obviously puts it in a position where it is more prone to damage."

Liddiard adds that highly mobile sediment can also create a scour effect on the base of a turbine's monopile foundation, which can expose the cable at the point where it connects with the turbine.


According to Halperin-Smith, insurers generally draw a distinction between projects built by utilities as their own generating assets - which they are likely to own for 20 to 25 years - and those built by consortia with a view to selling them once the construction is complete. Insurers believe the latter are built with a focus on the short term construction, rather than the long term operation of the assets.

Matt Rowland, an underwriter at GCube Insurance, agrees, saying that utilities are regarded as having the buying power to secure better, more experienced contractors. Where an independent power producer-style consortium comes together to build a project, the parties are generally in it to maximise profits - and one way of achieving this is to use contractors relatively new to the sector that will undercut more established firms in order to secure work, he adds.

"In Germany we have seen experienced contractors having to be brought in to such projects during construction to remedy issues that these inexperienced contractors are unable to solve," Rowland says. "The rates from an insurance perspective reflect that. The rates given to E.on or RWE on its fifth or sixth project will be completely different to those offered to projects run by inexperienced developers and contractors."

In addition to varying insurance rates, the level of "deductibles" - or amounts that must be paid by developers on claims before the policy pays out - can also vary greatly dependent on an insurers' assessment of the experience of both developers and contractors.

Rowland puts the range for deductibles on European offshore projects at between EUR500,000 and EUR1 million. Halperin-Smith largely concurs, saying the deductibles levels for offshore wind are rising, from EUR300,000 a couple of years ago to between EUR750,000 and EUR1 million now. This is mainly due to the number of cable claims and the rising cost of offshore vessels which is making cable repair more and more expensive, he says.

Contractor watch

Many insurers now conduct detailed assessments of a contractor's ability to get the job done, both in terms of their past experience and the equipment they are using.

Developers and insurers jointly employ marine warranty surveyors as technical consultants to assess a contractors' work during installation. These act as an insurer's "eyes and ears" on site, says Halperin-Smith.

Kragelund adds that his firm is rewriting its scope of works to make sure their work is precise and detailed. "We are very much relying on marine warranty surveyors to make sure the erection of an offshore wind farm can happen in a good and proper way," he says.

These surveyors should make sure equipment is right for the project and that the contractor is good. Insurers even go so far as to find out what ships are being used and who the captain is, to make sure they are experienced, Kragelund adds. "We would refuse to insure a project if the project manager hadn't worked on at least one project with success before. It all comes down to the question of 'do the people know what they are doing?' If not, then we will stay away."

However, Chris Sturgeon, managing director of Red Penguin Associates, a marine consultancy specialising in submarine cable projects across the range of industries, disagrees that marine warranty surveyors should be the ones to solve the problems surrounding offshore wind cable installation. "If (the problem) gets to the warranty surveyor then there has not been enough due diligence up front," he says. "They are a back-stop."

Instead, says Sturgeon, developers should be addressing installation at the earliest possible stages to reduce the risk of something going wrong. Blaming human error, he says, is the easy answer.

"It's all about design," says Sturgeon. "It's understanding what the process is at installation, and the detail, and bringing it as far forward as you can in the design process. If you have got the right people and project management processes prepared adequately then you will decrease the risk of human error occurring at the final stage."

Work together

Halperin-Smith agrees, saying his firm is looking to work with developers at the tendering stage of a project to probe bidding contractors on their proposed installation methodologies. He cites the example of two UK offshore wind farms as a good illustration of where a project has been improved due to a client being more stringent in its scope of work

"The same crew and vessel that worked on one project and managed to cut the cable, then managed to lay a 42-kilometre export cable successfully on its next project," he says. "The difference was that the client, following their insurer questioning why they were using a crew that had cut a cable previously, made around 12 changes to the contractor's scope of works. If a developer engages with the installation critically and at an early stage, there is no reason why you can't get it right."


- Mechanical problems Cable damage plays a very minor role in insurance claims for onshore wind farms. Instead, the majority of claims seen by insurers for onshore wind farms centre around mechanical and electrical breakdowns, particularly problems with main shaft bearings, gear boxes and generators. Claims occur during both construction and operation phases:

- Construction claims Construction-phase insurance claims typically include blade damage caused by mishandling, dropping of components during transportation, theft of components from the work area, electrical fault during commissioning and weather-related damages.

- Operational claims These onshore claims tend to include turbine fires, storm damage to valves, damage to blades, substations, foundations or gearboxes, machinery breakdown, manufacturer design problems and mechanical faults in the main components.

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