The world over, industrial sector growth and economic expansion have put tremendous strain on fossil fuel resources and the environment. Governments and corporations have been investing heavily in renewable energy sources, and above all, wind and solar.
Vietnam for example, possess ideal natural conditions for wind power development, with over 3,000 km of coastline within the tropical monsoon's areas and a combination of good wind-speed with very few severe storms. Their Ministry of Industry and Trade's (MOIT) original envisaged target for offshore wind energy development has been recently adjusted - a total expected output of 2,400 MW by 2020 and an output of 14,228 MW by 2030.
Within the frame of a project supported by the World Bank, Asian Development Bank and the European Union - among others, the MOIT has already granted nine licenses for the execution of offshore wind farms. Six of these have already started construction and four are partly in operation at present. With these developments, Vietnam could potentially supply clean energy to the growing demand of the country's metropolitan and rural areas.
While this signifies a huge potential, it also emerges a new set of risks. The actual construction of offshore wind farms is a relatively complex undertaking. Demanding technical requirements, compound construction risks, high costs and extreme weather conditions are just some risks wind farms projects could face. Currently, Asia is growing its offshore windfarm ambitions at different paces: much faster in China and at a relatively slower pace in Japan. Can the industry in Asia – and with industry, I mean manufacturers, construction companies, financial institutions, insurers, etc. - benefit from the experience gained from this field in Northern Europe? Probably, but only to a limited extent. Typhoons, earthquakes, tsunamis, and even thunderstorms seem to have different patterns in Asia, rendering any safety devices and precautions ineffective. These are what we call "new" exposures.
In addition, the actual project management presents another challenge. The new energy plants congregate companies which have never worked together before and are not used to each other's working methodologies. There are a myriad of cultural differences and ways of approaching the structuring and realisation of the projects. For example, the project risk management culture can be very different depending on the parties involved. Recent incidents in Asia like floating turbines sinking or capsizing, cranes mounted on barges with insufficient stability, blades falling in the water during erection, survey boats sinking and similar incidents could have been avoided with a joint risk management approach. This, I believe, is where the industry could benefit a lot from the experience of Europe. Let me explain.
At Swiss Re, we work in collaboration with our clients. This is evident from the recent offshore windfarm insurance seminar that we jointly organised with Vina Re and the members of the Vietnamese government in Hanoi. Other than analysing the opportunities and challenges of offshore windfarm projects in Vietnam, we shared on the insurance considerations and implications of these complex risks. We also actively emphasised the use of the service of marine surveyors and the Offshore Code of Practice to manage and mitigate risk by a third-party surveillance. Implementing healthy risk management practices is the essence to reducing risk exposures and ensuring project quality. Marine surveyors will help re/insurers and other stakeholders bridge the "experience gap" which currently exists between Asia and Europe.
This is our commitment to make the world more resilient.
Category: Sustainable energy: Wind