Almost every week, the news report on the prominence of renewable energy. During 2016 alone, there was more money invested in renewable energy than in conventional power. Last week for example, India decided to scrap 10 Gigawatt of coal fired projects while at the same time signed various contracts for solar plants with a record low purchase electricity price. In a similar vein, three weeks ago, a referendum in Switzerland decided to abandon nuclear energy following the movement initiated by Germany some 7 years ago. What's more, Germany briefly reached almost 100% of renewably produced electricity on May 8; another milestone and proof that switching to green energy brings progress and development!
Korea, one of the most technically advanced countries in the world, has decided to idle old coal fired plants during May and June to reduce fine particle levels. The recently elected president Moon Jae-in, is clearly setting the pace with the objective of producing 20% of electricity from renewable energy by 2030. For KEPCO, the main Korean electricity producer, this means nearly doubling its current capacity by adding 5 GW of green energy to its fleet. The equivalent of five nuclear units.
Solar photovoltaic is cutting-edge in Korea, particularly active in floating solar panels. These PV panels are usually mounted on floaters, which are connected to each other. This developing technology enables to use lake or agricultural reservoir's surfaces. Erection time is short but the challenges reside in the floatability of the installation and the repair methods in case of an accident. The role of the (re)insurers is to evaluate the risks of such new techs. Swiss Re plans to work in collaboration with surveyors to evaluate the exposures of such plants, beginning with the electrical insulation (we are working close to water!) as well as the buoyancy reserve and the downgraded mode, i.e. if one unit sinks, have the other units sufficient buoyancy reserve? Additionally, there is the mechanical resistance of the floaters connected to each other to consider.
The other main renewable source in Korea is offshore wind. With average winds around 7 m/s, Korea is a suitable location to develop offshore wind farms. This auspicious prospect can however be hampered by the absence of wind, both for on and offshore installations. Conversely, Korea can also have an average of four typhoons a year and energy production could suffer similar consequences as wind turbines are switched off if the wind speed exceeds 90 kph.
It is in this context that Swiss Re Korea held a seminar in Seoul, on June 1. The event, attended by some 50 representatives of the Korean insurance market, including offshore wind plants' project managers and developers, dealt with the challenges and promises of the offshore wind industry.
The wind and the sun are volatile resources. The success of renewable energy projects is dependent of the predictability of revenue streams. By complementing the traditional covers during construction and operation, Swiss Re offers additional protection with index-triggered insurance solutions. With these new (re)insurance protections, operators and investors receive steady revenues in case of wind or solar resource volatility and can concentrate on growing their business while maintaining a more stable cash flow. The actual wind speed or solar irradiation amount of a given year is calculated with data from third party providers, like for example NASA. This is a very transparent mechanism, which also ensures prompt indemnity payments.
The electrical world is dramatically changing. The future will be made of decentralized production centers with a significant amount of green - though volatile - energy, interconnected local grids, battery storages and electrical vehicles. The (re)insurance industry needs to develop its knowledge and elaborate new products covering the associated emerging exposures. Swiss Re is ready to support this development. This is our contribution to make our planet more resilient.
(Photo of TamRa windfarm led and risk-managed by SwissRe)
Category: Sustainable energy: Solar, Wind
Location: South Korea