China paving its way to clean energy
Back from Tianjin, on my way to Beijing airport, we crossed a "herd" of wind turbine blades being transported from the factory to the windfarm site. Long pieces of white carbon fiber, mounted on special trucks, they were progressing very slowly on the highway, with a man walking on their side like a guiding modern pachyderms.
Someone living in a small city (Hong Kong) like me, would find this scenery interesting. However, it is common in China, as this country is now one of the key players within the renewable energy sector. Furthermore, the *Asia Infrastructure Investment Bank "AIIB" has recently announced that that they will no longer finance coal-fired power plants, but will be focusing more on renewable energy investments. This is an important milestone as the AIIB, head quartered in Beijing and in which the China has share of around 30%, has a funding of around 100 Billion USD and can be a game changer in the region, particularly when considering the One belt One Road Initiative.
In the same vein, China decided earlier this year to scrap more than 100 coal-fired power plants, in plan or under construction, following the example of India, which cancelled 14 GW recently.
The world is currently focusing on Global Warming in the suite of Paris climate agreement but there can be other reasons for China to reduce it coal-fired electricity production. If you include the health costs of the populations, the electricity produced by coal becomes much more expensive. Many studies have quantified the cost impact. The bill seems to be impressive with figures reaching 20 to 40 USD Cents per kw.h for the US*, i.e. more than the price of electricity. These estimations need to be carefully handled, but it is sure that producing low cost electricity and leaving the health bill to the governments or societies is no longer an accepted sustainable model.
It is in this context that Swiss Re Engineering China Team held last week in Tianjin its forum about insuring renewable energy（瑞士再保险可 再生能源保险论坛）。
Representatives of more than 20 companies attended the event. The insurance of solar panels, windfarms, battery storage, parametric or index covers and carbon certificates were presented and discussed. Some preliminary results on a method unique to Swiss Re about testing and selecting solar panels were also explained.
The world is changing and particularly in the power sector. For these new technologies, there are obviously no statistics which can support the insurers in the pricing of such exposures. The risk appetite also need to consider the serial losses which need to be identified and quantified. This can be challenging.
Swiss Re is committed to support the energy transition. From a business perspective, it means that we invest in knowledge in order to be able to effectively support our clients and partners handling these emerging technologies and the associated new covers.
This is one of our contributions to make the world more resilient.
References AIIB is right to shun coal for cleaner energy investments
Category: Sustainable energy: Solar, Wind
Location: Tianjin, China