The energy sector has come under particular scrutiny as sustainable solutions are needed to contribute to the strengthening of the global response to climate change. The offshore wind market bears enormous potential and is projected to quadruple in installed capacity by 2030, thus replacing the energy equivalent of over 1'000 large fossil fired power plants.
Suitable risk transfer solutions are critical to enable the investments in such sustainable energy solutions, both in advanced and emerging markets. Focusing on the wind offshore market, how do we respond to this challenge as an industry and how can we reliably assess accumulation risks arising from future storms? Together with our key clients, we contemplated the implications of the growing wind offshore segment as part of the Swiss Re Engineering Underwriting Forum 2017, a well-established knowledge platform.
At Swiss Re, storms and their destructive powers are very much on our minds. We are refining our modeling approaches and enhancing our wind offshore protection products offering. With the increasing number of installations, inevitably grows the exposure to (re)insurers. Aside from an increase in power density, we also see a shift of such installations into more exposed offshore locations. In an effort to better predict loss scenarios as a result of major storms going forward, and in close collaboration with experts of the Danish Technical University and the Hochschule Bremerhaven, Swiss Re has prepared a study which shows that over the next 15 years a storm with a return period of 50 years could easily cause a market loss in the multibillion range.
While today we expect most losses to arise from European business, Asia (and particularly China) will dominate in the future. In order to compute these results, we estimated the current and future exposure of the global windfarm market, developed specific vulnerability curves and used our in-house NatCat models to compute expected losses from earthquakes and windstorms for different regions of the world. The result was a suite of four Swiss Re Institute publications under the names of Insuring wind power in China (a summary of the result for China specifically (also available in Chinese), Wind farms: harvesting energy on shaky grounds and in stormy seas (a summary of the perils-specific publications mentioned below), Offshore wind power in stormy seas (potential offshore wind turbines losses due to storms in Europe, Asia and North America) and Moving on dangerous grounds (potential wind turbine losses due to earthquakes in China).
The discussions held at the Engineering Underwriting Forum and the above publications are part of our ongoing efforts to support the renewable energy sector. With our innovative products beyond standard insurance coverage, we are prepared to advance sustainable energy solutions.
Category: Sustainable energy: Wind
Location: Zürich, Switzerland