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TRANSCRIPT
WIND ENERGY Underwriting and Risk Management Considerations
March 29, 2011
© 2011 The Hartford Steam Boiler Inspection and Insurance Company
Andrea Ezerins Assistant Vice President Corporate Underwriting The Hartford Steam Boiler Inspection & Insurance Company
Michael Roy Principal Engineer Emerging Technologies The Hartford Steam Boiler Inspection & Insurance Company
Michael Fusselbaugh Senior Vice President Renewable Energy The Hartford Steam Boiler Inspection & Insurance Company
Presenters Property Issues and Considerations
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Agenda
Overview
Growth
End users
Manufacturers / Cost
Technology
Maintenance
Risk Drivers
Insurance Considerations
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Wind Resources
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Source: USDOE
Wind resource data developed by AWS Truewind, LLC for windNavigator®
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Wind Energy by State
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MICHAEL ROY Principal Engineer, Emerging Technologies
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Wind Turbine Size
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50 ft
301 ft
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Small Wind vs. Large Wind
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Size = Output Small Wind is <100 kW Large Wind is >100 kW
How are wind turbines measured?
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Small Wind Turbines End Users
Homes, farms, schools, communities, and small factories – generally in rural areas
Owned by facility – located on site
Supplements the electrical needs:
Homes & battery chargers (<15 kW)
Farms (15–30 kW)
Office buildings (30–50 kW)
Manufacturers, schools, municipalities (50–100 kW)
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5,000
10,000
15,000
20,000
Small Wind Units Sold
Capacity Sold (kW) Sales of Units Sold ($U.S. x 10,000)
U.S. Small Wind Power Growth
U.S. is world’s largest market for small wind
9,800 small wind turbines sold in U.S. in 2009
Two thirds (2/3) were manufactured in U.S.
2,100 3,100 3,200 4,671 4,324 8,329 9,092
10,386 9,800
2,100 3,100 3,200 4,878 3,285 8,565 9,737
17,374 20,300
(not avail.) (not avail.) (not avail.)
$1,489 $990
$3,320 $4,197 $7,266 $8,240
2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: American Wind Energy Association (AWEA)
Year Units kW Sales $U.S.
Growth of U.S. Small Wind Market
10 * $U.S. x 10,000
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What’s driving the growth?
Fossil fuel prices
Demand for sources of green energy is increasing
DOE: 5% to be renewable by 2020
29 states – Renewal Portfolio Standards
Production Tax Credit renewed through 2012
Investment Tax Credits = 30%
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Zoning
Performance
Supply chain
National net metering policy
Permitting & regulations
Fossil fuel prices
Intermittent power generation
Energy storage as a solution?
Back-up power generation?
Barriers to Small Wind Growth
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Grid Integration
Small wind turbines may be installed as stand-alone or connected to the utility grid, requiring approval of the utility. Technical & insurance requirements vary state by state, as do metering arrangements
Grid-Connected Systems
Source: USDOE
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Hybrid Power System – Off-Grid
A hybrid system combines a wind system with a solar and/or diesel engine-generator and can provide reliable off-grid power around the clock.
Hybrid Power Systems
Source: USDOE
Combine multiple sources to deliver non-intermittent electric power
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Wind Turbine Overview
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Wind across blades
Pressure difference
Blades rotate
Turns generator
Produces electricity
How does a wind turbine work?
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Small Wind Turbine Cost
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Image 16031 Courtesy DOE/NREL
Cost varies by company, design type, size (height), and kW rating
Generally about $3–$5,000 per kW
If tall tower – add $30–40,000 for foundation
Residential pay back – 6 to 20 years – depends on $$ incentives
Estimate 20 year life span
The majority carry a 5 yr. warranty, Bergey Wind recently raised to 10 yr.
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Small Wind Turbine Components
10 kW Wind Turbine
Source: © Bergey Windpower Source: © HSB
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Advancements in Technology
High efficiency airfoils
Neodymium-iron-boron “super-magnet” generators
Pultruded Fiberglass Reinforced Plastic (FRP) blades
Graphite-filled injection molded plastic blades
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Technology Evolution and Adaptations
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Advancements in Technology Tilt-Down Tower Design
Tilt-up tower in the normal operating position
Tilt-up tower in the lowered position for maintenance or hurricanes
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Power Curve & Capacity Factor
Power Curve for the Endurance S-250 – 5 kW Wind Turbine
0
1,000
2,000
3,000
4,000
5,000
Hub-Height Wind Speed
0 0
4 2
9 4
13 6
18 8
22 10
27 12
31 14
36 16
40 18
45 20
mph m/s
Pow
er D
eliv
ered
to G
rid (W
atts
)
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Horizontal Axis Wind Turbine (HAWT):
Requires smooth wind
Requires a tail or yaw control
Small Wind Turbine Types
Vertical Axis Wind turbine (VAWT):
Functions in shifty wind
Functions in gusty wind
Quiet & bird friendly
Current limited capacity
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Small Wind Turbine Examples
Bergley 10 kW BWC Excel America's best selling residential wind turbine (3-bladed)
Horizontal Axis Wind Turbine (HAWT)
Horizontal Axis Wind Turbine (HAWT)
Home Energy Ball 0.50 kW V100 residential turbine
Helix 1 kW D361 residential wind turbine
Vertical Axis Wind Turbine (VAWT)
Vertical Axis Wind Turbine (VAWT)
Mariah 1.2 kW Windspire residential turbine
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Towers, Turbulence & Durability
Short towers result in:
Reduced wind speeds, and less electricity
Compromised reliability – more wear and tear from turbulence
30’ Rule – rotor should be 30’ above any obstacles to get above turbulent wind shear
Wind Turbulence
Source: Home Power magazine
Turbulence slows and degrades the wind resource, both upwind and downwind of obstructions. Note the height (H) and distance of turbulence
behind an obstruction—an unsuitable area for a wind turbine.
2H 20H
H
Wind Direction 2H
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Small Wind Turbine Maintenance
Follow OEM maintenance guidelines
Tilt down towers = easier maintenance
Periodic inspection & maintenance (owner vs. OEM certified contract):
Blade cracks
Dings & dents
Cleaning debris off the blades
Re-tightening all bolts
Lubrication/greasing/oiling
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© 2011 The Hartford Steam Boiler Inspection and Insurance Company
ANDREA EZERINS Assistant Vice President, Corporate Underwriting
© 2011 The Hartford Steam Boiler Inspection and Insurance Company
Wind Turbine Risk Drivers
Rapid technology change
Turnover in manufacturers
Parts no longer available?
Weather
Property concerns
Site layout construction/repair issues
Operational risk
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Wind Turbine Property Exposures
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Weather
Icing/Hail
High Winds
Lightning
Earth Movement and Flood
Property Concerns
Fire
Vandalism
Theft
Tower Collapse
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Wind Turbine Equipment Breakdown Exposures
Blade damage
Foreign object impact
Erosion of leading edge
Blade tip deflection hitting tower
Cracks and fatigue failure
Tower collapse – structural fatigue
Overspeed damage
Rotor / generator bearing failures
Gearbox – lubrication viscosity and cleanliness
Miscellaneous electrical apparatus: slip rings, brushes, inverter, controls
Image Source: Photo by J.D. Redinger
3.5 kW
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Image 16177 Courtesy DOE/NREL
16 13 5
25
0
5
10
15
20
25
Lightning Breakdown Wind Damage Unknown
Cause of Loss, Percent
27 22
12 5 4
0 4 8
12 16 20 24 28
Gearbox Blade Generator MEA Transformer
Cause by Component, Percent
Wind Turbine – Loss Experience
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Keys to Reducing Exposure
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Experienced installers
Established manufacturers
No experimental, prototype
New equipment under warranty
Some sort of service agreement, regular inspection
Turbine is visible and accessible
Properly designed for climate (temperature, lightning, wind)
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How Do You Identify Risks with Renewable Energy Exposures?
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Homeowners
BOP
Commercial Package
Farmowners
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Do you generate power for your own use or to sell to others?
How Do You Identify Risks with Renewable Energy?
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Manufacturer & model Size (kW output) # of units Age
(retrofit date?)
Warranty Service &
maintenance agreement
Monitoring agreement
Loss history (serial loss
issues) Tower height TIV & value
per unit
Business Income & Extra Expense Annual power
production Value
per unit
Insurance & Underwriting Considerations
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Coverage in the Marketplace
Customized Renewable Energy Forms
All risk forms
Renewable experts
Designed to address exposures associated with larger renewable risks
Standard Commercial Property
Non customized, standard forms
Most address smaller renewable exposures that are ancillary to a commercial risk
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Players in the Renewable Market
Dedicated Team/Product Approach
Travelers
Chubb
GCube
The Hartford
Chartis
New companies every day
Many brokers including Marsh, Willis and Holmes Murphy
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Loss Example
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© 2011 The Hartford Steam Boiler Inspection and Insurance Company
More Information
Andrea Ezerins [email protected] 860.722.5308
Michael Roy [email protected] 860.722.5055
Contact your Munich Re Client Manager or HSB Client Company Manager for additional information.
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THANK YOU FOR ATTENDING.
© Copyright 2011 Munich Reinsurance America, Inc. All rights reserved. "Munich Re" and the Munich Re logo are internationally protected registered trademarks. The Hartford Steam Boiler name is a mark owned by The Hartford Steam Boiler Inspection and Insurance Company. The material in this presentation is provided for your information only, and is not permitted to be further distributed without the express written permission of Munich Reinsurance America, Inc., Munich Re or Hartford Steam Boiler. This material is not intended to be legal, underwriting, financial, or any other type of professional advice. Examples given are for illustrative purposes only. Each reader should consult an attorney and other appropriate advisors to determine the applicability of any particular contract language to the reader's specific circumstances.