renewable power exposures – what can go wrong? · systems better energy storage capability...

Renewable Power Exposures – What Can Go Wrong? Thursday, July 25, 2013, 8:00 a.m.

Ronald G. Behrens, ALCM, ARe, CEA, PE (inactive) Director of Risk Management Services Hartford Steam Boiler Inspection & Insurance Company Lisle, Ill. Ronald Behrens is the director of risk management services for the Hartford Steam Boiler Inspection & Insurance Company and works as the liaison between reinsured companies and the various HSB technical service units. He has more than 30 years of experience in equipment breakdown insurance and loss control. Prior to HSB, he was the engineering team manager for the Chicago branch of Kemper Insurance. Ron earned an electrical engineering degree from Valparaiso University. Ron received the Associate in Loss Control Management and Associate in Reinsurance designations from the Insurance Institute of America. He is also a certified Level I Infrared Thermographer member of the Institute of Electrical and Electronics Engineers. Ron was a licensed professional engineer in Illinois for more than 20 years, but currently is inactive. He holds a National Board of Boiler and Pressure Vessel Inspectors Inservice Commission and an Illinois Special Inspector Commission. Session Description: How does renewable energy technology change traditional farm exposures? Attendees will be provided an overview of photovoltaic solar panels and wind turbine energy. The scope will include: incentives, key equipment, systems, and applications, including “Net Metering”. The session will also cover property and liability exposures and typical loss experience.

Top Three Session Ideas Tools or tips you learned from this session and can apply back at the office.

1. ______________________________________________________________________

2. _______________________________________________________________________

3. ________________________________________________________________________

Renewable Power Exposures – What Can Go Wrong? Session Outline

Overview Basic Energy Terminology

• Electrical Power o Units of Power o Units of Energy o Types of Energy

• System Configurations • Grid Integration • Hybrid Power System

Renewable Energy Incentives

• Why Now? • Financial Incentives

o Federal o State

Solar Power

• Solar Radiant/Intensity Map • Solar Power

o Solar Thermal Solar Thermal Heating Thermal Solar Systems & Power Plants Concentrating Solar Thermal (CST) Farm Solar Power Applications

o Solar Photovoltaic Overview Installations Components

• PV Hardware Inverter (PCU) • PV Panels • Building Integrated PV (BIPV) • Energy Storage • Concentrated Solar Power (CSP)

Insurance Considerations o Solar Hazards and Perils o Solar Trackers

Wind Power

• U.S. Onshore Wind Resource Potential • U.S. Wind Capacity • Installed Wind Across the U.S. in MW • Small Wind vs. Large Wind

o Wind Turbine Size o How Are Wind Turbines Measured?

• U.S. Small Wind Power Growth

o Barriers to Small Wind Growth o Small Wind Turbines End Users

• Wind Turbine Overview • Small Wind Turbines • Wind Turbine System Additional Components • Advancements in Technology - Tilt-Down Tower Design • Towers, Turbulence & Durability • Small Wind Turbine Types

o Examples • Wind Turbine Power Generation

o Farm Applications Additional Insurance Issues

• Wind Turbine – Loss Experience • Wind Turbine – Equipment Breakdown Exposures • Wind Turbine Property Exposures • Small Wind Turbine Insurance Considerations

o Property Exposure – Fire o Lightning

• Wind Hazards and Perils o Foundation Cracking o Loss Examples

• Wind Farm on Farmers Property Exposures o Contractual Exposures o Indirect Exposures (Wind or Solar)

Typical Loss Control Recommendations

• Basic Maintenance Objectives • Keys to Reducing Exposure • Insurance & Underwriting Considerations

Q & A

RENEWABLE POWER EXPOSURES -WHAT CAN GO WRONG?

July 25, 2013Ron Behrens, HSB

Agenda

1. Basic Energy Terminology

2. Renewable Energy Incentives

3. Solar Power

Photovoltaic or Thermal

Key components

Insurance Considerations

4. Wind Power (Small)

Key components


5. Typical Loss Control Recommendations

2013 NAMIC Agricultural Risk Inspection School - Behrens Page 1 of 37

Renewable Energy

Source: UTCPowerPhoto Courtesy DOE/NREL

Source: U.S. Department of EnergySource: Capstone Turbine Corp.

Photo Courtesy DOE/NREL

It’s Headed Your Way

Geothermal

Wind

Microturbines

Fuel Cells

Solar

BASIC ENERGY TERMINOLOGY


Electrical Power

Units of Power

Watt (W) 1

Kilowatt (kW) 1,000

Megawatt (MW) 1,000,000

Gigawatt (GW) 1,000,000,000

Units of Power

Watt (W) 1

Kilowatt (kW) 1,000

Megawatt (MW) 1,000,000

Gigawatt (GW) 1,000,000,000

Terminology

Electrical Power

Units of Energy

Watt-hour (Wh)

Kilowatt-hour (kWh)

Megawatt-hour (MWh)

Units of Energy

Watt-hour (Wh)

Kilowatt-hour (kWh)

Megawatt-hour (MWh)

Terminology

× =


Clean

Generates no harmful emissions – can be fossil

Clean

Generates no harmful emissions – can be fossil

Electrical PowerTerminology

Alternative Energy

Non-fossil fuel based

Alternative Energy

Non-fossil fuel based

Renewable Energy

Fuel sources never depleted or constantly renewed

Renewable Energy

Fuel sources never depleted or constantly renewed

Green Energy

Renewable and environmentally preferable

Green Energy

Renewable and environmentally preferable

System Configurations

Stand-Alone System

8© 2012 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

DC Interfaceand Regulation

Battery Bank

Load (DC)

PV Module

Source: http://www.1.eere.energy.gov

Farm water pump PV system


Equipment may be installed as stand-alone or connected to the utility grid, requiring approval of the utility. Technical and other requirements vary state by state, as do metering arrangements

Grid Integration

Grid-Connected Systems

Source: USDOE

Wind

Wind Turbine

Meter

InverterAC Load

A hybrid system combines several types of systems, such as a wind system with a solar and/or diesel engine-generator, and can provide reliable off-grid power around the clock.

Source: USDOE

Hybrid Power System

Hybrid Power Systems – Off-Grid

Combine multiple sources to delivernon-intermittent electric power

PV Modules

Wind

Wind Turbine

Battery Bank

AC or DC

Load

Generator (Farmer-Owned)

Regulationand Conversion


RENEWABLE ENERGY INCENTIVES

Incentives

Fuel Costs RisingFuel Costs Rising

Rising Energy DemandRising Energy Demand

Available TechnologyAvailable Technology

Aging of the GridAging of the Grid

Global Climate ChangeGlobal Climate Change

Why Now?


Financial Incentives

Production Tax Credit (PTC) renewed through 2013

Investment taxcredits = 30%

Modified Accelerated Cost Recovery (tax deduction)

50% depreciation bonus (tax deduction)

Federal grant programs

Federal loan guarantees

Production Tax Credit (PTC) renewed through 2013

Investment taxcredits = 30%

Modified Accelerated Cost Recovery (tax deduction)

50% depreciation bonus (tax deduction)

Federal grant programs

Federal loan guarantees

Federal

Financial Incentives

Renewable Portfolio Standards (RPS)

Renewable Energy Certificates (RECs)

Feed-in-Tariff (FiT)

Net Metering

State and/or Utility Loan Programs

http://www.dsireusa.org

Renewable Portfolio Standards (RPS)

Renewable Energy Certificates (RECs)

Feed-in-Tariff (FiT)

Net Metering

State and/or Utility Loan Programs

http://www.dsireusa.org

State


SOLAR POWER

Solar Radiant/Intensity Map


Solar Power

Solar Thermal

Hot Water

Electricity (large scale)

Solar Thermal

Hot Water

Electricity (large scale)

Two Types of Solar Power

Solar Photovoltaic Solar Photovoltaic

Solar Thermal Heating

Collector Types

Flat Plate

Integral Collector-Storage (ICS)

Evacuated-Tube

Active Systems

Pumps

Direct vs.. Indirect Circulation

Passive Systems

No Pumps

Natural Circulation

Collector Types

Flat Plate

Integral Collector-Storage (ICS)

Evacuated-Tube

Active Systems

Pumps

Direct vs.. Indirect Circulation

Passive Systems

No Pumps

Natural Circulation

Solar Water Heating Panels. Courtesy of DOE/NREL


Thermal Solar Systems & Power PlantsSun’s Radiation Energy is Converted into Heat

HVAC Collector Systems

Use of air or water to transfer heat

HVAC Collector Systems

Use of air or water to transfer heat

Parabolic Trough Systems

Most proven & deployed

Parabolic Trough Systems

Most proven & deployed

Solar Power Towers

More efficient vs. trough systems

Better energy storage capability

Solar Power Towers

More efficient vs. trough systems

Better energy storage capability

Source: Stiebel Eltron GmbH & Co. KG

1. Collector2. Solar control3. Hot-water store4. Follow-on heating with a heater unit

Concentrating Solar Thermal (CST)

Windstorms

Impact

Hail, Flying Objects, Vandalism

Fire

Molten Salt Freeze

Theft

Windstorms

Impact

Hail, Flying Objects, Vandalism

Fire

Molten Salt Freeze

Theft

Property Exposures


On-the-farm solar thermal heating not widespread

More popular is Photovoltaic (PV); converts sunlight to direct current (DC)

PV-charged batteries operate: pumps, gates, lighting systems, security systems, portable electronic equipment, etc.

Unusual equipment – exposed to the elements

Farm Solar Power Applications

© 2012 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Solar Photovoltaic

Fixed vs.. Tracking

Rigid vs.. Flexible

Concentrating

Fixed vs.. Tracking

Rigid vs.. Flexible

Concentrating

Overview


Solar Photovoltaic

Overview Cost Depends of Size: Residential: $5 -$6 per wattCommercial: $4 per wattUtility: $2.40 per watt

Output: 15 W/ft²

Size: Farm/Residential: 4-10 kWRooftop: 200 kW to 5 MWUtility: 10 MW to 100 MW+

Inverter

Cost: US $4,000/kWLife: 10–12 years

Cost Depends of Size: Residential: $5 -$6 per wattCommercial: $4 per wattUtility: $2.40 per watt

Output: 15 W/ft²

Size: Farm/Residential: 4-10 kWRooftop: 200 kW to 5 MWUtility: 10 MW to 100 MW+

Inverter

Cost: US $4,000/kWLife: 10–12 years

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

UtilityNon-ResidentialResidential

Solar Photovoltaic

Installations


Solar Photovoltaic

Inverter (power conditioning unit) –convert DC electricity to AC

Panel mount – keep the panel oriented toward the sun

Combiner boxes –consolidates strings

Storage – store extra energy (batteries)

Disconnects, fuses, and diodes

Inverter (power conditioning unit) –convert DC electricity to AC

Panel mount – keep the panel oriented toward the sun

Combiner boxes –consolidates strings

Storage – store extra energy (batteries)

Disconnects, fuses, and diodes

Components

PV HardwareInverter (PCU)

26 © 2012 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Large Inverter Microinverter

Used to convert DC to AC

Should be at least 90% efficient

10-year life expectancy

Microinverter alternative

Photos Courtesy of DOE/NREL


PV Panels

Proven technology

Commercially used

13–19% efficient

Proven technology

Commercially used

13–19% efficient


Selection of Modules Photo Courtesy of DOE/NREL

Building Integrated PV (BIPV)

PV systems are being integrated into building components and materials

PV integrated into building awnings, windows, and rooftop shingles

PV systems are being integrated into building components and materials

PV integrated into building awnings, windows, and rooftop shingles


Shingles

Awning

Windows

Photos Courtesy of DOE/NREL


Energy Storage

Battery banks

Mainly used in stand-alone systems

Additional hardware required

Charge controller

Battery banks

Mainly used in stand-alone systems

Additional hardware required

Charge controller


Battery Bank Installations

Photo Courtesy of DOE/NREL

Concentrated Solar Power (CSP)

Concentrating Solar Photovoltaic (CPV)

Uses mirrors, parabolic dish systems, or Fresnel lenses to concentrated sunlight onto a high-efficiency PV cell


Uses mirrors, parabolic dish systems, or parabolic trough systems to heat a working fluid which is then used to generate electricity

Concentrating Solar Photovoltaic (CPV)

Uses mirrors, parabolic dish systems, or Fresnel lenses to concentrated sunlight onto a high-efficiency PV cell


Uses mirrors, parabolic dish systems, or parabolic trough systems to heat a working fluid which is then used to generate electricity

Configurations


Two primary concentrating solar

technologies

Photovoltaic Concentrator

Two primary concentrating solar technologies

Photovoltaic Concentrator


Solar Photovoltaic

Inverter

Impact Damage

Wind Damage

Fire Loss Potential

Roof Penetrations

Lightning

Inverter

Impact Damage

Wind Damage

Fire Loss Potential

Roof Penetrations

Lightning


Solar Hazards and Perils

32

Example of Snow Exposure


Solar Trackers

Pinion gear missing/sheared.

Pinion gear missing/sheared.

Failure of axis drive machinery

WIND POWER


Wind Power

US Onshore Wind Resource Potential

Data Source: AWS Truewind, LLC, for windNavigator® for the National Renewable Energy Laboratory

U.S. Wind Capacity

Megawatt

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

7/1/2013 36© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.


Installed Wind Across the US in MW

37© 2012 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Small Wind vs. Large Wind


70 ft, 1.8 kW Wind Turbine 224 ft, 1,000 kW Wind TurbinePhoto Courtesy of DOE/NREL


50 ft

301 ft

Wind Turbine Size

Small Wind vs. Large Wind

How are Wind Turbines Measured?

Size = OutputSmall Wind is 100 kW

Size = OutputSmall Wind is 100 kW


0

5,000

10,000

15,000

20,000

25,000

30,000

Small Wind UnitsSold

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

7,303 small wind turbines sold in U.S. in 2011

80% were manufactured in U.S.

© 2012 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved. 41

2,1003,1003,2004,6714,3248,3309,102

10,3869,8207,8117,303

2,1003,1003,2004,8783,2858,5659,748

17,37420,37525,61819,033

(not avail.)(not avail.)(not avail.)

1,7191,1053,5814,3057,3519,096

13,92211,498

Year Units kW Sales, US, $k

Growth of U.S. Small Wind Market

Source: American Wind Energy Association (AWEA)

20012002200320042005200620072008200920102011

Zoning

Performance

Supply chain

National net metering policy

Permitting and regulations

Fossil fuel prices

Intermittent power generation

Energy storage as a solution?

Back-up power generation?

Zoning

Performance

Supply chain

National net metering policy

Permitting and regulations

Fossil fuel prices

Intermittent power generation

Energy storage as a solution?

Back-up power generation?

Barriers to Small Wind Growth



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 and battery chargers (

Overview

Small Wind Turbines

Blades

Tail

Nacelle

Tower

Generator

Rotor

Shaft


Wind Turbine System Additional Components

Foundation Gearbox Power control

Blade pitch Yaw (orientation

to the wind)

Transformer

Power Electronics

Foundation Gearbox Power control

Blade pitch Yaw (orientation

to the wind)

Transformer

Power Electronics

46



Small Wind Turbines

Installed cost range is $2,300/kW to $10,000/kWAverage is $6,300/kW

Types:

Direct Drive

Gear Box

AC vs. DC

Upwind vs. Downwind

Size: up to 100 kW

Installation:

Free Standing vs.. Guyed

Installed cost range is $2,300/kW to $10,000/kWAverage is $6,300/kW

Types:

Direct Drive

Gear Box

AC vs. DC

Upwind vs. Downwind

Size: up to 100 kW

Installation:

Free Standing vs.. Guyed

Overview


Advancements in TechnologyTilt-Down Tower Design

48

Tilt-up tower in the normal operating position

Tilt-up tower in the lowered position formaintenance or hurricanes



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 turbulentwind shear


Wind TurbulenceWind Turbulence 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 Direction2H

Source: Home Power magazine

Horizontal Axis Wind Turbine (HAWT):

Requires smooth wind

Requires a tail or yaw control

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 and bird friendly

Current limited capacity

Vertical Axis Wind turbine (VAWT):

Functions in shifty wind

Functions in gusty wind

Quiet and bird friendly

Current limited capacity


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 AxisWind Turbine(VAWT)

Vertical AxisWind Turbine(VAWT)

Mariah 1.2 kW Windspireresidential turbine

Wind Turbine Power GenerationFarm Applications – Responsibilities and Liabilities


Who owns the equipment ?

Owner / Operator

Lease

No ownership by Farmer

Who owns the footprint/land ?

Owner / Operator

Lease with production %

Lease with no production

Who owns the equipment ?

Owner / Operator

Lease

No ownership by Farmer

Who owns the footprint/land ?

Owner / Operator

Lease with production %

Lease with no production


Wind Turbine Power GenerationFarm Applications


Far too many “do-it-yourself” installations

Too many “marginal” manufacturers & installers

Many “pole mounted” and “roof top” units seem to have serious issues

Far too many “do-it-yourself” installations

Too many “marginal” manufacturers & installers

Many “pole mounted” and “roof top” units seem to have serious issues



Photo Courtesy of USDA

Additional insurance issues:

Unusual machinery and electrical equipment

Outside contractors

Business interruption and grid obligations

Liability ?? – electrical, noise, FOD, ice, etc.

Additional insurance issues:

Unusual machinery and electrical equipment

Outside contractors

Business interruption and grid obligations

Liability ?? – electrical, noise, FOD, ice, etc.


Image 16177 Courtesy DOE/NREL

16 135

25

0

5

10

15

20

25

Lightning Breakdown Wind Damage Unknown

Cause of Loss, %

2722

125 4

048

1216202428

Gearbox Blade Generator MEA Transformer

Cause by Component, %

Wind Turbine – Loss Experience

Note: These losses were for mostly large wind turbines

Wind Turbine Equipment Breakdown Exposures

56

3.5 kW


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

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


Wind Turbine Property Exposures

Weather

Icing/hail

High winds

Lightning

Earth movement and flood

Weather

Icing/hail

High winds

Lightning

Earth movement and flood

57

Small Wind Turbine

Maintenance

Size

Fire

Vandalism

Theft

Tower Collapse

Maintenance

Size

Fire

Vandalism

Theft

Tower Collapse




Property Exposures – Fire

59

Lightning

60


Wind Turbine

Loss Cause: 25% “Unknown”.

Series losses with blades and gear sets result from design, workmanship, and construction

Older units now obsolete and out of production

Loss Cause: 25% “Unknown”.

Series losses with blades and gear sets result from design, workmanship, and construction

Older units now obsolete and out of production

Considerations

61


Very expensive repair or replacement

Special expertise required

Special crane(s)

Very expensive repair or replacement

Special expertise required

Special crane(s)



Wind Hazards and Perils

63

Example of foundation Cracking

Wind Turbine Power GenerationLoss Example



Wind Turbine Power GenerationLoss Example


Wind Farm on Farmer’s Property.Exposures?


1,600 kW



Contractual Exposures

Time element exposures

Contingent exposures

Power company contracts

Service and maintenance agreement

Monitoring agreement

Jurisdictional incentive contracts

Time element exposures

Contingent exposures

Power company contracts

Service and maintenance agreement

Monitoring agreement

Jurisdictional incentive contracts

67

Know your contractual exposures!

Indirect Exposures(Wind or Solar)

Additional cost to purchase power

Utility Penalty?

Is there a “Power Purchase Agreement”?

Renewable Energy Certificates

Who owns the equipment?

Additional cost to purchase power

Utility Penalty?

Is there a “Power Purchase Agreement”?

Renewable Energy Certificates

Who owns the equipment?

Business Interruption


TYPICAL LOSS CONTROL RECOMMENDATIONSFOR WIND AND SOLAR EQUIPMENT

Basic Maintenance Objectives

Clean Cool

Dry Tight

KeepEquipment



Keys to Reducing Exposure

Experienced installers

Established manufacturers

No experimental, prototype

New equipment under warranty

Some sort of service agreement, regular inspection

Equipment is visible and accessible

Properly designed for climate (temperature, lightning, wind)

Experienced installers

Established manufacturers

No experimental, prototype

New equipment under warranty

Some sort of service agreement, regular inspection

Equipment is visible and accessible

Properly designed for climate (temperature, lightning, wind)

Manufacturer & model

Manufacturer & model Size (kW output)Size (kW output) Number of unitsNumber of units

Age(retrofit date?)

Age(retrofit date?)

WarrantyWarrantyService &

maintenance agreement

Service & maintenance agreement

Monitoring agreementMonitoring agreement

Loss history (serial loss

issues)

Loss history (serial loss

issues)Tower heightTower height TIV & valueper unit

TIV & valueper unit

Business Income & Extra ExpenseBusiness Income & Extra ExpenseAnnual power

productionValue

per unit

Insurance & Underwriting Considerations


QUESTIONS

THANK YOU VERY MUCH FOR YOUR ATTENTION25 July 2013Ron Behrens, HSB


Renewable Power Exposures – What Can Go Wrong?

Recommended Resources

www.dsireusa.org

www.awea.org

DSIRE: Summary of Net Metering Policies in the U.S.

www.irecusa.org

The Impact of Rate Design and Net Metering on the Bill Savings from Distributed

PV for Residential Customers in California, Naïm Darghouth, Galen Barbose, and

Ryan Wiser, Lawrence Berkeley National Laboratory, April 2010.

www.gracelinks.org/835/energy-program

www.hsb.com

http://www.dsireusa.org/http://www.awea.org/http://www.dsireusa.org/incentives/index.cfm?SearchType=Net&&EE=0&RE=1http://www.irecusa.org/http://eetd.lbl.gov/ea/EMS/reports/lbnl-3276e.pdfhttp://eetd.lbl.gov/ea/EMS/reports/lbnl-3276e.pdfhttp://www.gracelinks.org/835/energy-programhttp://www.hsb.com/

Behrens FINALBehrens FINALSession Outline

Behrens FINAL

renewable power exposures – what can go wrong? · systems better energy storage capability...

Documents