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Risk Mitigation in Wind Power Projects, Part I: An Insurer’s View

Reg Tucker

At the recent WINDPOWER 2014 Conference & Exhibition, Renewable Energy Focus magazine sat down with Travelers’ Scott Foyer, national practice leader, and Peter Wilcox, technical director, to discuss the issue of risk management and mitigation. Following are excerpts of that interview:

REFocus: What are some of the most critical aspects that plant operators should consider when trying to mitigate risk when executing wind power projects?

Scott Foyer: From a construction standpoint, the main concern you might have is in the actual erection of the wind turbines (i.e., making sure the cranes are able to properly execute the lifts). Beyond the nacelle and the blades, you also have the various components of the tower, which all have to be put in place. If you don’t have a trained crane operator, then it’s not going to go well.
You also have to be mindful of the surrounding conditions. For example, if the winds are too high, then you should wait until it subsides. You also have to have proper pads in place to ensure that the crane won’t tip.
All these things are critical in guarding against losses during the erection of the turbine.
Peter Wilcox: And with that there needs to be oversight by a project manager over that crane operator. Although the crane operator may be certified, we [as an insurer] want management to be there to make sure that they shutdown, that they’re doing the proper inspections, and that the crane is sitting where it’s supposed to be sitting. Keep in mind that a crane can tip over if the crane pad is off by only a foot or so.
Along with the cranes comes the transportation of those cranes. In the industry where we see the most losses is the transportation aspect; there’s a lot of preparation that goes into moving the crane. Then, once it’s moved, you have to worry about the drivers who are hauling the various crane components. The industry has the “lift” aspect pretty much nailed down, but you have to consider all of the other considerations that go into it. (You could have 14 trailers loads for the typical lattice boom crane that’s on the site.) All the risk management goes to: Who’s driving the truck and how do we make sure all of my parts get back and forth safely between job sites.

Foyer: We’ve actually seen those types of losses, where the crane is transiting within pads. When you have a crane, which is rented in most cases, time is money so the operators are trying to move it along between the pads as quickly as possible in order to make those lifts. Therein lies the danger — sometimes if you push it you can make mistakes.
Wilcox: Beyond the cranes and the workers, wind farm operators and developers also need to take ‘quality controls’ into account. In other words, taking a closer look at the people they are hiring to perform those services. This all starts with sub-contractor selection and ensuring that people understand the specifications of how they’re supposed to be testing the various systems in place. During our claim activity, we’re finding that people are not fully aware of their specific duties and responsibilities when it comes to the issue of quality control and testing systems. (You can have issues like wire failures underground or problems up-tower, etc.) It’s about defining who’s responsible and then holding people accountable. That’s one of the most critical aspects of risk management.
REFocus: What are some of the actions that Travelers are taking, in advance of the claims stage, to minimize some of these issues you’re seeing in the field?

Foyer: For starters, we ask for details about the crane operator, i.e., their qualifications and experience. We also ask project managers about the specific controls that they may or may not have in place on the site.
Travelers also offers a crane training class to help clients pass the NCCCO written exam. The 40-hour class teaches operators the essentials — how to read load charts, etc.
Wilcox: We also ask for specifics on sub-contractor selection — i.e., how did the project manager choose a specific company, whether it’s an electrician or an earth mover, etc. Of course, you need to look at a sub-contractor’s resume, but you also have to consider the contractor’s experience modification rate to see if workers are being injured on the site as well as how long those workers are unable to work as a result.  You also have to look at any OSHA violations, because these will give you a ‘snapshot’ in time.
More importantly, it’s good practice to have the contractor explain their controls to you during the interview process. So many times I see the various parties throw safety manuals back and forth, but the problem is no one ever really looks at them. It’s not enough to ask contractors to provide a written controls program; instead, have them verbally describe the controls that are in place so that you [the operator] feel comfortable in knowing that the contractor fully understands his own safety program.
For example, putting a harness on a technician is not ‘fall protection,’ per se; that’s just catching you when you fall! The key to effective risk management is taking that proactive approach to defining what the action is as opposed to just saying, ‘OSHA says you have to do this…’ When it comes to instituting safety controls on the job site, it’s more about what your operation expects as a company and that the workers go home every day with all their fingers and toes intact. Then it becomes a personal approach to the workers under your supervision.
Foyer: Going back to the transportation issue, you need to take into account the movement of all this heavy, expensive equipment to the site. A lot of the wind turbine manufacturers [out there] are shipping in parts to the US from overseas. When all that equipment arrives in the States it requires inland transit and then it must be off-loaded. During that transit, damage can occur and this causes delays in the project. That holds true for the transformer or for any other critical part of the wind farm. For us, the critical part is establishing who is liable for the condition of the equipment once ownership changes hands.
In terms of risk mitigation, this is important in terms of exposure. Travelers’ policies often cover this. From a mitigation standpoint, we (the insurer) want to know who ultimately has the responsibility.
That’s why it’s so important that the operator picks the right logistics firm with a lot of experience in this type of work. They have the special trailers to transport the blades to the site. What’s more, a good transportation company will conduct a tour to the site prior to the delivery of the equipment. For example, you can’t make 90-degree turns if you’re carrying 130-foot blades, so you need to be familiar with the routes. Transporters have to be so cautious about how they plan to deliver the equipment to the site.
REFocus: Are these issues some of the more common examples you come across in investigation claims?
Foyer: Oh, yes. We read about loss cases coming out of the transit area in particular. This is especially true with the transport of the blades through tight areas. Drivers, in their attempts to make turns, often cause damage to the blades they are transporting.
REFocus: From an insurance claims perspective, how does the wind power industry stack up to the other categories or industry sectors?

Wilcox: In the wind industry, it’s not the frequency of claims as much as it is the severity of the claims. For instance, a wind turbine blade damaged by lighting could result in a $500,000 claim. And that’ just the damage to the blade itself — not any loss of income that may have resulted from the lack of activity.
Foyer: Naturally, when you’re installing expensive equipment 200 feet in the air — as is the case with wind turbines — then it becomes more expensive to fix, as opposed to a power-generating plant on the ground.
REFocus: What are some of the other ‘exposure’ risks related to construction of the wind turbines?

Foyer: Storage, definitely. In most cases, operators are going to store much of this equipment prior to installing it on the job site. There are exposures hazards due to high winds (blades are ‘sails,’ after all). That’s why it’s important to secure the blades in storage using the shipping hardware provided.
There’s also the issue of theft of equipment on the job site — not necessarily the wind turbine blades themselves, but the copper and cables utilized in the installation. They’re worth a lot of money, and can ‘walk away’ if not properly secured.
Wilcox: That’s why we highly recommend that a stationary guard be paired up with a roving guard on the job site. The two guards could then report back to one another to guard against theft.  

Editor’s note: In Part II of this feature: Wilcox and Foyer discuss wind power plant risk mitigation from the “operational” side.      

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Energy infrastructure  •  Policy, investment and markets  •  Wind power




24 July 2014
Excellent. Very useful for Wind Energy Project investors.
Dr.A.Jagadeesh Nellore(AP),India

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