As demand for wind turbines grows, take steps to mitigate risk
From California to New York, wind turbine farms are popping up all over the country. The United States is second only to China in terms of installed wind power capacity, and the demand is increasing. Georgetown, Texas, with a population of 50,000 people, will be the first city in the Lone Star state to be completely powered by renewable energy. Why? Because, according to a U.S. Energy Department analysis, wind power will be less expensive than electricity produced from natural gas within the next 10 years, even without a federal tax incentive.
Wind farms provided 4.5 percent of U.S. power supplies in 2013. If that number increased to 35 percent by 2050, power prices would decrease and result in $400 billion in benefits related to reduced emissions of greenhouse gases, Bloomberg reports. Additional benefits include reduced water consumption by the power industry, 600,000 new jobs, and a drop in air pollution.
The Obama administration has asked for a permanent extension of the federal production tax credit that has helped the U.S. become a world leader in wind energy. The American Wind Energy Association is confident that the permanent extension of the credit will provide stability for farm developers and for the wind industry in the long term.
There are two types of insurance to consider when it comes to mitigating risk on a wind farm project: business interruption and property all-risk. The former covers loss of revenue resulting from a covered physical damage loss. Production tax credits should be calculated into the business interruption value as a revenue source. As there are a variety of turbine manufacturers in the field, it is difficult to compare claims, but it’s important to ensure you have the proper business interruption insurance in place to cover lost revenue during the repair of an insurable event. Property all-risk insurance covers fire, theft, water, and other natural disasters, including repair of the turbines and components in the event of mechanical or electrical breakdown.
About the Author
Molly Lovelette is an Assistant Vice President at WGA in the Property and Casualty Group, with a specialized focus in energy and construction policies in WGA’s Renewable Energy and Clean Tech Practice. She serves the day-to-day needs of numerous energy clients, including independent power producers, owner-operators and manufacturers in the wind, solar, landfill gas, waste-to-energy and fossil fuel industries.