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Managing risk in wind power projects

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42 July/August 2014 | Renewable Energy Focus

focus:Interview | Travelers Insurance

Managing risk in wind power projects

AT THE recent WINDPOWER 2014 Con-

ference & 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:

REF: 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 we 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 compo-

nents of the tower — all of which 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 exam-

ple, 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 proj-

ect manager over that crane opera-

tor. Although the crane operator may

be certifi ed, 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 sup-

posed 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 mov-

ing the crane. Then, once it’s moved,

you have to worry about the driv-

ers 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 trailer 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 ser-

vices. This all starts with sub-contrac-

tor selection and ensuring that people

understand the specifi cations of how

they’re supposed to be testing the

various systems in place. During our

claim activity, we’re fi nding that peo-

ple are not fully aware of their spe-

cifi c duties and responsibilities when

it comes to the issue of quality control

and testing systems. (You can have

issues such as wire failures under-

ground or problems up-tower, etc.)

It’s about defi ning who’s responsible

and then holding people accountable.

That’s one of the most critical aspects

of risk management.

REF: What are some of the actions that Travelers Insurace Company is taking, in advance of the claims stage, to minimise some of these issues you’re seeing in the fi eld?

Foyer: For starters, we ask for

details about the crane operator, i.e.,

their qualifi cations and experience.

We also ask project managers about

the specifi c controls that they may

or may not have in place on the site.

Travelers also off ers 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 specifi cs

on sub-contractor selection — i.e., how

Ensuring the cranes are able to properly execute the turbine lifts on the construction site is paramount.

REF0414_Focus_Interview_Travelers 42 07-08-2014 16:02:50

43July/August 2014 | Renewable Energy Focus

Interview

About: Scott Foyer is national practice leader at Travelers; Peter Wilcox serves as the insurance company’s technical director.

did the project manager choose a spe-

cifi c company, whether it’s an electri-

cian 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 modifi ca-

tion 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 prac-

tice to have the contractor explain

their controls to you during the inter-

view 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 con-

trols that are in place so that you [the

operator] feel comfortable in knowing

that the contractor fully understands

his own safety program.

Foyer: Going back to the trans-

portation issue, you need to take into

account the movement of all this

heavy, expensive equipment to the

site. A lot of the wind turbine man-

ufacturers [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 estab-

lishing 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 fi rm,

preferably a company 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 carry-

ing 130-foot blades, so you need to be

familiar with the routes. Transport-

ers have to be so cautious about how

they plan to deliver the equipment to

the site.

REF: 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 dam-

aged by lighting could result in a

$500,000 claim. And that’s 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 fi x, as opposed

to a power-generating plant on the

ground.

REF: What are some of the other ‘exposure’ risks related to construction of the wind turbines?

Foyer: Storage, defi nitely. 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 nec-

essarily the wind turbine blades them-

selves, but the copper and cables

utilised in the installation. They’re

worth a lot of money, and can ‘walk

away’ if not properly secured.

REF: What are the main issues to consider regarding exposures on the operational side?

Foyer: Maintenance becomes an

issue the longer a wind farm is in

operation, especially as some of the

warranties expire on the older sys-

tems. Consequently, if a system is

not properly maintained, then it will

break down and subsequently shut

off the income stream. We’re not only

talking about “preventative” mainte-

nance but also “predictive” mainte-

nance, which comes from condition

monitoring. This allows the owner to

know that there are potential wear

items that require attention. Using

predictive maintenance, the operator

can replace some of those parts prior

to failure. In short, it’s about making

sure you are planning for budgeting,

maintenance and repair.

Wilcox: This approach not only

applies to the turbine, but also the

main power transformer in the sub-

station. The operators should be doing

condition monitoring on those sys-

tems as well, because that’s your pinch

point. If you lose that main trans-

former, then you’re not pushing any

power to the grid — and you’re losing

income.

REF: We’ve been talking primarily about risk mitigation as it pertains to onshore wind farms. What are some of the issues you’re seeing with off shore applications?

Wilcox: Although Travelers does

not insure off shore wind farm proj-

ects, we realise that you have to deal

with some of the same issues. That

being said, with off shore wind farms

being so far out, there’s more of an

emphasis on workers’ compensation

issues, for example: Is there prompt

medical care on site? What kind of

systems do operators have in place to

take care of workers, be it helicopters,

vessels, etc., or trained emergency

medical technicians to take care of

those situations? When you start

building plants in a remote location

— whether it’s on the ocean or on a

mountainside — these are provisions

that have to be in place all the time.

Another thing to consider as an

off shore wind farm ages is: will the

operator be able to get the spare parts

he needs for the turbine? Let’s be hon-

est; there have been some wind tur-

bine companies that have gone out of

business, and it served as a real wake-

up call to some of these owners. Those

successful wind farm operators who

have the appropriate resources will

get through just fi ne. The same can’t

be said for those operators who don’t

keep abreast of the manufacturers

and parts suppliers.

REF0414_Focus_Interview_Travelers 43 07-08-2014 16:02:51