As the summer approaches, and the first lockdowns across Europe and the US are hopefully eased, the renewable energy industry has started to look forward to returning to the record-breaking pace and scale of growth predicted for this decade. However, rather than ramping up activity in an attempt to make up for lost time, the industry must carefully manage risks to prevent unsustainable losses.
Wind and solar developers and EPC contractors in the US are placed under particular pressure to rush through construction in order to meet deadlines by the end of the year. While the House of Representatives has recently pushed for an extension of wind and solar tax credits, the status quo is that production tax credits for wind will end this year. Additionally, developers and contractors could face major penalties if contracted construction milestones and online dates are not met. This will put undue pressure on contractors to finish on time and inevitably mistakes will be made.
While it may be a fair assumption by the industry that force majeure could be triggered under some contracts due to Covid-19-related delays resulting in Business Interruption and any resulting Delay in Start-Up, unfortunately, many insurance policies do not cover disease outbreaks for force majeure if there is no direct, physical damage to assets. Without a way to cover the cost of not meeting contracted handover dates, contractors may be forced to cut corners to meet deadlines by any means necessary – increasing risk of major losses in both the short- and long-term if not carefully managed.
As ever, we are committed to sharing our knowledge of emerging market risks with our insureds, and this month, we will explore these additional risks the industry faces during a return to construction activity in our upcoming webinar, “The Changing Risk Landscape: Managing Rising Construction Pressures in US Renewables”. We hope you will join us as we discuss how project owners and EPCs can monitor and manage construction schedules to avoid quality issues in the post-lockdown scramble.
Over the past quarter, we have also explored the changing risk landscape for global offshore wind and the US solar industry in our webinars, which you can watch via our website.
It is increasingly clear that socially distanced ways of working and the reliance on digital networks to continue communications and operations, will continue for as long as there is still risk of a new outbreak. Our expert on cybersecurity risk for renewable energy, Geoff Taunton-Collins, provides in this interview his perspective on best-practice for safely operating online and protecting against the financial impact of cyberattacks.
Finally, in late May, we completed the acquisition by Tokio Marine HCC. I wrote in April how this acquisition will combine GCube’s track-record supporting renewables developers and asset owners worldwide with TMHCC’s global footprint and financial scale. We look forward to working with our new owner to scale up the GCube business on an international basis on all fronts and providing the industry with the the capacity it needs for the recovery ahead.
Enjoy this edition, and I look forward to updating you with our activity in the second half of the year.