The burgeoning potential of offshore wind as a pivotal source of clean energy for the global energy transition is unequivocal. A recent report, “A Turning Point for Offshore Wind,” by Allianz Commercial, a leading insurer of renewable energy and low-carbon technology solutions, underscores the remarkable growth opportunities and technological advancements within the offshore wind sector as it gears up for substantial global expansion.
Anthony Vassallo, Global Head of Natural Resources at Allianz Commercial, emphasized the complexity of offshore wind farm projects and the vital lessons derived from past losses, primarily relating to cable and turbine damage. These insights are crucial as the industry aims for sustainable growth amid emerging risks associated with evolving technologies, escalating turbine sizes, and harsher marine environments.
As the report highlights, more than 99 percent of the current global offshore wind installations are in Europe and Asia-Pacific, but China has surged ahead of Europe to become the world’s largest market in 2023. The US is also making significant investments in the sector. In 2022, the global installed capacity reached 64.3GW, with approximately 380GW of offshore capacity anticipated to be added across 32 markets over the next decade, according to the Global Wind Energy Council.
However, the path to realizing these ambitious growth goals is not without its challenges. Spiraling costs have stalled major wind projects, and the industry grapples with inflation, capital expenses, rising interest rates, geopolitical instability, supply chain bottlenecks, and permitting delays.
Cables have emerged as a top cause of claims in the offshore wind industry, constituting 53 percent of claims by value in Germany and Central Eastern Europe, a key offshore wind insurance market for Allianz Commercial, from 2014 to 2020. Turbine failure follows closely as a significant cause of claims.
The offshore wind sector is on the brink of disruptive tech innovations, from ‘energy islands’ to multi-purpose wind farms and drone-based maintenance. However, the increasing size of wind turbines poses a significant challenge, necessitating careful risk management.
Allianz Commercial is actively supporting offshore wind developments, both as an investor and an insurer, committing to a revenue growth of 150 percent for renewable energy and low-carbon technology by 2030 and €20 billion in additional investments for climate and clean-tech solutions.
The company is involved in about 100 wind farm and green energy projects globally, providing insurance coverage solutions across all stages of offshore wind development, construction, and operations.