DAILY NEWS Dec 21, 2012 11:44 AM - 0 comments

ACE report warns of risks for renewable energy power plants

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ACE Ltd.’s insurance retail division announced this week it published a white paper on the risks faced by operators of renewable energy plants.

Renewable energy includes electricity produced by sources such as solar, wind, water, biomass and geothermal.

“Operations can range from relatively modest biodiesel plants to massive waste-to-energy facilities,” wrote Darren Small, vice president and underwriting manager of Philadelphia-based ACE USA’s national custom casualty energy business. The facilities “tend to be complex and may entail a winder range of risks than anticipate.”

These risks can include transport, construction, liabilities to third parties, liabilities to employees, environment-related liability, fire and business interruption, according to the white paper, titled Renewable Energy: The Right Risk Partner Makes the Difference.

For example, Small wrote, “if a transformer that is fed by many wind turbines fails, the impact on the business can be devastating.”

With wind turbine power plants, Small added, most risk assessments focus on the major mechanical components, such as the gearboxes, cables and nacelles.

“But operators should not ignore the risks to less obvious areas such as foundations, or the dangers that ice, lightning and tornadoes pose to such tall structures.”

With solar power plants, risks can include the “high combustibility of heat transfer fluids, hailstorms, theft or problems with reflector alignment,” according to the white paper.

Another major category of renewable energy is biomass, and Small notes the process is sometimes carried out, as a substitute fuel, at coal-burning plants.

The end product is combustible, and “the cost of systems to  control the high fire risks are often perceived to be disproportionate to the plant costs, something that can pose a problem to the operator and insurer alike.”

ACE Renewable Energy specializes in property and casualty insurance products for energy companies. ACE Ltd. provides commercial and personal property and casualty insurance, reinsurance, plus health and life.

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