GCube: Most Financial Losses Are Down to the Subsea Wire
Incidents relating to the installation and operation of high voltage subsea cables are the most costly cause of financial losses in the global offshore wind industry and led to insurance claims totalling more than EUR 60 million in 2015, according to a report by GCube Underwriting Ltd.
As the European offshore wind sector prepares to enter an extended phase of deep-water construction and new markets open up in North America and Asia, it is crucial that the industry starts to address a problematic bottleneck that can cause 100 days or more of unscheduled project delays and create substantial cost overruns, GCube said.
On average, at least 10 subsea cable failures are declared to insurers each year in the offshore wind sector. While this frequency is low, the financial severity of these incidents upon developers, project owners and offshore transmission owners (OFTOs) continues to grow – such that they account for 77% of the total global cost of offshore wind farm losses.
Managing this financial impact will be essential if the industry is to meet increasingly stringent cost reduction targets and maintain its appeal to the international investment community.
In its report, titled Down to the Wire: An Insurance Buyer’s Guide to Subsea Cabling Incidents, GCube explores the causation, financial impact and mitigation of subsea cabling incidents.
The report finds that two-thirds of cable faults recorded in GCube’s claims database can be attributed to contractor error during the installation phases, even if these do not manifest until the wind farms are operational.
This highlights a growing requirement, not only to ensure quality control during cable laying, but also to create more effective communications channels and improve data collection procedures, GCube said.
“It’s striking just how often subsea cabling incidents in offshore wind can be traced back to human error,” said Jatin Sharma, Head of Business Development, GCube, and author of Down to the Wire.
“Cable installation techniques and monitoring technology are continuing to evolve as the industry looks to address this challenge – however recurring losses are still commonplace, and the number of ‘repeat offenders’ is a source of concern for the insurance industry. Ultimately, when it comes to sharing lessons learnt, there’s no substitute for full transparency and consistent dialogue between project teams and the industry at large. A behavioural shift may be needed when it comes to the risk/reward balance developers agree in supply and installation contracts. In an industry aggressively driving down costs, there is clearly not enough margin for contractors to try and improve.”