Munich Re and a unit of Indian wind-turbine maker Suzlon Energy Ltd. signed the first deal to insure against “serial losses” of offshore machines as the world’s biggest reinsurer bets on gains from growth in renewables.
Munich Re insured Repower Systems SE turbines at a farm being built in the German North Sea and will pay to repair or replace faulty machines, the insurer said today in a statement. The company is also developing insurance against delays when installation vessels are held up by bad weather, it said.
“We seek to source a mid-sized three-digit million-euro amount in premiums with renewable energies in the coming years,” Gerd Henghuber, a Munich Re spokesman, said by phone.
European nations including Germany and the U.K. are leading the push to generate electricity offshore, harnessing relatively steady breezes in the North Sea, where waves may top 15 feet (5 meters) and winds gust at more than 90 miles (145 kilometers) an hour. Revenue from the projects, that need investments of about 1 billion euros, may be hurt by unfavorable weather, and changes in political support and subsidy levels available to developers.
“The mechanism allows Repower to cover potential losses of large projects, which is particularly important for projects using its new 6.15-megawatt turbine,” Sophia von Waldow, a Bloomberg New Energy Finance analyst, said today by e-mail. “We expect the product to increase overall investment security and make it easier to finance large offshore wind projects.”
The five-year cover includes retrofits carried out on units in which defective parts have been installed, even if no loss or damage has been sustained, according to Munich Re.
“Serial loss cover for offshore wind farms gives our customers certainty regarding the funding of major projects, and the insurance cover and the guarantee Munich Re provides with it testify to the quality of our wind energy units,” Repower Chief Financial Officer Marcus Wassenberg said in the statement.