- Email: [email protected]
Managing risk in wind power projects
focus:Interview |
Travelers Insurance
Ensuring the cranes are able to properly execute the turbine lifts on the construction site is paramount.
Managing risk in wind power projects
A
T THE recent WINDPOWER 2014 Conference & Exhibition, Renewable Energy Focus magazine sat down with Travelers’ Scott Foyer, national practice leader, and Peter Wilcox, technical director, to discuss the issue of risk management and mitigation. Following are excerpts of that interview: REF: What are some of the most critical aspects that plant operators should consider when trying to mitigate risk when executing wind power projects? Scott Foyer: From a construction standpoint, the main concern we have is in the actual erection of the wind turbines (i.e., making sure the cranes are able to properly execute the lifts). Beyond the nacelle and the blades, you also have the various components of the tower — all of which have to be put in place. If you don’t have a trained crane operator, then it’s not going to go well. You also have to be mindful of the surrounding conditions. For example, if the winds are too high, then you should wait until it subsides. You also have to have proper pads in place to ensure that the crane won’t tip. All these things are critical in
42
July/August 2014 | Renewable Energy Focus
guarding against losses during the erection of the turbine. Peter Wilcox: And with that there needs to be oversight by a project manager over that crane operator. Although the crane operator may be certified, we [as an insurer] want management to be there to make sure that they shutdown, that they’re doing the proper inspections, and that the crane is sitting where it’s supposed to be sitting. Keep in mind that a crane can tip over if the crane pad is off by only a foot or so. Along with the cranes comes the transportation of those cranes. In the industry where we see the most losses is the transportation aspect; there’s a lot of preparation that goes into moving the crane. Then, once it’s moved, you have to worry about the drivers who are hauling the various crane components. The industry has the
“lift” aspect pretty much nailed down, but you have to consider all of the other considerations that go into it. (You could have 14 trailer loads for the typical lattice boom crane that’s on the site.) All the risk management goes to: Who’s driving the truck and how do we make sure all of my parts get back and forth safely between job sites. Foyer: We’ve actually seen those types of losses, where the crane is transiting within pads. When you have a crane, which is rented in most cases, time is money so the operators are trying to move it along between the pads as quickly as possible in order to make those lifts. Therein lies the danger — sometimes if you push it you can make mistakes. Wilcox: Beyond the cranes and the workers, wind farm operators and developers also need to take ‘quality controls’ into account. In other words, taking a closer look at the people they are hiring to perform those services. This all starts with sub-contractor selection and ensuring that people understand the specifications of how they’re supposed to be testing the various systems in place. During our claim activity, we’re finding that people are not fully aware of their specific duties and responsibilities when it comes to the issue of quality control and testing systems. (You can have issues such as wire failures underground or problems up-tower, etc.) It’s about defining who’s responsible and then holding people accountable. That’s one of the most critical aspects of risk management.
REF: What are some of the actions that Travelers Insurace Company is taking, in advance of the claims stage, to minimise some of these issues you’re seeing in the field? Foyer: For starters, we ask for details about the crane operator, i.e., their qualifications and experience. We also ask project managers about the specific controls that they may or may not have in place on the site. Travelers also offers a crane training class to help clients pass the NCCCO written exam. The 40-hour class teaches operators the essentials — how to read load charts, etc. Wilcox: We also ask for specifics on sub-contractor selection — i.e., how
About: Scott Foyer is national practice leader at Travelers; Peter Wilcox serves as the insurance company’s technical director. Interview
did the project manager choose a specific company, whether it’s an electrician or an earth mover, etc. Of course, you need to look at a sub-contractor’s resume, but you also have to consider the contractor’s experience modification rate to see if workers are being injured on the site as well as how long those workers are unable to work as a result. You also have to look at any OSHA violations, because these will give you a ‘snapshot’ in time. More importantly, it’s good practice to have the contractor explain their controls to you during the interview process. So many times I see the various parties throw safety manuals back and forth but the problem is, no one ever really looks at them. It’s not enough to ask contractors to provide a written controls program; instead, have them verbally describe the controls that are in place so that you [the operator] feel comfortable in knowing that the contractor fully understands his own safety program. Foyer: Going back to the transportation issue, you need to take into account the movement of all this heavy, expensive equipment to the site. A lot of the wind turbine manufacturers [out there] are shipping in parts to the US from overseas. When all that equipment arrives in the States it requires inland transit and then it must be off-loaded. During that transit, damage can occur and this causes delays in the project. That holds true for the transformer or for any other critical part of the wind farm. For us, the critical part is establishing who is liable for the condition of the equipment once ownership changes hands. In terms of risk mitigation, this is important in terms of exposure. Travelers’ policies often cover this. From a mitigation standpoint, we (the insurer) want to know who ultimately has the responsibility. That’s why it’s so important that the operator picks the right logistics firm, preferably a company with a lot of experience in this type of work. They have the special trailers to transport the blades to the site. What’s more, a good transportation company will conduct a tour to the site prior to the delivery of the equipment. For example, you can’t make
90-degree turns if you’re carrying 130-foot blades, so you need to be familiar with the routes. Transporters have to be so cautious about how they plan to deliver the equipment to the site.
REF: From an insurance claims perspective, how does the wind power industry stack up to the other categories or industry sectors? Wilcox: In the wind industry, it’s not the frequency of claims as much as it is the severity of the claims. For instance, a wind turbine blade damaged by lighting could result in a $500,000 claim. And that’s just the damage to the blade itself — not any loss of income that may have resulted from the lack of activity. Foyer: Naturally, when you’re installing expensive equipment 200 feet in the air — as is the case with wind turbines — then it becomes more expensive to fix, as opposed to a power-generating plant on the ground.
REF: What are some of the other ‘exposure’ risks related to construction of the wind turbines? Foyer: Storage, definitely. In most cases, operators are going to store much of this equipment prior to installing it on the job site. There are exposures hazards due to high winds (blades are ‘sails,’ after all). That’s why it’s important to secure the blades in storage using the shipping hardware provided. There’s also the issue of theft of equipment on the job site — not necessarily the wind turbine blades themselves, but the copper and cables utilised in the installation. They’re worth a lot of money, and can ‘walk away’ if not properly secured.
REF: What are the main issues to consider regarding exposures on the operational side? Foyer: Maintenance becomes an issue the longer a wind farm is in operation, especially as some of the warranties expire on the older systems. Consequently, if a system is not properly maintained, then it will break down and subsequently shut off the income stream. We’re not only
talking about “preventative” maintenance but also “predictive” maintenance, which comes from condition monitoring. This allows the owner to know that there are potential wear items that require attention. Using predictive maintenance, the operator can replace some of those parts prior to failure. In short, it’s about making sure you are planning for budgeting, maintenance and repair. Wilcox: This approach not only applies to the turbine, but also the main power transformer in the substation. The operators should be doing condition monitoring on those systems as well, because that’s your pinch point. If you lose that main transformer, then you’re not pushing any power to the grid — and you’re losing income.
REF: We’ve been talking primarily about risk mitigation as it pertains to onshore wind farms. What are some of the issues you’re seeing with offshore applications? Wilcox: Although Travelers does not insure offshore wind farm projects, we realise that you have to deal with some of the same issues. That being said, with offshore wind farms being so far out, there’s more of an emphasis on workers’ compensation issues, for example: Is there prompt medical care on site? What kind of systems do operators have in place to take care of workers, be it helicopters, vessels, etc., or trained emergency medical technicians to take care of those situations? When you start building plants in a remote location — whether it’s on the ocean or on a mountainside — these are provisions that have to be in place all the time. Another thing to consider as an offshore wind farm ages is: will the operator be able to get the spare parts he needs for the turbine? Let’s be honest; there have been some wind turbine companies that have gone out of business, and it served as a real wakeup call to some of these owners. Those successful wind farm operators who have the appropriate resources will get through just fine. The same can’t be said for those operators who don’t keep abreast of the manufacturers and parts suppliers.
July/August 2014 | Renewable Energy Focus
43
Travelers Insurance
Ensuring the cranes are able to properly execute the turbine lifts on the construction site is paramount.
Managing risk in wind power projects
A
T THE recent WINDPOWER 2014 Conference & Exhibition, Renewable Energy Focus magazine sat down with Travelers’ Scott Foyer, national practice leader, and Peter Wilcox, technical director, to discuss the issue of risk management and mitigation. Following are excerpts of that interview: REF: What are some of the most critical aspects that plant operators should consider when trying to mitigate risk when executing wind power projects? Scott Foyer: From a construction standpoint, the main concern we have is in the actual erection of the wind turbines (i.e., making sure the cranes are able to properly execute the lifts). Beyond the nacelle and the blades, you also have the various components of the tower — all of which have to be put in place. If you don’t have a trained crane operator, then it’s not going to go well. You also have to be mindful of the surrounding conditions. For example, if the winds are too high, then you should wait until it subsides. You also have to have proper pads in place to ensure that the crane won’t tip. All these things are critical in
42
July/August 2014 | Renewable Energy Focus
guarding against losses during the erection of the turbine. Peter Wilcox: And with that there needs to be oversight by a project manager over that crane operator. Although the crane operator may be certified, we [as an insurer] want management to be there to make sure that they shutdown, that they’re doing the proper inspections, and that the crane is sitting where it’s supposed to be sitting. Keep in mind that a crane can tip over if the crane pad is off by only a foot or so. Along with the cranes comes the transportation of those cranes. In the industry where we see the most losses is the transportation aspect; there’s a lot of preparation that goes into moving the crane. Then, once it’s moved, you have to worry about the drivers who are hauling the various crane components. The industry has the
“lift” aspect pretty much nailed down, but you have to consider all of the other considerations that go into it. (You could have 14 trailer loads for the typical lattice boom crane that’s on the site.) All the risk management goes to: Who’s driving the truck and how do we make sure all of my parts get back and forth safely between job sites. Foyer: We’ve actually seen those types of losses, where the crane is transiting within pads. When you have a crane, which is rented in most cases, time is money so the operators are trying to move it along between the pads as quickly as possible in order to make those lifts. Therein lies the danger — sometimes if you push it you can make mistakes. Wilcox: Beyond the cranes and the workers, wind farm operators and developers also need to take ‘quality controls’ into account. In other words, taking a closer look at the people they are hiring to perform those services. This all starts with sub-contractor selection and ensuring that people understand the specifications of how they’re supposed to be testing the various systems in place. During our claim activity, we’re finding that people are not fully aware of their specific duties and responsibilities when it comes to the issue of quality control and testing systems. (You can have issues such as wire failures underground or problems up-tower, etc.) It’s about defining who’s responsible and then holding people accountable. That’s one of the most critical aspects of risk management.
REF: What are some of the actions that Travelers Insurace Company is taking, in advance of the claims stage, to minimise some of these issues you’re seeing in the field? Foyer: For starters, we ask for details about the crane operator, i.e., their qualifications and experience. We also ask project managers about the specific controls that they may or may not have in place on the site. Travelers also offers a crane training class to help clients pass the NCCCO written exam. The 40-hour class teaches operators the essentials — how to read load charts, etc. Wilcox: We also ask for specifics on sub-contractor selection — i.e., how
About: Scott Foyer is national practice leader at Travelers; Peter Wilcox serves as the insurance company’s technical director. Interview
did the project manager choose a specific company, whether it’s an electrician or an earth mover, etc. Of course, you need to look at a sub-contractor’s resume, but you also have to consider the contractor’s experience modification rate to see if workers are being injured on the site as well as how long those workers are unable to work as a result. You also have to look at any OSHA violations, because these will give you a ‘snapshot’ in time. More importantly, it’s good practice to have the contractor explain their controls to you during the interview process. So many times I see the various parties throw safety manuals back and forth but the problem is, no one ever really looks at them. It’s not enough to ask contractors to provide a written controls program; instead, have them verbally describe the controls that are in place so that you [the operator] feel comfortable in knowing that the contractor fully understands his own safety program. Foyer: Going back to the transportation issue, you need to take into account the movement of all this heavy, expensive equipment to the site. A lot of the wind turbine manufacturers [out there] are shipping in parts to the US from overseas. When all that equipment arrives in the States it requires inland transit and then it must be off-loaded. During that transit, damage can occur and this causes delays in the project. That holds true for the transformer or for any other critical part of the wind farm. For us, the critical part is establishing who is liable for the condition of the equipment once ownership changes hands. In terms of risk mitigation, this is important in terms of exposure. Travelers’ policies often cover this. From a mitigation standpoint, we (the insurer) want to know who ultimately has the responsibility. That’s why it’s so important that the operator picks the right logistics firm, preferably a company with a lot of experience in this type of work. They have the special trailers to transport the blades to the site. What’s more, a good transportation company will conduct a tour to the site prior to the delivery of the equipment. For example, you can’t make
90-degree turns if you’re carrying 130-foot blades, so you need to be familiar with the routes. Transporters have to be so cautious about how they plan to deliver the equipment to the site.
REF: From an insurance claims perspective, how does the wind power industry stack up to the other categories or industry sectors? Wilcox: In the wind industry, it’s not the frequency of claims as much as it is the severity of the claims. For instance, a wind turbine blade damaged by lighting could result in a $500,000 claim. And that’s just the damage to the blade itself — not any loss of income that may have resulted from the lack of activity. Foyer: Naturally, when you’re installing expensive equipment 200 feet in the air — as is the case with wind turbines — then it becomes more expensive to fix, as opposed to a power-generating plant on the ground.
REF: What are some of the other ‘exposure’ risks related to construction of the wind turbines? Foyer: Storage, definitely. In most cases, operators are going to store much of this equipment prior to installing it on the job site. There are exposures hazards due to high winds (blades are ‘sails,’ after all). That’s why it’s important to secure the blades in storage using the shipping hardware provided. There’s also the issue of theft of equipment on the job site — not necessarily the wind turbine blades themselves, but the copper and cables utilised in the installation. They’re worth a lot of money, and can ‘walk away’ if not properly secured.
REF: What are the main issues to consider regarding exposures on the operational side? Foyer: Maintenance becomes an issue the longer a wind farm is in operation, especially as some of the warranties expire on the older systems. Consequently, if a system is not properly maintained, then it will break down and subsequently shut off the income stream. We’re not only
talking about “preventative” maintenance but also “predictive” maintenance, which comes from condition monitoring. This allows the owner to know that there are potential wear items that require attention. Using predictive maintenance, the operator can replace some of those parts prior to failure. In short, it’s about making sure you are planning for budgeting, maintenance and repair. Wilcox: This approach not only applies to the turbine, but also the main power transformer in the substation. The operators should be doing condition monitoring on those systems as well, because that’s your pinch point. If you lose that main transformer, then you’re not pushing any power to the grid — and you’re losing income.
REF: We’ve been talking primarily about risk mitigation as it pertains to onshore wind farms. What are some of the issues you’re seeing with offshore applications? Wilcox: Although Travelers does not insure offshore wind farm projects, we realise that you have to deal with some of the same issues. That being said, with offshore wind farms being so far out, there’s more of an emphasis on workers’ compensation issues, for example: Is there prompt medical care on site? What kind of systems do operators have in place to take care of workers, be it helicopters, vessels, etc., or trained emergency medical technicians to take care of those situations? When you start building plants in a remote location — whether it’s on the ocean or on a mountainside — these are provisions that have to be in place all the time. Another thing to consider as an offshore wind farm ages is: will the operator be able to get the spare parts he needs for the turbine? Let’s be honest; there have been some wind turbine companies that have gone out of business, and it served as a real wakeup call to some of these owners. Those successful wind farm operators who have the appropriate resources will get through just fine. The same can’t be said for those operators who don’t keep abreast of the manufacturers and parts suppliers.
July/August 2014 | Renewable Energy Focus
43