Japanese Sompo Insurance Group has launched a model for evaluating risks to onshore and offshore wind farms.
As the price for energy has steadily increased, many countries around the world are turning to wind as a viable option for producing electricity on a large scale.
The potential of wind turbines, which convert the kinetic (mechanical) energy into electrical energy, is enormous but comes with significant risks.
The model, created by Sompo in collaboration with the University of Tokyo, will provide pricing and catastrophe modelling data for insuring the construction and operation of wind turbines.
Taking into account perils such as wind, lightning, wave, and electrical and mechanical breakdown, the model will provide valuable risk insights to insurers as well as renewable energy companies.
Sompo stated that it is the first such model to be launched. It will initially cater for risks in Japan and then followed by the North Sea and Asia markets later in the year.
Marek Shafer, Head of Catastrophe management at Sompo’s Lloyd’s unit, Sompo Canopius, said: “The quantitative evaluation of risks associated with wind farms is still in its infancy and the development of this model is an important step forward.”
The launch comes few weeks after the Paris Climate Agreement (COP21) where more than 170 countries signed a historic agreement to combat climate change and to accelerate the actions and investments needed for a sustainable low carbon future.
Indeed, the call for increased investments is likely to boost the sales of wind turbines over the coming years according to Moody’s Investors Service
And as such the model comes along at the right time