Renewable energy insurance

On July 13, 2024, a blade failed at the Vineyard Wind offshore farm off Massachusetts, and the federal regulator suspended construction and generation pending investigation: one component stopped the whole site. A wind or solar farm concentrates high value in standardized equipment, installed in hostile environments and operated without permanent human presence. The risk changes character in three stages. During construction the major exposure is the transport and lifting of oversized components, offshore with narrow weather windows and scarce specialist vessels, so an incident mostly means delay, and an advance loss of profits claim. Construction is written on construction all risks or erection all risks, with delay in start-up behind it; design defects are bought back under the London Engineering Group clauses, LEG 2 or LEG 3, which decide whether the faulty part itself is paid or only the damage it causes. In operation, most losses come from hail on solar farms, lightning, and blade and gearbox failures; those last are less accidents than serial defects, which is why the serial loss clause carries so much weight. Finally, the technology moves faster than the loss history builds up. Each generation of turbines is bigger than the one insurers have data on, so the underwriter is always pricing a machine it has never seen grow old.