Power generation insurance

Colorado Bend, Texas, September 2018: a GE HA-class gas turbine, the newest and most efficient in its lineup, is shut down after a blade failure that GE attributes to oxidation. The operator takes other units offline as a precaution, and GE acknowledges the problem affects part of its fleet. For power generation underwriters, the episode sums up the class: the loss that costs comes from the machine, and the newest machine is the least known. The standard plant policy combines all risks property damage, machinery breakdown and the business interruption that follows either one. Thermal plants (combined cycle, open cycle peakers, coal on its way out) make up the bulk of the market; hydro adds civil works and flood; nuclear goes through dedicated pools (see nuclear risk) and renewables through their own forms. What the market looks at comes down to a few questions. The turbine model first: a model without a track record is treated as a prototype until the lead unit has built up its hours (8,000 failure-free hours is often cited), which is paid for in higher deductibles and a serial defect exclusion. Then the maintenance program and the long-term service agreement with the manufacturer. Then the parts: a rotor or a large power transformer takes months to order, sometimes more than a year, and that lead time, more than the breakage itself, drives the business interruption loss. An operator holding a spare rotor shared across several sites changes the risk profile. The caveat is cycling. Gas plants now start and stop several times a week to follow solar and wind, and the thermal fatigue that comes with it is not the duty the validation hours were counted on.

• NERC, Generating Availability Data System (GADS), availability and outage statistics for North American generating units