Rising renewable energy development in Australia has highlighted the logistical challenges in shipping specialist equipment from overseas and the role of project cargo insurance in supporting new power generation, Axa XL says.

Project cargo policies are mainly designed to cover physical losses of cargo in transit, and can include losses arising from commercial operation delays if key equipment is damaged.

Axa XL Head of Marine for Australia Tom Hughes says transportation for renewable energy projects is complex given the diverse components needed from suppliers around the world, and a problem can cause lengthy and costly delays.

A 300-megawatt windfarm project in Australia will typically require more than ten ocean shipments and up to one thousand truckloads, or railcars, to transport the motors, hubs, tower sections, blades, and nacelles, which house the generating components.

At the same time, renewable energy operations vary in size and technologies and are situated in various locations, including offshore.

“Each renewable energy facility is unique and, at least in terms of project cargo insurance, warrants tailored coverages and specialised expertise to manage and mitigate the risks,” Mr Hughes says.

Waste-to-energy (WtE) is another emerging technology using mechanical equipment sourced from overseas suppliers.

“Consider, for instance, the implications if the lifting equipment fails during discharge and a boiler for a WtE plant is irretrievably damaged. Since the manufacturer schedules production far in advance, it likely will take at least six months before it can start fabricating a replacement boiler,” he says.

“A single incident can cause a 24-month delay that, in turn, produces a substantial underlying financial loss.”

Mr Hughes says it’s important to mitigate risks during the transportation process, and marine warranty surveyors work with the insurer and the insured to minimise the potential for damage.

The article is available here.