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Insuring renewable energy projects in South Africa

In recent years, there has been a growing emphasis on renewable energy as a source of alternative energy. South Africa’s Integrated Resource Plan (IRP), which is a 20 year projection on electricity supply and demand, indicates that by 2030, approximately 38% of the total electricity generated in South Africa, about 23,375 MW, will be required to come from renewable energy sources. This is according to the South African department of energy’s independent power producer (IPP) renewable energy procurement programme.

The construction of renewable energy plants is complex and involves a diversity of risks. Many of the components used for the solar or wind farms are sourced overseas. Risks therefore include the importing and shipping of the components and transportation by road before construction work commences. Once the plant has been constructed, the permanent assets will also need appropriate cover, from testing and start up, through to full operation.

“In order to meet our clients’ needs, we have developed a product, using a cradle to grave design approach, which provides marine, construction, and operational cover for assets, breakdown and profits, all in one comprehensive policy,” Samantha Boyd, head of corporate and niche insurance at Mutual & Federal, says. “To date we’ve had incidents where a client experienced damage to materials whilst in transit to a site.

“In another incident a client’s blades for a wind farm were damaged during a storm at a harbour where it had been stored prior to shipping to South Africa. Other incidents included damage to photovoltaic (PV) cells during inland transit from the ports, due to road accidents or overturning of trucks, and loss during the construction phase of a wind farm project where a telehandler which was being used to pick up blades overturned and fell on top of the blades. All of these incidents would be recoverable in terms of our renewable energy project insurance policy, thus providing the protection expected by our clients,” she concludes.

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