Delivering at scale and keeping prices low is critical for offshore wind growth

Large off shore wind farm at sunset panoramic 3d render

Almost every coastline in the world is now expressing ambition for offshore wind power as the sector enters a new phase of rapid international growth in support of the global energy transition. Current installed capacity, that has taken 30 years to develop, looks set to grow by 560% to 380 gigawatts by 2032. To meet this ambition to scale, tomorrow’s leaders in the sector are already leveraging a strategic framework built on four primary pillars to diversify revenue models, mobilize investment capital, motivate stakeholders, overcome obstacles, and improve the efficiency of insurance markets to accelerate project development. The overarching imperative is to expedite project development and bring new generation capacity online as soon as possible.

Resources. The pace of growth is creating an urgent need for a skilled and mobile workforce, to design, finance, construct, operate, and maintain the global offshore wind fleet. The Global Wind Energy Council estimates that the offshore wind workforce will expand by 79% by 2027. A mobile workforce also creates an urgent need for international training standards to ensure consistency and quality are maintained. And the need for experienced resources will extend along the project value chain, from equipment manufacturers to maritime surveyors, construction contractors, port operators, and even risk and insurance professionals. A skills gap in one part of a project can and will jeopardize the critical path for the entire project.
Standardization. Nearly every leader in the offshore wind value chain has highlighted standardization as a critical tool in driving process efficiency, reducing time and cost, and improving the resiliency of supply chains. Standardization also supports and encourages collaboration as it generates scalable approaches to solving common issues. For those in the risk and insurance industry, applying increasing levels of standardization to what has been one of the more hyper-specialized and insulated sectors may seem counter-intuitive. However, challenging traditional ways of working or ‘doing things’ often reduces complexity and results in more efficient, and streamlined processes and pathways.
Sustainable pricing. All participants in the offshore wind sector are calling for sustainable pricing across the value chain to counter headwinds associated with everything from cost of capital to supply chain disruption. The commercial realities of a project impact social license to operate, regulatory regimes, financial incentives, bid strategies, and most certainly how identified risks are analyzed and then allocated in contracts. In terms of insurance, the development of domestic markets and reducing barriers to entry for new risk capital must continue. Pathways to reducing the cost of risk as a percentage of both CapEx and OpEx must be pursued. Every risk and insurance professional has a critical role to play in delivering cost-effective and increasingly data-driven access to risk capital.
Collaboration. The commercial arrangements of a project create a natural interdependency for investors, developers, governments and project stakeholders. Collaboration will continue to be critical to achieving shared goals and to de-risking deployment of evolving technology, particularly in new and undeveloped regions. Building and sharing knowledge is a cornerstone of collaboration and insurance professionals need to take a leading role in identifying and disseminating lessons learned and emerging best practices from projects around the world.

The global groundswell to accelerate energy transition has never been greater, and the capital needed to support the volume of projects is unprecedented. Offshore wind is a proven, commercially viable, eminently scalable, and reliable energy technology. Now is the time for risk management and insurance professionals to innovate, challenge accepted norms, demystify processes, and support the growth ambitions of this critical sector.

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Delivering at scale and keeping prices low is critical for offshore wind growth

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Delivering at scale and keeping prices low is critical for offshore wind growth

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