Delay in Start Up

Delay in Start Up (DSU) insurance provides coverage for financial losses incurred due to a claimable event under the CAR insurance causing the offshore wind farm to start production of electricity later than it otherwise would have, but for the occurrence of said damage.

Those financial losses can represent both additional costs incurred as a result of the delay, as well as monies not earned as a result of the delay. To the extent that the offshore windfarm is scheduled to sell the electricity produced at prices impacted by the market, it is possible that a similar duration of delay may arise in a more sizeable claim if suffered in the winter time, than if suffered in the summer time when electricity prices tend to be lower.   

Damage

Logically, it is entirely understandable that a damage to an offshore wind farm’s substation and/or export cable may result in a significantly higher DSU claim than if a damage had been suffered by a single inter-array cable or a single turbine. In this context, the availability of spares, repair/reconstruction facilities, available nearby vessel tonnage, and lead time to reconstruction of required replacement components may all impact the size of the DSU claim significantly.

It is furthermore typical to extend the DSU scope of coverage to include delays triggered by certain listed cases which are not necessarily related to a claimable event under the CAR insurance. These extensions provide for what is typically call Contingent DSU coverage. A typical example is when another party owns the transmission assets (offshore substation, export cable, etc.) linking the offshore windfarm to the onshore electrical grid. In such a case, it is quite typical that a damage to that other party’s transmission assets may trigger the Contingent DSU insurance, as the damage would not be a physical damage to the farm assets themselves, but may nevertheless delay the ability of the farm to deliver and sell electricity as originally scheduled and contracted for.  

Risks

The risks here are largely those of manufacturing, assembly, marine operations, and offshore construction. In some jurisdictions, it is contemplated that the offshore wind farm developer is also tasked with construction of the energy transmission assets (onshore/offshore substations, export cabling, etc.), the insurance of which would then also naturally be subject to the CAR insurance. Beyond this, the CAR insurance often will provide certain additional coverages, including coverages for sue and labour, removal of wreck, stand-by costs, offshore cancellation costs, and the like.  

Safety and suitabililty

A key component of risk assessment during the CAR insurance is the involvement of Marine Warranty Surveyors (MWS) and third-party certification bodies. While MWS looks after the safety and suitability of the marine operations necessary for construction, the certification body makes sure that the various components of the offshore wind farm, or perhaps the overall wind farm in general, is suitably designed for the purpose intended. These service providers are key partners to both the underwriters and the insured throughout the construction process, minimizing the risk for all parties.