The implementation of renewable technologies to generate power has increased at an exponential rate over the past decade. Research conducted by the Massachusetts Institute of Technology has shown for the first time in history, patents for innovations in renewable energy are now rising at a faster rate than patents for technology based in fossil fuels.
Investment in renewable technologies has increased across the globe in both established and new territories. Whilst OECD countries still account for the majority of renewable energy production, over the past six years non OECD growth has exceeded OECD growth in percentage terms. Growth in all types of renewable technologies is already being seen in South America, Turkey, Eastern Europe, Southeast Asia, Southern Africa and China. In the Middle East, Africa and parts of Asia in particular, there is increasing interest in photovoltaic installations.
Financing an onshore renewable energy project has unique complexities. By the very nature of the technologies involved, there are numerous risk factors which have to be considered from early phases of planning, through construction to final operation.
Planning a project
Each installation project offers different risk challenges from environmental hazards, natural catastrophes, planning, to equipment damage and breakdown and loss of profits. Involving insurers and their engineers at the start of a renewable energy installation is an essential component in the risk management process.
Natural hazards, climate, etc
In any renewable energy project, it may be tempting to build an installation on undeveloped land without consideration being given to why the land is available. In addition, the natural environment and weather conditions, the suitability of the technology to withstand those conditions, and the risk-reducing factors which can be engineered into the design should all be taken into account. For example, wind turbines must be suitable for average wind speed, turbulence values and extreme gust levels.
Working time on site can be restricted by the climate and exposure to the elements. In some regions, winters are too harsh for work to continue. This should be given due attention in the planning stage along with measures to preserve partially built equipment and material on site during site lay-off periods.
Given the size and weight of modern wind turbines, it is vital that the geotechnical conditions are appropriate and the foundation design is reliable. There are numerous examples of inadequate foundations leading to collapse, such as wind turbines being erected over mining shafts or on unstable soil. Foundation design should be undertaken by a qualified structural engineer.
Contractors, site access, equipment
Growth in renewable energy has prompted contractors with little experience in this sector to enter the market. Engaging the services of an experienced contractor with strong project management skills and previous experience in similar renewable energy projects is therefore crucial to ensure its success.
Access to the site is an important consideration during the planning stage. Wind farms are often erected in remote locations, making it difficult for trucks to manoeuvre along narrow roads. Planning permission may be required to extend and widen roads for the duration of the project, and it may be necessary to remove overhead cables, traffic lights and other street furniture on the route. Once the project has been completed, this infrastructure needs to be restored to its previous state.
For remote construction projects where infrastructure changes were required, the cost, time factor in obtaining planning permission and reconstruction of access roads will need to be factored into any revisit to the site for maintenance, breakdown and damage repair.
Having the right construction equipment on hand for the project is also essential. For instance, at least one crane is needed to erect a wind farm. It is therefore recommended to plan in advance the availability of appropriate cranes of suitable size, as well as to arrange for replacements in the event of any problems. In addition, the operation of cranes and the provision of hard standing are additional things to consider in the planning stage.
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