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This week, the team discusses the collapse of a crane hoisting wire rope while offloading a turbine in Houston, revealing issues with corrosion and grease buildup on cables. Thankfully, no one was hurt. Then we move to the impacts of severe thunderstorms and lightning strikes on wind turbine damage and rising insurance costs. We got some offshore wind lease updates from BOEM, and discuss an agreement between Siemens and Vestas to standardize equipment for turbine transportation and installation. Our Wind Farm of the Week is Wyoming’s massive Chokecherry Sierra Madre wind project being developed by The Anschutz Corporation.
Sign up now for Uptime Tech News, our weekly email update on all things wind technology. This episode is sponsored by Weather Guard Lightning Tech. Learn more about Weather Guard’s StrikeTape Wind Turbine LPS retrofit. Follow the show on Facebook, YouTube, Twitter, LinkedIn and visit Weather Guard on the web. And subscribe to Rosemary Barnes’ YouTube channel here. Have a question we can answer on the show? Email us!
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Allen Hall: I have you guys seen this rocket man on YouTube lately, this Robert Maddox, have you seen this guy where he builds these pulse jet engines and he sticks them on a go cart and this pulse jet is glowing red. It’s gotta be like 500 degrees and it’s right between his legs.
Joel Saxum: So he’s he’s retired, right?
This is a retired, it’s someone’s retired grandfather who is making jet engines out of everything. Or putting them on everything. Bicycles, wagons, scooters whatever he’s bored with, right?
Allen Hall: Yeah, he’s got a water jet cutter, and he’s cutting these steel forms to make these pulse jet engines. And, Phil, you know what a pulse jet engine is.
That’s what the Germans used early on in World War II, right? It’s a really crude jet engine, so it doesn’t have a lot of Impulse power is basically burning raw fuel and shoving out on an exhaust, but everything gets super hot in those in those pulse jets. And he’s got four or five of these stacked up on a steel frame go kart.
And I’m not sure how fast he goes. Phil, you gotta check this out. He’s got a selfie stick, he’s sticking out in front of him, and he’s like driving with one hand.
Philip Totaro: Driving one handed with four rockets on his back. That sounds like super safe. The Uptime Wind Energy Podcast does not condone this activity in any, where’s our disclaimer?
Allen Hall: No, this is fascinating because it’s such an engineering thing. You think, all those guys designing wind turbines and blades are Just like this guy was probably designing wind turbines back in his twenties.
Joel Saxum: This is my, this is what I want to be.
Allen Hall: That’s exactly what’s happening inside their garage right now.
If I could just get a water jet, my wife wasn’t looking, I would be building this pulse jet engine and put it on a go-kart a thousand percent.
Back in July of 22 hoisting wire rope broke on a crane while offloading a Nordex Delta 4,000 nacelle in the Port of Houston. Now, I remember when that happened, and there was a little bit of discussion when that happened, but it went to the NTSB here in the United States to write up the report on the accident investigation, and those things take a year, sometimes longer.
They just released the report, so we have a little more insight and some photos as to what had happened, and the crane itself was on the ship, so it was a ship based crane, they had three cranes. And they had completed two lifts using that same crane, lifting nacelles and other things out of the cargo hold.
And just after lunch they were lifting another nacelle, and one of the lifting ropes, which is a steel rope, broke. And it dropped the nacelle about six feet back into that bay narrowly missing a couple of guys who were down in that area. So it does raise a lot of concerns, and Joel, one of the things that they noticed, The examination was that the cable was nine years old and that it looked like it failed due to corrosion.
So even though it had to lifted the same heavy weight earlier that day when it came to the last lift of the day, what would be the last lift? That cable broke and they did an inspection. No, no lifting cables as probably everybody knows who’s been around lifting. Those things get inspected every couple of years.
So that cable had been inspected at the 5 year mark, and they only have a lifetime of 10 years, and it was 9 years old, so it’s close to the end of its life. But it’s at the Port of Houston at this particular juncture it was. But they noticed a lot of corrosion on that cable and they think corrosion was the cause.
Also, they noticed that the cable was covered in grease, which happens a lot of times to help keep corrosion out. You’ll see operators coat those cables in grease, so that may have had something to But when they were trying to inspect it at the five year point, it probably was covered in grease and you couldn’t see all the corrosion.
So There’s a lot of recommendations coming out of this. One is that you clean the grease off to make sure when you’re inspecting, you can see it’s clearly clean enough. And if you can make to be able to see the corrosion and the company that operated that ship is saying they’re not going to re inspected five years. Just going to trash the cables and bring new cables on. That’s a unique change, Joel. I think obviously as we get, yeah, as we just getting started here, those cables are really expensive as lifting cables are because they’re certified. But as we get to lifting bigger and bigger in the cells, this is a Delta 4000.
This is not a, 12 megawatt machine. This has implications that this NTSB report will ripple through the industry.
Joel Saxum: Yeah, I think that we, our duty to shed light on things. People that aren’t familiar with lifting operations, you have to think about it this way too. The wire or rope, whatever we want to call it, wire rope is what it is, right?
Sometimes for if you’re talking an 80 ton, if this is a crane safe working load was 80 tons at the lift radius, that usually means they’re going to be 130 to 150 percent with a safety factor. So that’s probably rated at 120 tons at that lifting radius. And when they say radius, they mean where that boom was extended to where was this thing extended to when they were lifting, right?
Because you can only, you can probably lift, some crane, you can lift one ton if you’re extended all the way out, but you can lift 20 tons if you’re right up near a vertical over the top of the pivot table. So there’s differences there. But what happens is those wires are running over basically a bearing, a wheel, right?
So as that continues to run over that same spot, sometimes you can develop, wear and tear on that same spot in the cable. And I’ll give you this one. This. Personal experience and wench cables from like on a four wheeler, right? You have a plow, you’re plowing snow. I live in Wisconsin.
And if throughout the course of the winter, you’re continually pulling the winch in and out. And that cable rolls over the rollers in the same spot over and over again. And eventually it gets weak and those will break. So the same thing, what I’m under assuming here is that this cable had been in service for nine years, which it’s nearing the end of its design life where you have to swap them out at 10 years and that’s probably a manufacturer spec regardless of inspection, it was nearing its life, right?
Those things are stretched in there under a lot of abuse regularly. Outside of the environmental factors are under but that day if it was unloading a bunch of 76 ton turbine wind turbine nacelles If it did two or three or had done that ship had been used regularly for unloading those same Nacelles. Then that same lift is gonna happen over and over again so you’re gonna have the same lift with the same cable payout and the same cable pull back in over the top of Where that wheel is on the top of the crane arm over and over again.
And eventually you’re going to wear that spot out and it’s going to break. So while this thing was, of course, like I said, inside of its design life these things that’s how these these things wear out and break. So I think that you’ll see everybody. It did not just in the wind turbine world.
This isn’t a wind turbine world problem, right? You’re in a port of Houston It’s one of the busiest ports in America. So you’re gonna start looking around all the other ports. You’re gonna get the NTSB bulletin out. Hey, make sure you’re whether it’s the port facility or the ship itself for the cranes on the ship You’re gonna see a lot of people do some inspections and possibly do some cable swap out. So if you’re in the cable crane cable industry right now or water weights for testing crane cables, you’re licking your chops because there’s a lot of work coming.
Philip Totaro: Not much to add, just glad that this, incident didn’t result in any injuries first of all. And secondly, agree with what Joel’s been suggesting is that this Underscores a an issue that not only is not wind energy specific necessarily, but is something that we’re all going to have to pay a bit closer attention to, moving forward, because, we’re looking at a point in time where global capacity additions are trending up at this point, so we’re going to have more shipments potentially with Vessel owners and operators that maybe don’t have as much experience with wind turbine component transportation and assembly.
And having the right equipment, having an inspected on a consistent basis, swapping it out if it’s necessary, even though it might be expensive. This is all just a, precaution that’s gonna have to take place, I think, moving forward.
Allen Hall: Scooting over one state to Louisiana, Mitsubishi’s Diamond Offshore Wind and Vesta subsidiary Cajun Wind signed a first ever offshore wind operating agreement with the state of Louisiana for areas real close to the coastline.
So this is all in state water. Diamond Offshore secured about a 6, 000 acre agreement. With higher up front costs, about 300, 000 is what it cost him. And rental fees per acre, but a 1. 5 percent energy royalty over the project lifetime. And Cajun Wind obtained 60, 000 acres with a lower up front per acre cost and a 2. 2 percent lifetime energy royalty, which Louisiana is touting as being flexible, unlike New York. I’m sure that’s where that joust is at. The agreements allow the developers to commence wind measurement, environmental studies, and community engagement to advance the projects, and the governor of Louisiana, Governor Edwards, noted that Louisiana’s existing offshore infrastructure and experienced workforce suit wind energy development, and I think he’s right about that.
Phil, this is unique, and because this is the first time maybe Block Island? No, Block Island’s not part of a state project. So I think this is the first set of offshore turbines that the feds are not involved with, right?
Philip Totaro: Yeah, there were some proposed projects in different areas of state waters throughout the northeast and even within the Great Lakes, although a lot of that’s not moving forward anymore.
But this is interesting because if we remember back to the federal BOEM tender in the Gulf of Mexico, the Texas lease areas did not sell, the Louisiana lease area did. And it’s really because Louisiana is quite interested in kind of propelling their, offshore wind industry forward.
They’ve got the University of New Orleans engaged in some of the activity on, on workforce training. They’ve got different, state agencies on board with doing both these state level projects and the federal projects. And they’ve got a desire for offtake. I think a lot of what played into the lack of interest in the federal tender for the Texas sites in the Gulf of Mexico was the fact that they’ve already got tons and tons of, onshore wind and solar that is cheap feeding into the ERCOT market.
But Louisiana is not necessarily strictly getting power off that, that ERCOT grid, of course and yeah, they’re getting the power from the southwest power pool amongst, the other regional kind of utility companies and an independent power producers that are there.
So they, they’ve got basically, they’ve got a mechanism for power offtake is what I’m clumsily trying to get at. So they, they’ve got a really great enthusiasm, and they’ve got a willingness to build the necessary infrastructure to be able to support this.
Joel Saxum: Yeah, along the same lines as what’s Phil saying, while Texas and Louisiana are co located on the Gulf of Mexico, and a lot of things are the same, where you can find this, the same culture of people in Beaumont, Texas, as you can in St. Charles, Louisiana. Economically, they’re two completely different states. The state of Louisiana is regularly scrambling for jobs for their people. And as you see a little bit of a slowdown in active development, offshore oil and gas in that part of the Gulf, you’ve got a whole fleet of ships and vessels and people that are trained to work on them that are looking for what’s the next thing.
The next thing is offshore wind. The other side of that, like Phil was saying the markets and the operators that take power off in that corner of the world, there’s not a whole lot of access to renewable energy. So you’re in that corner, you have Georgia, Mississippi, Alabama Louisiana up into, Tennessee and Kentucky, and it will not so much Kentucky, but Tennessee.
And into that area, they’re starting to install some solar. Yes. However, those areas are also very wooded. So it’s not that easy like it is in West Texas to install solar but there is no wind energy there because there’s no wind resource. So if you look at the map of where wind turbines are in the United States, there’s none in the southeast corner of the country.
There’s one or two at some universities or something, right? But the idea of having a renewable energy, offshore renewable energy. Controlled within state waters is it’s attractive to the state of Louisiana big time because it’s jobs it’s a boon to their economy. That’s you know, pretty flaccid to be honest So I think that’s why it’s attractive down there as opposed to Texas where people aren’t scrambling for jobs Texas can’t Texas is flush with jobs unemployment rate is Frickin lower, lower than low.
And they have, like Phil said, Texas is also the biggest producer of renewable energy in the country. I think there’s a 24, 25 percent of the U S is renewable energy comes from Texas. So they’re not hurting for it. Whereas Louisiana is and to be honest with you the governor over there, they’re getting into a lot of other projects too.
They have one of the biggest carbon capture projects in the country is happening in Louisiana right now. That’s they’re actively changing over their economy to adapt to the renewable energy transition and for the future, and they’re doing it any way they can.
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Allen Hall: BOEM released its final environmental impact statement for Sunrise Wind off the southern New England coast. And remember, Sunrise Wind is a combo of Orsted and Eversource. BOEM recommends reducing the project from 94 turbines to 84 turbines. To protect cod habitat and avoid areas with C4 geology problems that have glockenite sand which is really resistant to driving monopiles into they’re gonna, BOEM’s gonna allow the project to reach its maximum rated capacity of 924 megawatts, but that means that Orsted and Eversource have to buy bigger turbines.
To do that so there’s been, obviously, there’s been a lot of back and forth from the fishermen in the area. This is what BOEM’s trying to negotiate out is, hey, we’re going to put fewer turbans in, we’re going to select where they go, and we’re trying to stay out of some cod habitats. Also recently, BOEM has released two areas off the coast of Delaware and Maryland and Virginia that are going to be new sail leases in 2024.
One of the three that they were talking about there were supposed to be three, but they’re only going to have two now. One of them is off the coast of Maryland, and the Department of Defense and NASA had concerns about it in terms of some of the issues for naval testing and space observation.
So BOEM’s been pretty busy, guys. It sounds like up in the New England area, they’re making projects smaller, and down in, the Atlantic coastline, they’re removing project spaces because of other concerns, yeah, a lot going on at BOEM at the moment.
Joel Saxum: It doesn’t make sense that we’re doing this stuff right now.
Allen Hall: Why now?
Joel Saxum: Before lease auctions happened, like, why wasn’t these things I’m rambling on this a little bit, but I was looking at some things for the Wind Farm of the Week this week, and there’s a website associated to the easiest search for the name of the wind farm. Chokecherry Sierra Madre. You google it, the first website that comes up.
Is literally a link to a Google Drive that has every single piece of documentation for this wind farm that from the BLM, from permitting, from applications, it’s all in a drive that you can freely, actively get at. I couldn’t believe it when it popped up. I thought something was wrong with my computer.
I’m like did I get into my Google Drive here? Oh no, this is the one for this wind farm. The fact that these, there’s so much still going on in the background, like when we celebrated these lease auctions, some of these lease auctions last year, the year before, we were like, yeah, go offshore wind. Now it’s oh, we’re doing studies and we’re taking this out and we’re doing this and we change this one.
And it’s frustrating.
Philip Totaro: Some of the offshore wind lease auctions are also tied into the government doing offshore oil and gas leases. And when we do this without all that preliminary work that would normally be undertaken, Joel it’s probably due in, in part to, we’re going to punt on some of that stuff.
It’s going to get covered in the environmental permitting review subsequent to the lease auction taking place. But the kind of commercial impact of that is, Okay. That you don’t necessarily get, for instance if somebody wants you to buy a plot of land to build a house, and they say you can, spend 12 hours maximum going around and inspecting it, as opposed to, you can spend a whole year going around and doing a detailed inspection of whatever this thing is before you buy it.
The point is, how much are you going to be willing to pay when you’ve only been able to inspect it for 12 hours versus you’ve had a year? So that, that’s the implication to BOEM is that they’re going to end up with, they’re going to end up undertaking these lease auctions, but they’re going to get a lower price.
Then they would otherwise potentially hope for so it behooves everybody if they put a little more effort into doing all the site assessment, all the, geotechnical inspections, et cetera, prior to doing the lease auction, because then you’re going to, everybody’s going to know what the site really looks like, how it’s going to perform, what the power offtake is going to, profiles going to look like, et cetera.
It’s, it seems sensible to me, but it’s not always what drives the decision making, I guess.
Allen Hall: Is Orsted gonna be more likely or less likely to take on Sunrise now that they decreased the number of turbines they can put in the water?
Joel Saxum: I think Orsted’s gotta be scared right now of anything to do with offshore wind in the United States.
If Mads Nipper wants to keep his job, he might want to just stay out of the U. S. for right now. That’s my take on it, but I’m not sitting in their boardroom.
Philip Totaro: They’re likely to move forward because it’s not going to be that much of a problem to find turbans that are, slightly bigger than You know what they were originally planning.
I think they were planning for 12 megawatt units and now they have to get 13. So it’s not
that big of a deal.
Joel Saxum: Yeah. And if if you’re sitting there, if you’re in the risk management portion of Orsted looking at this thing now going, okay, now we’ve got, it’s a little bit more transparent. We’re a little bit, we have a better understanding of what’s actually, how we have to build this thing.
The risk factor goes down a little bit, I would hope. There isn’t, another BOEM or some other random agency from the U. S. federal government pops up next week and says, now we have to do our thing, or someone sues someone else in Congress because. I don’t know. They like the taste of salt water, and they want to change something.
Allen Hall: Another piece about this is the relationship between the auction sale price and whether a project gets completed or not. I’m starting to wonder if there’s an inverse relationship between those two. At the higher price, they pay for a piece of ocean. The less likely it is that it’s going to be developed, because they have so much into it, they don’t have a lot of wiggle room at the end.
That seems to be the case at the moment, though.
Philip Totaro: In a high interest rate environment, that is true, but if the Federal Reserve starts dropping interest rates next year, like they are talking about Then I think it’s going to reinvigorate the interest in the offshore wind market and everybody who ran around this year saying offshore wind is dead is going to be like, we’re totally back, so I don’t think it’s going to be a big deal.
Joel Saxum: So Phil, I read something today that said six, it said average of the average interest rate in the next year calendar year will be 6. 3%. If that happens, and we’re also, I’m adding this in, if we’re also looking at an election cycle, what does that do to interest?
Allen Hall: They’re going to try to drive it down.
Clearly, the Fed and the administration want to drive that number down. The problem is that prices won’t come down, right? It’s just slowing the rate of inflation, right? So the prices are going to remain high, which is whatever he’s trying to adjust to at the moment. But the prices skyrocketed, literally skyrocketed, particularly for steel.
Until steel drops and comes down to some historically normal average, then I think they’re gonna have problems on getting these projects in the water, right?
Joel Saxum: Yeah, you can’t build Modvion wood towers in the ocean.
Allen Hall: Rosemary, we’d love that. Speaking about floating Siemens and Vestas are aligning on shipping the two agreed through an agreement that was facilitated by the Energy Cluster Denmark, because who else would do this to increase standardization in the wind industry.
The focus is on using standardized equipment to transport and install offshore wind turbine towers. Currently, there’s some welding of boxes that go on the, to the ships to accommodate a Vestas or a Siemens turbine. And what they want to do is standardize that so a Vestas or a Siemens turbine can fit into that, those, those weldments that are on the ships.
That makes sense to me, Phil. It’s just going to save so much time instead of cutting off all the Vestas metalwork and welding on Siemens. For the next shipment, you’re just going to leave it alone. My comment about this is, where’s GE and some others involved in this? And how come, if the energy cluster Denmark is trying to navigate a standard, right?
Which No one in the U. S. is doing that. Why wouldn’t GE participate in that?
Joel Saxum: They’re not Danish.
Philip Totaro: They’re not Danish. Exactly.
Joel Saxum: The problem here is that this shouldn’t be even a conversation. These things should have happened years ago. If you’ve watched, everybody that is alive has seen multimodal transportation.
So when things come off of a ship, they go on to a trailer, they go on to a truck, a train. All of those shipping containers look exactly the same, whether they are full of toys, or cars, or chemicals, or whatever. That gets shipped from China, to Russia, to the Congo, to the United States, to the UK, those are the exact same containers.
Everything is standardized. Why are we not doing that? Why has that not been done, right? So it just seems oh, this is a good win for Energy Cluster Denmark. Fantastic. However, you should have done it 30 years ago.
Philip Totaro: Yeah, and to, to Allen’s point the fact that GE’s not participating is probably down to the cost that’s going to be associated with the retooling because at the end of the day, everybody developed their own proprietary solution.
This is the same thing that happens whenever there’s any kind of standardization. In any realm of technology or industry in the world somebody ends up paying a price to retool whatever they did, you see this with Apple doing away with the, their Thunderbolt connection to do USB C or, what have you, there, there’s any number of examples of this sort of thing, but there’s always a cost and a price tag associated with doing that retooling, and I think that’s what’s driving GE’s decision to not participate in this at this point, but hopefully eventually everybody comes to the same conclusion that this is going to save cost in the long run.
Joel Saxum: I say at the end of the day, isn’t this cost no matter whether it’s standardizing here, GE’s doing or whatever, isn’t the end of the end of the day, the cost is getting transferred to the asset owner? Buyer, right? Whether it’s transportation costs is the shipping company has to do it or whatever the shipping price then goes up.
Or if GE has to do it, no matter what, it’s getting passed on to the end customer, the end user. So at some point in time, you’d be like, Oh, these guys are, everything here is being changed over. So that makes actually Siemens and Vestas more. Cost effective, then you would think that, yeah, and profitable, you think that everybody else in the offshore game would do the same thing.
Unless you’re Ming Yang, and you’re only selling turbines in the Southeast Pacific, then, or the Southern Pacific, then you don’t have to.
Philip Totaro: Not for long.
Joel Saxum: That’s true. Phil, you’re right.
Allen Hall: Hey, Uptime listeners. We know how difficult it is to keep track of the wind industry. That’s why we read P. E. S. Wind magazine.
P. E. S. Wind doesn’t summarize the news. It digs into the tough issues. And P. E. S. Wind is written by the experts, so you can get the in depth info you need. Check out the wind industry’s leading trade publication, P. E. S. Wind at peswind.Com.
All right, severe thunderstorms caused upwards of 60 billion in insured losses in the U. S. in 2023, a new annual record according to Swiss Re. Losses from thunderstorms were almost double the previous 10 year average globally. The U. S. saw 18 separate billion dollar thunderstorm disaster events. Worldwide, thunderstorm losses were almost 90 percent higher than the previous five year average of 32 billion and more than double the previous 10 year average of 27 billion.
Yes, whose geography makes it particularly susceptible to thunderstorms in the Midwest accounted for the vast majority of those losses. But for the first time ever, we saw 50 billion in insured losses for the U. S. from severe convective storm activity, and that’s a record, said the group chief economist at Swiss Re.
So Joel, it, this aligns with some of the things we’re seeing in the lightning world because convective activity generally means you have lightning going with it. We’re seeing a lot more lightning damage. I think this year than in the previous 10. We’re getting a lot of complaints and concern from the wind operators in the Midwest that, hey, our turbines are taking more damage more often.
More severe damage. This seems to align with what Swiss Re is saying on the insurance side.
Joel Saxum: Yeah, when you talk severe convective storm that can take shape in a number of different ways, but usually it’s a mix, right? Usually there’s hail, there can be tornadoes, there can be bad lightning storms, heavy rain, all those things.
And some, one of the reasons that some of these values are climbing up is the installation of renewable energy assets in those corridors. So it’s not just wind. We talk about wind all the time, but we’re renewable energy transition fans. Solar is a big thing here as well. Last year, there was a multiple solar events solar losses to severe consecutive storms in the U.
S. that were above 50 million. And a lot of those are due to hailstorms. And because there’s things that happen to those, of course, you could see the big smash in the panel from hail, right? But there’s also these micro cracking, and when you have micro cracking, that can, depending on what your insurance policy is, that can be a claim as well, or they have to basically trash all those panels and get new ones.
we’re, because of the installation of renewable energy assets in the really good renewable energy producing areas, like wind in the corridor of the Midwest, you’re seeing, if you look at Vaisala’s maps from last year about where the most lightning was, most of the lightning was mid north Texas, straight through Oklahoma, up into Kansas.
There happens to be thousands of turbines in that corridor. And then that, that, that high lightning area leaks over into Illinois and Indiana. There’s thousands of wind turbines over there as well. That, the fact that these guys are seeing it, 60 billion insured losses just in that one year, you’re going to see a hardening of the insurance market, I believe against these things. Because like Allen said, we’re talking, we’re having more and more on the StrikeTape side, lightning protection systems for Weather Guard Lightning Tech. Of course, our day job that keeps us eating dinner. We’re getting a lot of calls just to us. We’re not having to go search the wind world for customers that are coming to us from websites and from text messages and from emails because they’re realizing that they may have been protected in the past good enough with the LPS systems that they had, but because lightning is becoming such a problem they’re looking for more and more support on avoiding paying for all these damages.
So that another thing here to think about 60 billion in insured losses. That does not count the uninsured losses or the underinsured losses or the things that didn’t actually quite meet deductible on the insurance side, so I would say That number 60 billion is easily double in the United States for losses.
Allen Hall: And Joel, don’t forget that. During the repowering that’s going on across the Midwest, what’s happening is they’re basically keeping the turbines the same size. So if you had a two megawatt turbine, they’re gonna be generally around the same two megawatt size, but they’re putting longer blades on. So the blades stand up higher in the air, which are triggering more lightning strikes, so they’re in more convective areas.
True. But if they had a wind farm there for the past 10 years, they get, they get a standard of what they usually will see in terms of lightning strikes and damage with the increased activity and storm activity, and then adding these bigger, longer blades on, they’re going to see more blade damage.
It’s inevitable, right?
Joel Saxum: Yeah, and I’m going to say something here that some people may not like to hear. . But from what we are seeing with lightning research that we’re doing at Weather Guard, some of these large wind farms are changing the way convective storms operate, changing the physi, the physics of them across as they move across the plains.
So that is as far as we’re concerned, that’s a fact. We’ve seen the data. We look at the data. So whether there was a wind farm here in 2010, a lot of times there’s now a wind farm here, front of it, behind it, left of it, right of it in the face of the prevailing storm.
So those things are all changing the dynamics of how these wind turbines are getting struck where they’re taking damages. The, and who’s at risk and who’s not at risk. So it plays into everything that a Swiss re is talking about here.
Allen Hall: And Phil Access Global is getting to the mix too, because they’ve written an article talking about the insurance costs on wind turbines, and they’re seeing more in insurance, price increases for the insurance and also claims because of the quality issues that exist at the moment as the wind turbines get bigger and bigger. And they’re seeing changes in the own O and M contract pricing that the operators of these farms are trying to handle their losses in different ways with the manufacturers stepping away on the warranty side, the operators are having to try to either one self insure or deal with increasing prices.
I, I don’t see how this works in the short term, Phil right? This is a huge financial stress point on existing operators.
Philip Totaro: Exactly. And this is the part of the concern that we’ve been talking about for about a year and a half now. Which is based on the fact that turban size on average has been increasing, you’re seeing increased losses because of two things.
One a single event, whether it’s a major corrective or even a minor shutdown of a portion of the park’s generating capacity or the full. The full park it’s a bigger hit and it’s a bigger hit on the insurance side because of the business interruption insurance, but also any kind of component claims and warranty claims that are filed.
So what happens with a larger component is they’re more likely to file an insurance claim rather than just fix the problem themselves because they need. The financial support that the insurance carrier is going to provide to be able to pay for new components or what have you whether it’s the OEM or the owner operator who has the insurance liability and is the one filing the claim.
So what you see now is this split in the market between the large owner operators, like your NextEras. Invenergies, et cetera, who are kind of balance sheet certifying and warranteeing their own fleet, and they’re not necessarily taking out any more insurance than just the standard kind of property and casualty and minor liability coverages that they need to have.
And so components that break, either they, have a really good relationship with the OEM and they know they’re going to get it fixed, or they’re basically buying extra blades, extra, everything and warehousing it in, knowing that they’re going to see some type of major or minor corrective that’s going to require them to replace and swap out components.
Now, that’s what the bigger owner operators are doing. The smaller owner operators are the ones that are getting a little hosed here, because if the price in the market for O& M services goes up, it goes up for everybody. While we’d all like to think that your mom and pop owner operator is maybe getting a bit of a discount, that’s not necessarily the case.
And so they’re looking for a cheaper alternative. They’re switching over to independent service providers. In lieu of getting the expensive, OEM long term service contract. And the challenge for them, however, is whether it’s through the ISP or through the asset owner, they’re necessarily unable to get access to spare parts because they either don’t exist or They’ve been gobbled up by some of the bigger owner operators who took away all that, that spare capacity.
So it, it’s an interesting challenge and there’s no easy solution to it.
Joel Saxum: I think one of the things that you’ll start to see, Phil, and if this hasn’t happened yet, I’m not in the depths of the insurance machine, I’ve just danced around the outside. I think that you’ll start to see different companies or different underwriters or different re insurers separating, further separating property damage, casualty lines, and business interruption lines.
And I think you’ll start to see people enter the market with different capital pools for the two of them. Because right now they’re While it is different accounting, they’re in the same, usually on the same policy. But I do know of a couple of smaller insurers that have some boutique capital that are starting to offer like interesting BI underwriting.
So one group that’s underwriting business interruption for icing damages, or for not icing damages, sorry, icing events, where that’s normally not an insurable. thing because it’s not a, it doesn’t, it’s not associated with property damage or anything like that. But there’s actually groups that are popping up saying Hey, we’ll insure that, that weird BI thing.
So I think that you might see some different some different products as they call them in the insurance market. Popup for with the use of capital like Swiss Re here. Okay. So Swiss Re that we talked about before, talking about Access Global Swiss Re is a reinsurer. So they’re not a frontline insurer.
They insure the insurance companies in the background. They still are exposed to the same risks. It’s just at a different level, at different percentages and usually a more diluted capital base across the portfolio. But either way, they’re still on, on the hook. So I think that, but I do think that you’ll see some people that will try to put some interesting products out there in the market. Because, like you said, I don’t see a quick fix for this, you’re like one of the issues with ISPs and, not giving, nobody getting a break, like everybody’s hurting for technicians right now, so everybody’s going to get a premium for them. They don’t care. They’re going to go to work somewhere. The cranes are going to go to work somewhere, whether you want one today or tomorrow.
They might say, Hey, a hundred thousand bucks to mobilize this crane or 150, 000 to mobilize this crane if you want to avoid the BI claim that will have you sitting there for another 90 days. That 90 days is much more than that 150, 000 mobile charge for a crane. So I’ve, there’s a smart capital move.
If you’ve got a bunch of money sitting around, Phil, buy some cranes.
Philip Totaro: Two things, Joel. First our friends at NARDAC are actually pioneering some of that kind of specialty insurance. Check them out. And secondly, you remember the adage about the gold rush in the 1800s?
It wasn’t the people who mined the gold that actually got rich, it was the people selling them all the picks and shovels and wheelbarrows. This is exactly that situation.
Joel Saxum: Yeah, NARDAC just popped up a year or two ago and I think Jatin Sharma, he’s a XG cube, right? If I’m right. And they’ve, and they.
Yeah, Jatton, so they’ve got a, and they have a group I’ve talked with a few of the people over there and they got some really smart individuals and they’re gathering up some good talent from across the insurance industry. You want to talk to some people about their opinions on what’s going on in wind and how they’re tackling it.
Yeah, hit up NARDAC.
Allen Hall: So if I’m an operator, do I need to get a, an insurance attorney on my staff to manage some of this stuff?
Joel Saxum: Most of them do. And maybe not an insurance attorney, but someone who specializes in risk management, like the bigger ones, of course, Invenergy, they have a team that does it, right?
You know what I mean? And I think when you get to some of the smaller operators, if they’re invested in multiple things, right? If they’re a utility where they have some wind and they get, they’ve got that person because if but if you’re just a small I don’t know. You could be have a retainer to someone like Norton Rose Fulbright or someone of the, of that sort that can that knows the environment because you don’t want, of course, you don’t want to jump into it with a brand new attorney, but yeah, the risk is huge the downtime with these things and some of the weird contracts that we’re starting to see with capacity factors and stuff involved in them.
Definitely consult some legal teams. Okay Wind Farm of the Week this week, Chokecherry Sierra Madre up in Wyoming. So this wind farm, I’m saying Wind Farm of the Week, it’s not operating yet. It’s been in place since 2012, but it is slated to be the largest wind farm in North America. 3, 500 megawatts when it’s complete, at a cost of over 5 billion.
So it’s going to cover, when completed, we’ll cover over 320, 000 acres with almost 900 turbines in it. So they actually started construction on this thing in September 2016, but when I say construction, basically roads and pads because it’s so dang big. But it is not a typical asset owner developer name that you hear here.
It’s called it’s being developed by the Anschutz Corporation. Anschutz is Denver based oil and gas money but they’re very much into putting their capital to work. They have donated a ton of money to University of Denver, their big medical facility down there, Anschutz is all over that front range.
So the wind farm was recently on 60 Minutes. And one of the things we wanted to focus on there was the idea of no, no energy transition without transmission. So if you’ve heard of the Trans West Express big power line, that is to take, that is solely designed to take power from this wind farm to Las Vegas and into California.
So it’s about a 730 mile power line transmission line that’s been approved to bring the power from here over. And that work started on that power line or transmission line this past spring. Wyoming’s got some big goals in making the renewable energy transition happen. Of course, they’ve been the country’s top coal producer for a long time, a lot of oil and gas there.
They are also one of the only states to tax wind energy. They get a dollar per megawatt and are looking to raise that on wind energy. To add to their state coffers, much like the oil and gas industry does but there’s also a lot of things going on out there. Pacific Corp they serve the northwest part of the country.
They’re making some transmission lines in the same area all in the goal to make Wyoming carbon negative, they want to be a net exporter of renewable energy, which The wind resource in Wyoming, if you’ve ever been up there is amazing. So the wind farm of the week this week is the ChokeCherry Sierra Madre, which is under construction, but not available yet.
Allen Hall: That’s going to do it for this week’s Uptime Wind Energy podcast. Thanks for listening. And please take a moment and give us a five star rating on your podcast platform. And also subscribe in the show notes below to Uptime Tech News, our weekly newsletter. And check out Rosemary’s YouTube channel, Engineering with Rosie.
And we’ll see you here next week on the Uptime Wind Energy podcast.
