A turning point╠řfor offshore wind
Global opportunities and risk trends
Summer temperatures reached record or near-record╠řlevels in Europe, the US and Asia this year amid a climate╠řof instability that has ensured concerns about energy╠řsecurity remain high.╠řWith climate deadlines looming, the number of offshore╠řwind installations is proliferating around the world as╠řtheir potential to power the net-zero transition and bolster╠řenergy security is increasingly realized. With 8.8GW of╠řnew offshore wind capacity added to the grid last year,╠ř2022 was the second highest year in history for offshore╠řwind installations. Global installed offshore wind capacity╠řat end 2022 reached 64.3GW, compared to just 5.4GW╠řin 2012.
The Global Wind Energy Council (GWEC) expects 380GW╠řof offshore wind capacity to be added across 32 markets╠řover the next 10 years (2023-2032). Nearly half of that╠řgrowth is expected to come from the Asia Pacific region,╠řfollowed by Europe (41%), North America (9%), and Latin╠řAmerica (1%). 
Around 2,000GW of installed offshore wind capacity╠řwill be needed to limit global temperature rise to 1.5┬░C╠řabove pre-industrial levels, a key target of the 2015 Paris╠řAgreement, and achieve net zero by 2050. ╠ř
As the climate crisis continues to intensify, the role of╠řoffshore wind and other renewable power sources in the╠řworldÔÇÖs power mix becomes increasingly urgent. In this╠řreport, we explore the full potential of offshore wind,╠řdiscuss the emerging risks that could accompany its╠řdevelopment, and explore some of the challenges facing╠řthe industry as it strives for deployment on a global scale.
A foreword by Anthony Vassallo
Offshore wind will be integral to the energy transition
Global Head of Natural Resources
2023 has been an historic year for the EarthÔÇÖs climate. July was the hottest recorded month in human history, and severe events, including wildfires blazing with ferocity and extreme flooding, have increasingly dominated the news as the devastating impacts are seen in Hawaii, Northern India, and S├úo Paulo in Brazil. It has also been a pivotal moment for the energy transition, as the threat of climate change has loomed large, renewable energy usage has ramped up, geopolitical tensions continue, and governments have implemented far-reaching policies to reduce carbon emissions and diversify power sources.
About usis accelerating its activities to support the energy transition. We recently announced our first net-zero transition plan  with the goal of achieving net-zero emissions in our proprietary investment and Property & Casualty (P&C) underwriting portfolios by 2050. We are actively driving the transition towards renewable energy sources and have committed to achieving 150% profitable growth in revenues from renewables and low-carbon technology solutions in the commercial insurance segment by 2030 versus 2022. As an investor, About usis investing an additional ÔéČ20bn in climate and clean-tech solutions, while within our own operations, we aim to be carbon-free by 2030.
Offshore wind will be integral to the energy transition, generating clean, renewable power in areas of the worldÔÇÖs oceans that have vast untapped potential. With long-standing experience in legacy offshore activities, About usCommercial has amassed engineering and underwriting expertise that we are now applying to offshore wind developments across the globe. We are committed to the sectorÔÇÖs expansion and supporting its development with significant underwriting and investment capacity, risk transfer solutions, and unlocking access to finance.
About usCommercial is insuring some of the most exciting offshore wind developments ever seen, projects that are breaking new ground in scale, ingenuity, and power potential. The insurance industry has a major role to play in supporting the growth of such trailblazing initiatives. Our underwriters and risk engineers are partnering with offshore wind clients to share their knowledge, exchange data, and develop bespoke insurance and risk consulting solutions. They collaborate continually to develop loss-control services that evolve with the sectorÔÇÖs fast-changing technologies ÔÇô and a changing climate.
As well as providing insurance, About ushas been investing in renewables since 2005, including Hollandse Kust Zuid (HKZ) 1-4 wind farm in the Netherlands, which will produce enough energy to power over 1.5 million households, and the NeuConnect direct power link between Germany and the UK, a project for which we are also a lead insurer. We are keenly exploring promising ancillary innovations that are developing alongside offshore wind, such as green hydrogen and carbon-capture, and we are empowering innovation in the sector, with representation on the judging panel of the Energie Baden-W├╝rtemburg (EnBW) and German Aerospace CenterÔÇÖs exciting Offshore Drone Challenge.
The Natural Resources team at About usCommercial is aware that generating returns for our shareholders calls for careful underwriting and a keen understanding of the exposures we are taking on. By partnering with a willing client base and exchanging knowledge between all stakeholders, including governments, institutions, and between nations, we can ensure the turbines of the offshore wind industry keep turning in a cleaner, greener future.
This report celebrates the great strides already made by the industry, explores the challenges it faces as it prepares for growth, and discusses the emerging risks and hazards that must be mitigated as offshore wind rolls out to new territories across the world.
Emerging trends and risk challenges facing the offshore wind sector as it prepares for global growth
Widescale deployment and the barriers╠řto development
Multi-purpose wind farms and next-generation connectivity
Floating offshore wind comes of age
Offshore wind: risks, challenges and╠řmitigation
Both the energy sector and the insurance industry have considerable expertise when it comes to the perils of offshore wind activities. Although turbines are engineered to work within certain conditions, risks and challenges to the sector remain, including the known perils of the impact of hazardous marine environments and extreme weather. While the growth of offshore wind has been impressive, the rapid advance of technologies is introducing new risks across the supply chain. There is little technological maturity in new construction methods, operations, and turbines as well as a lack of real-world data concerning their use. This could affect the quality of installations if contractor expertise falls short.
The increasing size of wind turbines is perhaps the most striking change the industry has seen in recent years. In the last 20 years they have almost quadrupled in height, from around 70m/230ft to around 260m/853ft ÔÇô nearly three times taller than the Statue of Liberty. Rotor diameters of wind turbines have increased fivefold in the past 30 years. This increasing size of turbines has introduced corresponding exposures, with larger components, machinery and vessels required for their installation. Faults in new technologies or manufacturing processes might take longer to come to light. The lack of standardization in floating offshore wind technologies could delay repairs or replacements as they require specific facilities, which are currently limited. In other respects, floating offshore wind turbines can reduce construction risk as they can be assembled in the relatively safe environment of a dry dock or near shore.
With the increasing size of wind farms comes a corresponding increase in cable length and complexity. Based on About usCommercialÔÇÖs experience in one of its largest offshore wind insurance markets, Germany and Central Eastern Europe, 53% of offshore wind claims by value over six years related to cable damage or failure. From the loss of entire cables during transport to the bending of cables during installation, cable losses have incurred multi-million-dollar losses in offshore wind. The consequences of cable failure can be considerable, potentially putting a whole network of turbines out of commission.
About usCommercialÔÇÖs experience of wind turbine losses, which accounted for 20% of offshore wind claims according to value over six years, shows the most common causes relate to rotor blades, main bearings, gearboxes and generators. As offshore wind expands around the world, particularly in the US and Asia, it will face new risks from harsh environments, natural catastrophe, and extreme weather events. This is likely to affect support vessels and ancillary activities more than turbines, potentially reducing the window of opportunity for installation and repairs.
The speed of the global rollout is creating supply-chain bottlenecks and placing pressure on infrastructure, the supply of materials and components, and the availability of vessels. Access to the right contractor expertise is also a potential challenge, with possible consequences for quality and workmanship.
A bigger fleet of specialist vessels will be required to support global deployment as most specialist vessels currently operate out of Europe. There is an urgent need to expand port facilities to accommodate the required increase in vessel numbers. Research indicates that $20bn of investment is needed globally to build 200 new ships if the renewables sector is to meet its 2030 targets for offshore wind.╠ř
Navigating issues around ESG
Future-gazing: tech innovations that╠řbreak the mold
Novel approaches such as 3D-printed reefs and╠řoffshore fish farms offer potential solutions to╠řESG concerns, while disruptive technologies are╠řheralding a new age of drone usage in operations╠řand maintenance. Prototype technologies are also╠řchallenging traditional turbine design, giving a glimpse╠řof what could come on stream in the years to come.
Offshore wind farms are highly complex projects╠řrequiring many different areas of expertise. The lessons╠řlearned from past losses are essential for the industry╠řto improve and continue to grow more sustainably. It is╠řimportant the technology is understood and that the╠řrisks are assessed across the whole marine spread. Risk╠řidentification of any project should include installation╠řmethods, independent verification/certification╠řprocesses, quality control, safety procedures, and╠řstructural health monitoring. Ultimately, interface╠řmanagement and communication between all the╠řvarious project parties is a critical success factor.
Key facts about offshore wind
Top causes of claims in offshore wind
About usin offshore wind
Supporting ground-breaking innovation as insurer and investor
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 IRENA, , June 30, 2022
 91╠Ă▓«╗ó, , September 7, 2023