Global Underwater Hub (GUH), an industry trade body, has raised concerns about the persistent risk of underwater cable failures that could potentially undermine the global offshore wind sector's ambitious plans.
GUH emphasizes that the reliability of subsea cables is of paramount importance for the success of offshore wind projects. Unfortunately, failures in these vital components have become all too frequent, pushing the cost of insuring them to levels that are increasingly unsustainable.
Neil Gordon, Chief Executive of GUH, revealed, “It's estimated that around 85% of the total value of offshore wind insurance claims are related to subsea cables. Insurers are facing significant losses in underwriting these cables, with the average settlement claim averaging around £9 million.”
Gordon continued, “Brokers have cautioned that the high number of cable-related claims is affecting insurance capacity and coverage. Moreover, the expenses incurred for repairs often run into millions, while warranties seldom cover the substantial costs associated with business interruption.”
The implications of these challenges are profound. Gordon expressed serious concerns, stating, “If these critical components become uninsurable, offshore wind projects around the world will be derailed, making the global 2050 net zero targets completely unachievable.”
A recent report from Allianz Capital underscored the severity of the situation, revealing that damage to cables stands as the leading cause of insurance claims in the offshore wind market, accounting for a staggering 53% of claims by value from 2014 to 2020.
To address this critical issue, GUH has taken proactive steps by establishing the Subsea Cables Forum. This initiative aims to unite industry stakeholders in developing a comprehensive roadmap to enhance the quality, reliability, and consequently the insurability of subsea cables. Such efforts are particularly crucial for realizing global offshore wind ambitions, especially in the emerging field of floating offshore wind technology.
Gordon emphasized, “There is an urgent need for a holistic approach to finding solutions that can be implemented as offshore wind projects continue to grow in scale and technical complexity, incorporating higher voltages and dynamic elements.” This warning underscores the pressing need for the offshore wind industry to tackle these challenges head-on to ensure its long-term sustainability and contribution to global clean energy goals.
