Renewable Energy Projects: Whose fault is it anyway?
15 July 2019- by Huw Turner
For a project to succeed, on time and on budget, it needs to be bankable.
Project insurance is an essential component of the financial structure, reassuring investors and lenders that the right level of protection is in place for when things go wrong.
In an ideal world, renewable energy projects would go off without incident, but working down the chain of OEM’s contractors and subcontractors, there are too many opportunities for gaps to appear or mistakes to happen.
In a world where energy tariffs are being forced down, margins have never been more squeezed, resulting, unfortunately, in corners being cut during construction and operations.
This is why Price Forbes is working with our clients to pinpoint where mistakes might occur, all along the line. This helps to align the interests of the stakeholders, while ensuring project owners are not carrying the can for the failure of others to deliver on their commitments. Delays pose the biggest threat to a project, so it is important that contracts and schedules clearly set out and define where liabilities lay.
When an issue occurs, it is critical to get to the root of how and why the fault occurred. Insurance should not be a failsafe to cover poor workmanship or malfunctioning kit under warranty, and it should not be used to pick up the cost of a contract failing to deliver on what was contractually agreed. Multiple claims will impact on the bottom line of a project, leading to an increase in insurance premiums and possibly to the risk of a project becoming uninsurable.
By identifying the risks that emanate from third parties, project leaders can access specialist cover that is accurately priced and underwritten – and by aligning all stakeholders early in this process they can ensure partners do the same.