Low Wind Insurance: Essential for Renewable Energy Sectors

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Nov 20, 2023
By Arbol

Low Wind Insurance: Tailored Coverage for Business Resilience

One of the most promising sectors in renewable energy generation is wind power. Unfortunately, wind droughts have intermittently hamstrung wind-dependent businesses. A recent article from Euronews, "The Threat of Wind Droughts to the North Sea Wind Power Industry," details the risks faced in the North Sea region, an area considered to be a stronghold of the renewable energy industry. 

According to the Euronews article, wind droughts constitute a significant threat to the wind power industry in the North Sea area. Given that several EU countries are interested in turning the North Sea into a hub of green energy production, the decrease in wind speeds caused by wind droughts has raised concerns about the likelihood of meeting renewable energy targets. 

Map depicting Europe and the United Kingdom, highlighting key production zones of North Sea wind farms, marked with distinct circles.

On a similar note, an article published last year by Yale Environment 360, "Global 'Stilling': Is Climate Change Slowing Down the Wind?," observed that in September 2021, wind farms generated only 2 percent of the U.K.’s power, compared to 18 percent, in the same month, in 2020. The article raises concerns about meeting renewable energy targets and the need for solutions to mitigate the adverse effects of wind droughts.

Research from 1978 to 2010 has shown a decline in wind speeds across the globe, the article states.  However, after 2010, global average wind speeds increased from 7 miles per hour to 7.4 miles per hour. Despite these conflicting findings, the Intergovernmental Panel on Climate Change (IPCC) forecasts a potential slowing of wind speeds in the coming decades, with projections indicating a drop of up to 10 percent by 2100.

The Yale Environment 360 article asserts that various factors contribute to wind droughts, such as the Arctic's rapid warming and an increase in "surface roughness" caused by urban buildings. The Arctic's warming, which is occurring at a faster rate than was once anticipated not that long ago, could further accelerate the decline in wind speeds. These factors highlight the complex nature of wind systems and the need for responsive renewable energy risk management solutions. Although both of the aforementioned articles focus on Europe and the U.K., climate change is, of course, a global phenomenon and there is no reason to suppose that wind droughts will only bedevil the European continent. 

The Importance of Low Wind Insurance

Arbol Insurance Services offers specialized wind energy insurance to address the risks associated with wind droughts. Our parametric insurance product allows businesses to customize coverage based on location, coverage trigger, policy period, and data source. For wind-dependent industries such as wind farms, setting a threshold for average wind speed during a policy period ensures automatic payout in case of low wind conditions, permitting the mitigation of financial losses.

Contact us here to learn more about how our low wind product can benefit your business.

The North Sea is one of the prime areas for wind energy production, with at least 91 active wind farms providing a maximum production capacity in excess of 19.4 GW per hour. Given that most of the high capacity wind farms are situated in one of three regions, it’s possible to see how changing wind speeds influence energy production.