Biomass Insurance

Biomass is important because it provides humans with a highly sought after, renewable form of energy. Not only does it provide energy in its most basic form, but it can be made into other forms of energy as well. Through mechanical and chemical processes, biomass can be created into chemical energy, thermal energy, and biochemical energy. And, because it is sustainable and actually utilizes a great deal of waste, it is a green method of energy that does not negatively impact the environment, as other energy forms do.

Biomass energy has rapidly become a vital part of the global renewable energy mix and account for an ever-growing share of electric capacity added worldwide. The UK government’s renewable targets state that by 2020 they aim to generate 12 % of heat through renewable energy sources (CEBR 2010). Within these targets approximately 30% is planned to come from biomass.

Insurance risks
Aside from some of the more conventional types of insurance for businesses eg employer’s liability property motor etc the focus of insurance for the biomass industry is on the biomass plant itself. The risks associated with biomass plant depend on where you are in the process chain.

Manufacturers of biomass plant
Most of the risks associated with manufacturers relate to problems with the underlying design of the plant and failures within the manufacturing process which impact customers and end users and create a legal liability further down the line. Also with new, unknown, untested technologies the risk associated with up-scaling from demonstration to full commercial applications can be significant.

Installers of biomass plant
During the installation phase many problems can occur.   Careful consideration needs to be given to the location of the installation and the potential to damage surrounding property and the financial impact that this could have to third parties. On site security needs to be considered to ensure the risks associated with loss or damage to the plant before completion is minimized. Testing and commissioning is vital therefore the risks of breakdown and project delay need to be carefully considered.

Other risks associated with the project include delay with supply of plant and potential environmental on site and off site clean-up.

Operators of biomass plant
By the very nature of biomass projects and in many cases the financing that sits in the background it’s vital that the plant performs in accordance with requirements. If it fails the financial impact to the owner of the plant could be significant. The risks associated with damage, breakdown and the ultimate impact to revenue are high and how they can be mitigated need to be clearly understood.

Also the nature and supply of feedstock could have a bearing on the performance of the plant and its ability to produce the revenue required.

Due to the specialist nature of biomass plant its really important to partner with an insurance broker that understands the risks associated with biomass plant and most importantly able to identify the solutions available in the market place. This is especially relevant to new technologies and processes when insurers need clear quantitative and qualitative reference data to enable them to appraise and price the risk associated with the project. If lenders are involved they need to be reassured that all project risks have been identified, analyzed and effectively controlled or transferred.

Depending on whether you are a manufacturer, installer or owner/user insurance for biomass plant can be arranged on either an annual or individual project basis. The types of insurance available include

Asset performance insurance
Environmental liability
Marine cargo & transit
Property damage, breakdown & loss of revenue
Public liability
Product liability

  • Construction all risks insurance for biomass plant

    Construction all risks insurance is vital during the installation phase of the contract. Construction all risks insurance for biomass plant provides protection against physical damage, theft and breakdown during installation testing and commissioning. Also importantly it can be extended to include advanced loss of revenue should completion of the installation be delayed as result of one of these insured events occurring.

    Important underwriting considerations include:-

    Type size scale and complexity of the biomass plant and project.
    Does the plant represent new technology.
    Nature of feedstock as some types are more hazardous than others.
    Situation of the contract.

    Operational all risk insurance is typically written of an all risks of physical loss or damage basis on either an annual or per project basis. We can tailor the insurance to meet the specific needs of the installation where ever it is situation.

  • Operational all risks insurance for biomass plant

    As an owner or end user insurance for biomass plant whilst in operation is vital. Operational all risks insurance for biomass plant provides protection against physical damage, theft and breakdown. An operational policy can be extended to include not only loss of revenue should the biomass plant stop operating as result of one of these insured events occurring but also if a key supplier suffers similar difficulties.

    Important underwriting considerations include:-

    Type size scale and complexity of the biomass plant.
    Does the plant represent new technology.
    Nature of security.
    Types of feedstock as some types are more hazardous than others.
    Source of feedstock and where suppliers are situated.
    Situation of the biomass plant facility.

    Operational all risks is typically written of an all risks of physical loss or damage basis on either an annual or per project basis. We can tailor the insurance to meet the specific needs of the plant where ever it is situation.

  • Environmental liability for on-site/off site clean up

    Environmental liability insurance covers the cost of restoring damage caused by environmental accidents, such as pollution of land, water, air, and biodiversity damage.

    During installation and operation of biomass plant you will face various scenarios in which your activities may cause environmental damage.  For example, damage caused by:

    • Explosion
    • Contaminated soil disposal.
    • Accidental release of fuel oil chemicals and toxic gases.
    • Dust arising from construction work

     

     

     

    Recent UK and EU legislation has significantly increased the potential costs of remediating damage caused.  Environmental issues need to be dealt with rapidly.

    What does it cover?

    Environmental liability insurance covers the cost of repairing environmental damage arising from both common law claims, and claims arising from UK and EU legislation.

    • Both sudden pollution and gradual pollution
    • First party (own site) clean up costs imposed by regulatory authorities
    • Third party liability including impact on property value
    • Nuisance claims
    • Legal costs and expenses
  • Marine cargo and transit insurance for biomass plant

    Invariably biomass plant will need to be transported from the manufacturer to the site of installation. In many cases the journey time could be significant utilising many different modes of transport. Any problems or delays can have a significant impact on project time lines which in turn can have implications on revenue further down the line.

    Marine cargo and transit insurance not only provides insurance for physical damage or loss of biomass plant during transportation but can also be extended to include delay. Also if these events lead to a delay in project completion we can arrange insurance to cover the anticipated loss of revenue.

    Important underwriting considerations include:-

    • Size and value of plant
    • Length and profile of journey
    • Replacement plant lead in times
    • Loss mitigation procedures following an insured event
    • Contractual review

     

     

     

     

    Due to the complexity of some biomass plant underwriters will focus extensively on the ability to replace plant that is lost during transit.

  • Energy Efficiency Insurance

    If you are an organisation that has invested into energy saving technology it’s possible to insure the shortfall in energy savings realised each year.

    Sitting aside more conventional types of insurance such damage, breakdown and loss or revenue energy efficiency insurance is designed for all types of energy efficiency systems including:-

    • LED lighting
    • Biomass boiler optimisation
    • Solar panels

     

     

    Whether you are owner/end user energy service companies or banks/funder energy efficiency insurer can help you reduce the financial risk associated with your investment.

  • Public liability for biomass plant

    Injury to third parties and damage to surrounding properties during either the installation or operation of biomass plant is an important consideration. During the very nature of biomass plant the risks can be high and underwriters will want to have a clear understanding of the steps undertaken to mitigate these exposure.

    Important underwriting considerations include:-

    • Type and size of the biomass plant facility or project
    • Security
    • Nature of surrounding area and country domicile (if applicable)
    • Type of feedstock

     

     

     

    Also where subcontractors are used during installation it will be important to understand the extent of contractual liability for each party.

    Public liability runs alongside either the construction or operational all risks policy and can be arranged with annually or on a contract specific basis.

  • Products Liability for biomass plant manufacturers

    Product liability insurance covers the cost of compensating anyone who is injured by a faulty product. If you design manufacture or distribute of biomass plant you may be held legally responsible for any injuries to people or damage to property caused by a faulty product. This may be as a result of an underlying defect in the design or the biomass or a failure somewhere on the manufacturing process.

    Important underwriting considerations for product liability for biomass plant include:-

    • Type of biomass plant
    • Development history and results of field testing
    • Extent of quality and safety procedures
    • Details of any outsourced procedures
    • Details of target market and location

     

     

     

    To a lesser degree operators/owners of biomass plant may have a product liability exposure if they are able and choose to sell biochar. Depending on the type of biomass biochar may be produced and in many cases can be sold on. In these circumstances product liability insurance should be arranged.

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