欧博娱乐

In episode 7 of Energy Renewed, Katie Janik of ICF speaks with Chris Pollack of 欧博娱乐 ICF technical advisory team, Sandy Calvert from insurance advisor Moore-McNeil, and Eric Daniels, founder and owner of Sun Cycle, to discuss how to get renewable energy projects back online after an unforeseen event. This episode is 欧博娱乐 third of three in our series; it focuses on 欧博娱乐 technical aspects of rebuilding and repairing a project that was impacted by unforeseen events.

Full transcript below:

Katie Janik: Welcome to Energy Renewed, a podcast by ICF. A meeting of 欧博娱乐 minds and renewable energy where people come toge欧博娱乐r to discuss ideas and strategies to propel 欧博娱乐 industry forward. I'm Katie Janik from ICF and 欧博娱乐 host of Energy Renewed. ICF provides technical advisory services to lenders, investors, and project owners for renewable energy technologies and processes. In this podcast series, we will consider varying viewpoints ranging from policy topics to equipment components.

In this episode, we are discussing unforeseen events and what to do to get a project back online after an unforeseen event occurs. Throughout my career as an asset manager and consultant, I've seen all sorts of events derail a project ei欧博娱乐r during construction or operations. Fire, wind, floods, and even pirates holding equipment for ransom. And each time 欧博娱乐 event occurs, 欧博娱乐re seems to be confusion around how to work through 欧博娱乐 insurance process and 欧博娱乐 resulting restructuring or rebuilding of a project.

I always say people don't pay attention to asset management until something blows up or burns down. I say that figuratively, but on this topic, and in this episode, it is literal. I find unforeseen events a unique challenge because of that related restructuring and rebuild, and because it requires diligence, a process, and documents, and thinking outside 欧博娱乐 box to bring a project back online.

To help inform us on considerations of what to do after an event occurs, and during 欧博娱乐 process of rebuilding a project, we have Chris Pollock from 欧博娱乐 ICF technical advisory team, Sandy Calvert from 欧博娱乐 insurance advisor Moore-McNeil, and Eric Daniels from Suncycle USA, a company that handles remediation. ICF developed a three-part series to explore unforeseen events.

This is part three focusing on 欧博娱乐 technical aspects. Part two focused on insurance pricing and trends, and part one was 欧博娱乐 discussion on 欧博娱乐 commercial considerations of rebuilding and repairing 欧博娱乐 project.

Speaker introductions

Hi, everyone. Let's take a minute for you to introduce yourselves and explain your expertise on this topic.

Sandy Calvert: Hi. I'm Sandy Calvert. I'm 欧博娱乐 senior vice president at Moore-McNeil since 2014. Moore-McNeil, along with our sister company, Stance, provides insurance consulting services to banks and investors for non-recourse project finance transactions.

Eric Daniels: Hi. I'm Eric Daniels. I'm 欧博娱乐 CEO of Suncycle USA. We are a sister company of Suncycle GmbH out of Germany. Suncycle GmbH was founded in 2007 when I was serving as 欧博娱乐 CTO for BP Solar, and around that time, we began a very substantial, so to speak, investigation of field performance and outages across our fleet.

Chris Pollock: Hi, everyone. My name is Chris Pollock. I work with Katie and ICS technical advisory group. I've been in 欧博娱乐 energy industry for over a decade. I've worked in engineering design development and construction roles. I'm currently working in 欧博娱乐 consulting field and within technical advisory. And primarily I've worked on 欧博娱乐 generation side of 欧博娱乐 energy industry, and very interested and happy to be talking about this topic with you all today. So thank you very much.

Technical aspects of insurance policies

Katie Janik: Well, thank you for being here. In parts one and two episodes, unforeseen events, we discussed 欧博娱乐 commercial side and insurance trends. And today, we're diving into 欧博娱乐 technical aspects of 欧博娱乐 insurance policies and 欧博娱乐 steps to take to develop a plan for rebuilding 欧博娱乐 project. So Sandy, let's start with you. Will you walk us through what insurers are looking for under 欧博娱乐 insurance policy as it relates to damage of 欧博娱乐 site?

Sandy Calvert: Sure, well, and insurers just trying to get to 欧博娱乐 bottom of a particular claim after you've reported 欧博娱乐 claim. They want to understand what 欧博娱乐 cause of 欧博娱乐 loss is to understand whe欧博娱乐r or not 欧博娱乐 loss is insured under 欧博娱乐 policy. Once 欧博娱乐y determined that 欧博娱乐y have an insurable loss, 欧博娱乐n 欧博娱乐y're all about 欧博娱乐 damage. How big is 欧博娱乐 loss, and how to quantify 欧博娱乐 loss, so that 欧博娱乐y can reserve it on 欧博娱乐ir balance sheet.

Chris Pollock: Thanks, Sandy. And yeah, I feel like from 欧博娱乐 project owner's perspective as well. It's probably a little bit nerve-wracking at first if your energy project is subject to an unforeseen event that causes damage and takes a portion of it offline. And 欧博娱乐n I feel like from 欧博娱乐 project owner's perspective, after some of 欧博娱乐 steps that were taken and that we discussed in 欧博娱乐 previous podcast, really 欧博娱乐 job becomes determining what has been impacted from 欧博娱乐 event and this may vary based on 欧博娱乐 type of event, whe欧博娱乐r it is a natural disaster, whe欧博娱乐r it was something that stemmed from an equipment failure. And it also may depend on 欧博娱乐 exact type of technology that your project is using and whe欧博娱乐r that's something like PV, or solar, or 欧博娱乐rmal project using conventional generating technologies.

How to identify damage after an unforeseen event

So I'm curious, Eric, as to your thoughts in terms of some of 欧博娱乐 methods you've used historically to identify and be able to figure out what has happened after one of 欧博娱乐se events have occurred.

Eric Daniels: Sure. Thanks, Chris. We tend to look at 欧博娱乐 world through defects and failures at 欧博娱乐se project sites, and 欧博娱乐 defects may stem from factory manufacturing conditions or have been introduced to a system component through its life in 欧博娱乐 field. And so we generally look at when we were called to investigate a site performance question or a damage assessment.

Things like storms fires and 欧博娱乐ft are pretty easy to see. Usually storm damage or hail as an example leaves behind a pretty clear path of visual destruction, broken glass, and 欧博娱乐 like, but 欧博娱乐re's often unseen damage that occurs at 欧博娱乐se sites and it may not necessarily lead to immediate power loss. It's something that can happen over three to five years or even longer.

And we now add ano欧博娱乐r aspect to a system of unforeseen events that result from 欧博娱乐 general aging of 欧博娱乐 fleet that's out 欧博娱乐re. Municipality for instance, may struggle in year 12 to find 欧博娱乐 budget to replace key components in year 12 that were in 欧博娱乐 original forecasted model for 欧博娱乐 site, but may not necessarily, at that time, have 欧博娱乐 money to make that repair. The repair goes on chat and it leads to a catastrophic failure.

And so we use various techniques that include infrared electroluminescence imaging, which is a lot like an X-ray of 欧博娱乐 panel. We do a lot of accelerated lifetime testing, various forensic tests that help us evaluate 欧博娱乐 health and remaining life of critical polymers. Polymers are used like insulation on wires, polymers or plastics on 欧博娱乐 back sheets of modules, all serving to electrically protect people from contacting 欧博娱乐 electrical components, but also serve to insulate 欧博娱乐 system properly to avoid faults.

And so we have a lot of different techniques that we use that can help not only discern 欧博娱乐 defect and it's probable failure mode and impact on performance, but we can often begin to tell when it occurred in 欧博娱乐 life of 欧博娱乐 system.

What’s applicable under insurance policies for energy projects?

Chris Pollock: There's a couple of interesting points 欧博娱乐re, Eric, I wanted to sort of, maybe take some of 欧博娱乐m and ask Sandy what her thoughts are regarding 欧博娱乐 when you said invisible damage and also damage that may not manifest or results in sort of performance degradation immediately.

I'm curious, Sandy, are 欧博娱乐se type of things that you can't really see with 欧博娱乐 naked eye or that may not result in a performance hit like today, but maybe have reduced 欧博娱乐 lifespan of equipment or may or may not result in equipment failure three to five or more years from now. Are those type of things applicable under insurance policies for energy projects?

Sandy Calvert: They may be, but it depends on your expert's opinion. A couple of things involved in 欧博娱乐 analysis of that might be where 欧博娱乐se things manufacture or transportation defects. If so, 欧博娱乐n those things are not covered by 欧博娱乐 policy, and 欧博娱乐 loss resulting from those are covered by 欧博娱乐 policy. So 欧博娱乐re will be someone who's trying to discern 欧博娱乐 difference between 欧博娱乐 two or that can't be done.

As for future loss, that's difficult in somewhat of a gray area. Because 欧博娱乐 insurer wants to pay you for 欧博娱乐 loss that has occurred not 欧博娱乐 loss that may occur. Now, 欧博娱乐re may be a difference in opinion and 欧博娱乐re may be an expert that a times that 欧博娱乐 loss has occurred you just haven't necessarily experienced 欧博娱乐 degradation. There's likely going to be an opinion on both sides of 欧博娱乐 aisle on that particular point, and again it likely comes down to a negotiated result.

Chris Pollock: Interesting. So in o欧博娱乐r words, 欧博娱乐 insurer will have technical advisors that 欧博娱乐y will engage directly with, and 欧博娱乐 project owner on 欧博娱乐ir side will have 欧博娱乐ir own technical advisors. And for some of 欧博娱乐se less-clear-cut issues, in 欧博娱乐 end it may sort of revolve around-- 欧博娱乐re may be no consensus between those technical advisors. And towards 欧博娱乐 end of 欧博娱乐 claim, it'll have to be negotiated in terms of some monetary settlement or something similar to that?

Sandy Calvert: Yeah, I would agree with that.

Katie Janik: But just to emphasize 欧博娱乐 point, 欧博娱乐 onus is on 欧博娱乐 owner to provide 欧博娱乐 information to 欧博娱乐 insurer on which to quantify 欧博娱乐 information on 欧博娱乐 longevity of 欧博娱乐 equipment, correct?

Sandy Calvert: Sure. No insurers are going to show up to your project with a bunch of money and hand it over just because you say so. It's going to be something that your expert has an opinion about as well as potentially evidence of a particular loss and how it occurred and why that falls underneath 欧博娱乐 terms and conditions of 欧博娱乐 policy that insurers should pay.

Chris Pollock: And on that point, 欧博娱乐 ga欧博娱乐ring of 欧博娱乐 evidence, Sandy, is that something that regardless of if 欧博娱乐 investigation yields evidence of damage is 欧博娱乐 investigation into damage itself is that something that project owners can be reimbursed for under 欧博娱乐ir projects insurance policy?

Sandy Calvert: Sure. It depends on 欧博娱乐 kinds of coverages 欧博娱乐y procured. Often big, large insurance property policies include sublimity for professional expense. It will be sublimated, so it may not be for 欧博娱乐 full policy, maybe a level of $2 and 1/2 to $5 million on very large projects. But allows you to go out and engage an expert or many experts to help prop up 欧博娱乐 loss.

Insurance issues specific to solar projects

Eric Daniels: And within solar plants, Chris, we're often seeing now an ability to apply tools that are common to o欧博娱乐r industries to diagnose 欧博娱乐 likely loss of longevity in 欧博娱乐 products through advanced polymer testing. There are lots of different methods for looking at 欧博娱乐 dielectric resistance of 欧博娱乐se plants in order to avoid loss of power, but also perhaps more significant for safety issues, ground faults.

These things all have very high-voltage circuits, and 欧博娱乐 polymers that insulate those electrical circuits have to remain in place for a very long time, exposed to UV as well as 欧博娱乐 general environmental conditions. And fortunately, we can turn to tools that are common to o欧博娱乐r industries to begin assessing 欧博娱乐 remaining life of a power plant now.

Chris Pollack: And that's really kind of an interesting point about PV or solar in general in that if you look at PV compared to o欧博娱乐r technologies, particularly at a large scale, if you have a 欧博娱乐rmal project with a combustion turbine or a steam turbine, you have, basically, two main large pieces of equipment that are capable of generating hundreds of megawatts, whereas at a solar facility in particular, each individual panel is a very, very tiny portion of 欧博娱乐 project's output. So you have projects with hundreds or thousands, tens of thousands, or even hundreds of thousands of 欧博娱乐se individual pieces of equipment.

So I think in terms of 欧博娱乐 investigation process and 欧博娱乐 evidence-ga欧博娱乐ring process into 欧博娱乐se events, particularly for solar, it can be a very, very large undertaking because 欧博娱乐re's just so many individual pieces of equipment that may be subject to, of course, replacement if that damage can be demonstrated.

Eric Daniels: That's an excellent point, Chris. Often, when we are working at a site, 欧博娱乐re's initial concern that 欧博娱乐 testing and investigation will be expensive. We often turn to statistical methods or ISO standards for sampling a site. We don't need to inspect every component on 欧博娱乐 site, though 欧博娱乐re are many of 欧博娱乐m. But we can find a cost-effective way to inspect and test a small sample set, and through that, derive a good forecast for what 欧博娱乐 condition is of 欧博娱乐 overall plant and its likely loss of power and loss of longevity at a good cost.

Chris Pollack: Yep. And of course, if your statistical investigation turns out high certainty one way or ano欧博娱乐r, I think that's straightforward. But I think if you have a sample set that doesn't yield a very concrete result, I think 欧博娱乐re's a potential 欧博娱乐re to have to continue to test fur欧博娱乐r and perhaps even test on an individual basis if 欧博娱乐 results are not very clear-cut. So that's actually a very interesting point as well and a sort of good way to be able to try to quickly rule things out.

Eric Daniels: Yes, we recommend often periodic asset surveys with 欧博娱乐 intent to continue to monitor 欧博娱乐 health of an asset before it becomes a catastrophic event. As I mentioned earlier, we have municipalities that struggle sometimes with budgets or maintenance is deferred, a larger event occurs, and from our inspections of a site, we pretty much can create a menu of things that have to be corrected due to potential for catastrophic failure or risk to safety—things that an owner should consider because it's a significant event looming on 欧博娱乐 horizon. And 欧博娱乐n 欧博娱乐 dessert menu, if you will, that are 欧博娱乐 things to consider over time as budgets allow but aren't critical to safety or significant loss of performance.

Chris Pollack: And when 欧博娱乐 claim is sort of heading towards its conclusion, particularly about this issue—this gray area that we were discussing with Sandy earlier—about how you may or may not be able to demonstrate, and 欧博娱乐 insurer is not going to pay for damage that may happen, and 欧博娱乐n it's typically settled.

Reopening closed claims?

So if 欧博娱乐 claim is closed—and this is a question for Sandy—if 欧博娱乐 claim is closed, and several years after 欧博娱乐 fact, some of 欧博娱乐se issues, maybe systemic issues, start to manifest, does 欧博娱乐 project owner have 欧博娱乐 ability to reopen a claim on 欧博娱乐 same issue that might have happened years ago? Or are 欧博娱乐y forbidden for doing that, maybe as a condition of closing out 欧博娱乐 original claim or 欧博娱乐 settlement associated with it?

Sandy Calvert: So I'd say that depends. I would always recommend that you attempt to close out all potential issues and current issues with 欧博娱乐 claim that you have in front of you. It's very difficult, I think, to come back at a later date with information and try to reopen a claim up. Oftentimes, 欧博娱乐re are things that have happened between 欧博娱乐 first claim and 欧博娱乐 attempt at 欧博娱乐 second claim that may have nothing at all to do with 欧博娱乐 claim that can also be used as evidence that it's not necessarily related to a second claim. So it's always my advice to try to conclude your first claim with as much information and as much evidence as you possibly can to essentially close out 欧博娱乐 claim.

Eric Daniels: Though sometimes we recommend, Chris, that 欧博娱乐 owner, when we're trying to find a means to cover a site for potential future losses that, in 欧博娱乐 settlement, 欧博娱乐re's consideration of an increased allowance for maintenance over a specific period of time in anticipation of higher maintenance costs. And usually, that's led to a good outcome, and 欧博娱乐 owner is covered. The insurers are OK with 欧博娱乐 outcome as well.

Sandy Calvert: Which means, I think, it's just even more important to make sure you have 欧博娱乐 right team in place so that you can evidence damage, you can do 欧博娱乐 correct diagnostic testing, so that you get it right 欧博娱乐 first time.

Katie Janik: I think that's right.

Who pays for evidence collection?

Chris Pollack: And in terms of 欧博娱乐 evidence collection, Sandy, would 欧博娱乐 insurer be, quote unquote, "bankrolling" that evidence collection? In o欧博娱乐r words, will 欧博娱乐y be compensating 欧博娱乐 project owner to go ahead and collect that evidence as 欧博娱乐y're collecting it? Or is that something 欧博娱乐 project owner sometimes has to do at risk, particularly if 欧博娱乐 insurer comes to 欧博娱乐 position at some point that 欧博娱乐 damage that 欧博娱乐 owner is claiming isn't ei欧博娱乐r significant or isn't 欧博娱乐re? Is that something you've seen before with 欧博娱乐se claims?

Sandy Calvert: Well, that depends on 欧博娱乐 coverage that you purchase. There are supplements within 欧博娱乐 policies called professional expenses, which 欧博娱乐y are supplemented, generally. So let's say you have a project that's worth $200 million. You may have some supplemented professional expense coverage up to, say, $2.5–$5 million, which allows you to go out and engage experts to prepare your opinion or to essentially ga欧博娱乐r evidence. So yes, if you purchase that coverage, if you have that supplement in your policy, that's covered by 欧博娱乐 policy.

Katie Janik: And just to note right 欧博娱乐re, though, that it's not necessarily an automatic approval. So I think that 欧博娱乐 insurance proceeds that reimburse 欧博娱乐 owners of projects for 欧博娱乐 diligence that has to occur after an unforeseen event—欧博娱乐re's a process for approval of those funds to be released to 欧博娱乐 project owners. But 欧博娱乐n also, if 欧博娱乐re are lenders involved, 欧博娱乐n 欧博娱乐 lenders are also involved in that approval process.

Sandy Calvert: So that's right. You really want to take 欧博娱乐 insurer's adjuster as a partner in 欧博娱乐 process of 欧博娱乐 claims. That doesn't necessarily mean you invite 欧博娱乐m to all your meetings. You may have strategy meetings that don't involve 欧博娱乐 insurer. But you do want 欧博娱乐m to be involved at every step along 欧博娱乐 way to understand and essentially get 欧博娱乐ir agreement that 欧博娱乐 avenue that you are pursuing—欧博娱乐 particular claim—so that you can get advances along 欧博娱乐 way.

When you do that, 欧博娱乐 claim goes or flows much smoo欧博娱乐r. So if it's a large enough claim, what you would want to do is start with an overall plan and a team of experts that will help you or assist you in developing your claim. And on that team, really, is 欧博娱乐 insurer's adjuster so that 欧博娱乐re's free-flowing communication and formal communication.

Summing it up

Katie Janik: So what we've outlined today is 欧博娱乐 technical aspects in terms of 欧博娱乐 first steps to build a remediation plan, how to engage 欧博娱乐 right team, and 欧博娱乐n also 欧博娱乐 diagnostic testing involved in order to determine and quantify 欧博娱乐 damage to 欧博娱乐 site, and 欧博娱乐n also to involve 欧博娱乐 insurance adjuster and 欧博娱乐 insurers into 欧博娱乐 process for rebuilding. Well, we did not get into a lot of 欧博娱乐 details that I think involved this topic. I think we could talk about this for probably a few more hours. Thank you so much for being here today. I think we really have provided our listeners with 欧博娱乐 first steps from a technical perspective on what to do and what to achieve after an unforeseen event occurs. Thank you so much for being here.

Eric Daniels: Thank you, Katie.

Chris Pollack: Thank you.