Extreme weather risks in North America are forcing renewables developers to strengthen project economics at the design stage as the cost of insurance claims soars, according to global energy consultancy K2 Management.

A K2 report, Pre-Construction Projects: The battle to reduce uncertainty and improve business case bankability, identifies major project development trends in the fast-growing renewables sector, based on data gathered from some of the most innovative wind and solar projects in North America and around the world.

In North America,where the large scale of projects has resulted in an increased focus on uncertainty, developers are being forced into more efficient and financially robust project development supported by tailored technology and high-quality data.

As the cost of insurance for natural disaster risks increases, the consideration of extreme weather particular to North America in the design phase can reduce risk and increase return on investment.

In response, developers are implementing new technology, modelling techniques and data, indicating that both investors and developers are investing in more detailed upfront analysis to secure more bankable projects. Special blades and foundations, and advanced electronics designed for extreme weather can mitigate risk and optimise project performance.

Secondly, the demand for detailed analysis and modelling early in the development phase is increasing as K2 Management saw a 440% increase in the use of Computational Fluid Dynamics in projects undertaken over the last three years, particularly in second-tier sites with more complex terrain, wind flows and weather patterns.

These project development trends will translate well to the budding offshore wind market in the US, which has a 25GW plus development pipeline as of summer 2018. As coastal weather events grow more extreme, a stronger focus on upfront risk mitigation and advanced design techniques will help developers secure expected returns.

“The US infrastructure bill has focused the renewables industry on issues relating to transmission and market design, but the North America-specific challenges highlighted in this report are driving important trends in support of stronger projects”, says Lars Andersen, president of K2 Management in North America.

“With installed wind power capacity in the US set to double in the near term and offshore wind about to take off, it is paramount that the risk mitigation strategies outlined in this report become standard procedure,” he said.

“Wind power is set to become a key part of the US’s energy mix, making the financial and operational strength of pre-construction projects of utmost importance to the county’s energy infrastructure going forward,” Anderson added.

The K2 Management’s report can be accessed and downloaded via this link:

Wind

Extreme weather forcing developers to rethink projects - K2