Biomass Plant Insurance

Biomass Sector

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

Construction all risks insurance

Operational all risks insurance

Environmental liability

Marine cargo & transit

Energy efficiency insurance

Public liability

Product liability