Sunday, June 30, 2019

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The Energy of Renewables

When a single solar farm can surpass the production of a coal-fired power station, the future for renewables is a strong one.

Energy and mining industries are specialised and highly complex with a high level of stakeholder engagement and government regulation. The mining sector is modern with world-class operations and high standards. Risks management and related insurance in the mining sector has stayed relatively unchanged from underground soft coal through to rare earth elements mines. Exports continued to grow in 2018, with key commodities being Coal ($61 Bil), LNG ($48 Bil), Gold ($20 Bil) & Iron Ore ($20 Bil). While traditional energy exports of coal and LNG are booming, domestic power production is quickly turning to renewables.

A single solar farm can exceed the output of the Hazelwood coal-fired power station in Victoria, one of the country’s largest polluters. Solar power has taken off, with 5,000 MW per year for 2017 & 2018 installed in both industrial scale and rooftop farms. This is equal to three major coal power stations coming online per year. Solar is expected to generate 80% of all electricity in Australia by 2030. While this is creating opportunities, it is also creating challengers and risks for the designers, project managers, builders, operators and owners. Along with the opportunities are risks such as connectivity and stability of the power grid, project construction delays, sourcing or training specialists to design, build and operate the solar and wind farms.

During the past year, we have successfully worked with several principals and head contractors on several renewable energy projects. These included a 175 MW grid ready project generating electricity for 59,000 homes, a 275MW project the largest in NSW and a 220 MW project, the largest in SA. While solar and wind will become mainstream, traditional energy sources such as natural gas will remain a significant source of energy, making up 18% of primary energy use. With the east coast of Australia facing a shortage of natural gas, resulting in increased wholesale and retail prices, exploration and production remains a key area of investment for Australian markets. Massive investment in LNG export projects of approx $200 Billion was undertaken between 2009 – 2015, with Australia now the second largest LNG exporter globally. This investment created new risks and challenges for the industry at that time, similar to those now facing the solar industry with its substantial pipeline.

At Honan, we work with clients to risk manage projects and operations, reducing injuries, loss and damage and assisting to safeguard profitability.

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Honan Insurance Group Pty Ltd is now fully owned by Marsh Pty Ltd. To find out more, speak to your broker or read the announcement