AXA XL explains the challenges posed by renewables

Although renewable energy options offer environmental benefits, development and operations can still be associated with some environmental exposures that should not be discounted, according to a new environmental white paper from AXA XL.

Domiciled in Bermuda, AXA XL is the US subsidiary of global insurance and reinsurance company AXA.

The white paper, titled Renewable Energy Environmental Exposures, provides an overview of renewable energy use, briefly discusses professional services and contracting risks, and outlines potential solar and wind energy environmental risks.

Renewable energy sources and projects provide a wide range of options and alternatives to fossil fuels for power generation and transportation, the white paper notes, but operational limitations, primarily due to scale and generation capacity, have resulted in limited contributions from renewable energy relative to fossil fuel sources.

It adds, however,  that increasing awareness, use, research, problem solving, incentives, and public acceptance factors are making alternative energy sources increasingly viable in the battle to reduce greenhouse gases and minimise climate change.

Site developers, owners and operators should recognise the professional, construction, and operational risks associated with solar and wind energy projects, the white paper says.

“A primary concern is the location and siting of projects. Use of contaminated or distressed land for renewable energy projects increases siting options, but also presents some unique historical challenges that must be addressed. Obtaining buy-in from stakeholders and local communities for construction and operation of power generation and transmission assets is critical.

“Solar and wind power projects have less obvious environmental risks, but there are some significant exposures that must be evaluated. These include potential ecosystem impacts, natural resource damages, aesthetics, and stormwater, soil, and groundwater risks. Ancillary operations and substations can also utilize various hazardous materials that can represent an environmental risk.

“On-going maintenance of solar-energy driven turbines/generators and wind-turbine machinery can generate oil and solvent wastes that must be properly managed and disposed. Site assessments, stakeholder collaboration, contracts/indemnifications, and risk transfer programs that include pollution and professional liability insurance, can help minimize the exposures associated with solar and wind energy project construction and operation. Comprehensively implementing such controls is vital to successful long-term development and operation of renewable energy projects,” the report concludes.