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Insurance possibilities for wind energy sector, available in India - Energetica India

06 March, 2010

The post liberalization era -India has been witness to a determined push by the government to hasten the pace of industrialization and make India one of the most preferred destinations for investment. While the efforts of the government have been laudable, we cannot attain a rapid pace of economic growth if our basic infrastructure is not in place and the most important component of this would be an uninterrupted supply of power. Unfortunately, most parts of the country have been plagued by an energy shortfall which has been a source of increasing frustration among the industry.  A study by KPMG shows that India has the fifth largest generation capacity in the world with an installed capacity of 152 GW as on 30 September 2009, which is about 4 percent of global power generation. The study further estimates the average per capita consumption of electricity in India to be 704 Kwh during 2008-09 which is  fairly low when compared to that of some of the developed and emerging nations such US (~15,000 Kwh). China (~1,800 Kwh) and the world average at 2,300 Kwh. The prognosis is decidedly dismal and the electricity energy shortfall for India is estimated to remain at 34,250 MW by 2012 and we would require energy above 300,000 MW by 2020 in order to sustain our economic growth. In this context, renewable energy can play a crucial role in filling a part of the energy gap and we have seen many companies making a foray into this sector of late. Though fossil fuels will continue to dominate the energy mix in the near future, there has to be a relentless effort to make renewable energy the major source of electricity generation for a brighter and cleaner planet. Although wind energy still accounts for less than one percent of the world¿s electricity generation, it has been attracting a lot of investment and is one of the fastest growing energy systems in the world. There are numerous reasons for this such as the reduction in the cost of wind turbines, volatility in the prices of conventional energy forms and most importantly the pressure on the global community to gradually make non - carbon forms of energy a major source of power to mitigate the effects of climate change.

The cost of wind energy is determined by the initial wind turbine installation costs, interest rate on the money invested and the amount of energy produced. Power production by wind turbines is contingent on various factors, chiefly the geographical and topographical conditions. Wind energy is an ideal renewable energy source, since it is an infinitely sustainable energy source and has a low gestation (erection) period. Wind farms are also compatible with agriculture since the wind turbines only cover about 2% of the land and the rest of the land can be used for farming or grazing. Moreover, although the initial wind energy costs are higher as compared to conventional electricity, improved technology has seen the costs of wind energy reducing drastically year on year whereas conventional electricity generation costs have been rising as the planet's fossil fuels continue to deplete.  In the initial years, the growth in the number of wind turbines and the gradual growth in the size of the individual turbine, which meant a higher financial value, was a precursor to a demand for more specialized covers with the recognition of the fact that a wind turbine is essentially a power plant and should be treated as such for insurance purposes. However, with the increase in the number of wind energy farms, the need for specialized insurance solutions specifically catering to this segment has been felt. Denmark is a pioneer in the Wind Energy industry having both onshore and offshore Wind Turbines.  In Denmark, nearly 10% of the power production is contributed by wind turbines with a wind energy capacity installed per capita many times higher than in any other country. Therefore, Danish insurers are a repository of relevant risk data on wind turbines for a number of years.

RSA, erstwhile Royal & Sun Alliance, with their presence in Denmark operating with CODAN are one of the largest and most trusted insurance providers for wind energy.

    Windmills are vulnerable to various risk exposures such as

  • Transit Damages due to the Over Dimensional nature of the equipment (Blades and towers) being handled.
  • Handling damages during installation
  • Erection and testing losses
  • Operational damage due to windstorms which could damage the rotor blades
  • Breakdown of gearboxes, generators.
  • Damages due to lightning
  • Third party liability due to blades getting dislodged and damaging public property as well as life
  • Loss of components due to theft during installation or operational stages
  • Damage to the turbines due to fire, arson or riot


Royal Sundaram is a leading player in insuring Wind Turbine Generators and can design tailor-made solutions to cater to specific needs of the insured.  An off-the-shelf seamless policy covering the following can be availed

  • Transit & Erection cover inclusive cover for hired machinery
  • Loss of Profits arising out of insurable loss during erection
  • All Risk cover at the Operational Stage and subsequent Loss of Profits, if any
  • Public Liability Risk


Today, wind energy is one of the fastest growing methods of electricity generation, both in terms of efficiency and the size of the turbines.  Very soon we expect to see turbines to the capacity of 20 MW and above. Royal Sundaram takes pleasure to be an active partner to this industry and in doing its bit to bring us a step closer to a clean energy future for our planet and gradually eliminate our dependence on fossil fuels.