AIR Assesses Catastrophe Risk of Industrial, Renewable Energy Facilities

May 2, 2011

Catastrophe modeling firm AIR Worldwide (AIR) has expanded its catastrophe risk engineering services to cover industrial and renewable energy facilities worldwide.

AIR said the expansion of its Catastrophe Risk Engineering (CRE) unit is aimed at helping insurers, facultative reinsurers, brokers, and risk managers better assess the natural catastrophe risk to industrial facilities and wind and solar energy installations throughout the world.

AIR said its recent studies of renewable energy infrastructure reveal that the best approach to quantifying the catastrophe risk for such unique facilities is a site-specific engineering-based risk assessment.

“The in-depth knowledge gained from site-specific assessments has informed our research on the vulnerability of industrial and renewable energy facilities, which we have found to be acutely sensitive to site- and asset-specific characteristics,” said Dr. Akshay Gupta, principal engineer and director of the CRE practice at AIR Worldwide.

Gupta said AIR now has the capability to conduct detailed, site-specific, engineering-based risk studies globally, through its Catastrophe Risk Engineering consulting services.

Boston-based AIR made its announcement at the Risk and Insurance Management Society (RIMS) meeting in Vancouver.

AIR said its recent research reports on the seismic and wind vulnerability of modern wind turbines and solar array shows that the quantification of the catastrophe risk of renewable energy assets pose several challenges. First, renewable energy structures and systems are relatively new, and, as a result, there is an acute scarcity of data . Second, renewable energy structures have completely distinct features from other typical industrial infrastructure, and therefore it may be inappropriate to use other industrial assets as surrogates for these systems.

Assessment is also challenging because the wind and solar energy industries continue to grow quickly throughout the world. The worldwide wind energy industry alone increased its capacity by more than 20 percent in 2010. Much of the growth is occurring in regions such as the United States and Asia, which have significant earthquake and tropical cyclone hazard, and Europe, which has significant earthquake and extra-tropical cyclone hazard.

AIR said it has developed a systematic engineering-based approach to assess the catastrophe risk associated with wind and solar energy installations on a site-specific basis.

“We believe that a rigorous understanding of the performance of wind turbines and solar arrays to natural catastrophes is essential to appropriately address issues of risk management and financing associated with such projects,” said Gupta. AIR said the results of its engineering analyses of the behavior of these assets under severe ground shaking and winds show that the performance or damageability of such systems is highly sensitive to a multitude of site- and asset-specific details.

Gupta said he believes that solutions typically used by the industry may not provide reliable estimates of the vulnerability for unique risks such as renewable energy infrastructure. “Until such time as a majority of installation types are analyzed and understood, the best approach for assessing risk for such unique assets remains a site-specific risk assessment,” he said.

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