Offshore Wind’s Risks, Opportunities Explored in New Report

Image via Allianz.

Offshore Wind (OSW) is a rapidly growing industry and a heightened policy focus under the Biden administration, which is pushing development of OSW around the country, including several planned West Coast projects.

Offshore wind is also big issue for the commercial fishing industry, and has been making commercial fishermen anxious for a number or reasons, due to unanswered questions such as how floating wind turbines could affect California’s marine life (including noise from building and running wind farms), as well as whether electromagnetic fields could harm Pacific Coast salmon and other fish stocks.

Now, a new report from a global insurer that examines the opportunities and risks of OSW highlights some new concerns with these projects, as well as the developing infrastructure and technology around them.

The report, released by Allianz Commercial in late September, is titled “A turning point for offshore wind,” and lists growth opportunities, developing technologies, risks and loss patterns.

It identifies risks including bigger turbines and new technology creating bigger exposures for insurers, as well as weather and natural catastrophe risks as OSW expands into new territories.

Collisions, an impact on vessel construction demands and other elements are also in the report.

Two years after the Biden administration opened the West Coast to OSW development, Interior Secretary Deb Haaland in October announced plans for several new offshore wind lease sales, including leases in the Pacific off California and Oregon.

The Bureau of Ocean Energy Management (BOEM) last spring announced possible leasing off the Oregon coast, in the proposed Coos Bay Call Area (872,854 acres) and the Brookings Call Area (about 286,444 acres).

The Inflation Reduction Act of 2022 earmarks $369 billion for energy transition and boosting energy security. The Biden administration aims to deploy 30GW of OSW by 2030, enough to power 10 million homes and support 77,000 jobs.

In the U.S., a federal law called the Jones Act complicates OSW buildouts. The law stipulates that only ships built, owned and operated by U.S. citizens or permanent residents can move cargo between U.S. ports.

Because OSW components are currently only manufactured outside the U.S., this has led to some workarounds such as ship-to-ship transfers from cargo barges to installation vessels, which introduces new risk factors.

The U.S. is only lately attempting to catch up to global OSW expansion that’s well underway and is expected to boom in the coming years.

A report from the Global Wind Energy Council ( identified OSW growth across three continents and 19 countries by the end of 2022, reaching 64.3 GW—nearly a 12-times increase from 2012 (5.4 GW). Roughly 380 GW of new OSW capacity is forecast across 32 markets in the next 10 years.

Nearly half of that growth is expected to come from the Asia-Pacific region, followed by Europe (41%), North America (9%) and the Latin America region (1%).

China is now the world’s biggest OSW market. The World Forum Offshore Wind Report ( shows half of the world’s wind installations this year are expected to be in China, with the nation targeting 100 GW by 2025 and 1,000 GW by 2050.

The law of supply and demand would suggest even more OSW development is possible than currently forecast.

The International Renewable Energy Agency states that 2,000 GW of OSW capacity is needed to limit global temperature rise to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels and achieve net zero by 2050.

Claims and Fears

These current, planned and presumable projects offer the promise of more renewable energy to meet increasing demands, but they come with some concerns and risks and have left unanswered questions and worries for those who feel they may be impacted by them.

Many West Coast fishermen and their families fear these projects could change the way they fish in the region. The fisheries in the Morro Bay Call Zone, for example, are home to deeper groundfish, sablefish, albacore and swordfish fisheries.

Electromagnetic cables will be run through the deeper nearshore and shallow nearshore rockfish, salmon, squid, Dungeness and rock crab, spot prawns, pink shrimp, hagfish, sea bass, and halibut, according to Tom Hafer, president of the Morro Bay Commercial Fishermen’s Organization.

There’s also the potential impact a wind farm could have on upwelling and access to nutrient-rich foods necessary for marine life. It could also change the migratory patterns of marine mammals, seabirds and fish stocks.

“It will take away a lot of fishing area, cause a lot of ship traffic, and there are a lot of unknowns on how it will affect fish behavior,” Hafer told Fishermen’s News for a July 2021 article focused on the concerns of commercial fishermen.

There are also risks over OSW buildout and deployment outside of potential impacts on fishing. The costs of claims for the expanding and ever larger projects are rising and may continue to rise.

The Allianz Commercial report shows damage to cables was the leading driver of claims. More than half of OSW claims incurred by Allianz (53%) from 2014 to 2020 were related to cable damage, followed by turbine failure as the second major cause (20%) of loss.

Cable claims range from the loss of cables during transport to cables bending during installation. OSW cable losses can run into the multi-million-dollar range, because cable failure can put a network of turbines out of commission, according to the report.

The increasing size of wind turbines poses another risk that could impact future claims. In the last 20 years, turbines have nearly quadrupled in height—from around 229 feet (70 meters) to 853 feet (260 meters)—while rotor diameters have increased by fivefold in the past 30 years, the report shows.

A corresponding increase in risk may result from the increase in size. The report states that there’s a lack of real-world data on the performance and long-term impacts on these large turbines and their associated infrastructure, especially cables and their maintenance requirements.

Bigger turbine construction requires bigger blades and towers, which calls for a change in components and the vessels and equipment required to install them. Cranes, jack-up vessels, monopiles and jackets are getting bigger.

These large structures and their components must be able to withstand installation and operation in deeper waters and more hazardous conditions as OSW moves further into new and remote waters, the report states.


Trends that are leading to larger and more far-flung installations will drive a need for larger and more specialized vessels, including installation vessels, jack-up vessels and support vessels, according to the report.

The 37-page report also shows an uptick in vessel collisions with turbines and offshore infrastructure in recent years, which can result in significant losses. To date, collisions have largely involved smaller vessels. However, incidents involving larger vessels have been reported.

In 2022, drifting bulk carrier Julietta D34 collided with an offshore wind turbine foundation and transformer station in the Hollandse Kust Zuid wind farm, having previously collided with the tanker Pechora Star after its anchor gave way in a storm, Allianz Commercial’s report shows.

Collisions are an increasing concern. The Maritime Research Institute Netherlands reports that with 2,500 wind turbines due to be installed on the North Sea before 2030, the risk of a ship to turbine collision in that area is estimated to occur 1.5 to 2.5 times a year.

A frequent cause of the collisions listed in the report was human error.

More shipbuilding is another likely result of these trends. The report identifies $20 billion in investment needed globally to build 200 new ships if the renewables sector is to meet its 2030 OSW targets.

As demand is likely to outstrip supply, this will present a challenge for developers not only in securing a vessel when needed, but also in having a contingency in the case of issues with their current vessel.

“We have already seen newbuild vessels experience problems during construction and need to be replaced,” Allianz Commercial Global Leader—Offshore Renewables and Upstream Energy Adam Reed said. “As more projects come to market needing these large vessels, it is unlikely that substitute vessels will be available, which could result in significant delays.”

OSW global expansion is also expected to lead to developments further from shore in some areas prone to more severe weather conditions and natural catastrophes. 

Top Risks and Losses in Offshore Wind

  • Lack of technical maturity and data available on new or unproven technologies.
  • Bigger turbines, cranes, vessels, and components create correspondingly bigger exposures.
  • Damage to cables is the top cause of insurance claims. Wind turbine losses mostly relate to rotor blades, main bearings, gearboxes and generators.
  • Natural catastrophe exposure and higher wind speeds could pose risks as the sector expands into new territories.
  • The speed of build-out is creating supply-chain pressures on infrastructure, materials, components and vessels.
  • Access to expertise and specialist technical staff could be a challenge.
  • Vessel collision with turbines and offshore infrastructure can also result in significant losses.

SOURCE: Allianz