Offshore Wind in Asia: Moving into Stormy Seas and Shaky Grounds 5th Asia Offshore Wind Day (AWEA) Tokyo 24 January 2019 Andre Martin

1 HOME Swiss Re Corporate Solutions Your insurance partner throughout the lifecycle of a wind farm

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2 HOME Global Wind Power Installed capacity onshore & offshore Top 10 New Installed Capacity Jan-Dec 2017 Top 10 New Cumulative Capacity Dec 2017

Rest of the world PR China* Rest of the world PR China* Belgium Mexico Turkey Italy France Canada Brazil* Brazil* France India UK Spain

UK India

Germany USA Germany USA

Country MW % Share Country MW % Share PR China* 19,500 37 PR China* 188,232 35 USA 7,017 13 USA 89,077 17 Germany 6,581 13 Germany 56,132 10 United Kingdom 4,270 8 India 32,848 6 India 4,148 8 Spain 23,170 4 Brazil* 2,022 4 United Kingdom 18,872 3 France 1,694 3 France 13,759 3 Turkey 766 1 Brazil* 12,763 2 Mexico 478 1 Canada 12,239 2 Belgium 467 1 Italy 9,479 2 Rest of the world 5,630 11 Rest of the world 83,008 15 Total TOP 10 46,943 89 Total TOP 10 456,572 85 World Total 52,573 100 World Total 539,581 100

Source: GWEC Global Wind Statistics 2017 3 HOME Global Wind Power - Installed Capacity Offshore Only

MW 18814 8000 Cumulative Capacity 2016 Cumulative Capacity 2017 7000 14483 12167 6000 8724

5000 7046 5415 4117 4000

3000

2011 2012 2013 2014 2015 2016 2017 Offshore Wind: 2000 • Total installed during Total cumulative

1000 offshore installed capacity: 18.8 GW • 85% of current offshore wind 0 installations are in Europe • Asia still relatively small (3 GW), but Total 5,156 4,108 1,627 1,271 1,118 712 202 99 32 60 35 30 25 0 5 2 0 14,483 2016 growing fast with China leading market New 1,680 1,247 1,161 0 0 165 0 0 60 5 3 0 0 8 0 0 2 4,331 2017 • Top 5 potentials in Asia: China, , Total 6,836 5,355 2,788 1,271 1,118 877 202 99 92 65 38 30 25 8 5 2 2 18,814 2017 , and Vietnam

Source: GWEC Global Wind Statistics 2017 4 HOME Moving into Stormy Seas … exposure

Vast majority of current offshore windfarms in European waters with benign Storm exposure Very limited experience with typhoon resilience of wind turbines • Typhoon Soudelor 2015, Taiwan • 2003, Okinawa • Typhoon Cimaron 2018, Hyogo Prefecture Japan

Local 50 Year Peak Gust Speed

Extreme (>70 m/s) Moderate (30-35 m/s)

Very High (60-70 m/s) Low (25-30 m/s)

High (50-60 m/s) Low (20-25 m/s)

Significant (40-50 m/s) Very Low (<20 m/s)

Moderate (35-40 m/s)

Source: Swiss Re Geoportal 5 HOME … and Shaky Grounds Earthquake exposure

No Earthquake exposure in Northern Europe Very limited experience with earthquake resilience of wind turbines • California EQ 1986 , USA • Tsunami Fukushima 2011, Japan

PSA 0.3s [g] – Return Period 475y

Extreme (1.82-20) Significant (0.27-0.41)

Very High (1.22-1.82) Moderate (0.18-0.27)

Very High (0.82-1.22) Low (0.14-0.18)

High (0.61-0.82) Low (0.09-0.14)

High (0.41-0.61) Very Low (0.06-0.09)

Source: Swiss Re Geoportal 6 HOME Growing into Untested Waters Asia to grow 15-fold by 2030

20 200

15 150 (GW)

10 100 capacity

5 50

Operating Annualinstalled capacity(GW) 0 0 2015 2020 2025 2030 2035 2040 2045 Year of commissioning

Operating capacity band Annual Install Operating capacity SR Institute Modelled Windstorm Loss Potential:

By 2030 expected TC Olivia in Increased Current design criteria By 2030 Europe North America West Pacific Taiwan 45 GW installed Australia (1996) research do not yet take into offshore capacity with 113m/s activity for account typhoon / in Asia (up from 3 compared to both Storm hurricane conditions Installed capacity (GW) 65 GW 24 GW 120 GW 5.5 GW GW in 2018) most severe and EQ • Certification standards Total Sum Insured (USD) 210 bn 80 bn 200 bn 20 bn • New risks and storm in exposure, being expanded exposures Scotland 77m/s but still e.g. IEC planning “T” insufficient class for Tropical 50-Year Loss Event (USD) 0.43 bn 1.0 bn 3.3 bn 2.7 bn Storm 200-Year Loss Event (USD) 1.2 bn 3.5 bn 6.7 bn 4.0 bn

Source: IRENA 2016 | SR Institute 7 HOME Risk Transfer Solutions Stretching the limits beyond traditional insurance

• Marine Cargo / DSU + Construction / DSU + Commercial Operations / BI + Liability • Focus beyond Repair / Replacement of physical damage: Importance of time element and financial impact of Delay / Business Interruption

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• Workwindow Put: Hedge against inclement weather causing Delays and Cost Overruns • Index based on high Wave Action / Wind Speed preventing vessels and labour to work on site • Wind Hedge / Lack of Wind Cover: Downside protection against under-production • Reducing earnings volatility allows for better capital structure and increases bankability of project

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