Offshore Wind’s Risks, Opportunities Explored in Report

A rendering of the Port of Long Beach’s planned Pier Wind facility. Image: POLB.

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

It is also a big issue for the commercial fishing industry and has been making commercial fishermen anxious for a number of reasons. Unanswered questions include how floating wind turbines could affect California’s marine life (with noise from building and running wind farms a consideration), 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, both with the projects and the developing infrastructure and technology around them.

The report, released by Allianz Commercial in late September, titled “A Turning Point for Offshore Wind,” lists growth opportunities, developing technologies, risks and loss patterns.

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

Collisions, impacts 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 Ocean 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 30 gigawatts 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 production, an 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. It is set to reach 64.3 GW by the end of 2022, nearly a 12-fold 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 zero emissions by 2050.

Claims and Fears

These current and planned projects offer the promise of more renewable energy to meet increasing demands, but they also are sparking concerns 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 Morro Bay Call Zone, for example, is home to deeper groundfish, sablefish, albacore and swordfish fisheries.

Electromagnetic cables will be run through the deeper nearshore and shallow nearshore areas filled with rockfish, salmon, squid, Dungeness and rock crab, spot prawn, 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 also could 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 in a July 2021 article focused on the concerns of commercial fishermen.

There are also risks over OSW buildout and deployment. The costs of claims for the expanding projects are rising and may continue to do so.

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

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 farther into new and remote waters, the report states.


The use of 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 a recent uptick in vessel collisions with turbines and offshore infrastructure, 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, after having previously collided with the tanker Pechora Star after its anchor gave way in a storm, Allianz Commercial’s report stated.

The Maritime Research Institute Netherlands reports that with 2,500 wind turbines due to be installed in the North Sea before 2030, a ship-to-turbine collision in that area is expected to occur 1.5 to 2.5 times a year.

A frequent cause of the collisions, the report said, was human error.

More shipbuilding is predicted. 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,” said Adam Reed, Allianz Commercial’s global leader for offshore renewables and upstream energy. “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 

Don Jergler has been a professional journalist for more than 25 years, covering insurance, real estate and more. He spent two decades as a reporter at several daily newspapers, then entered business-to-business reporting. His freelance work has appeared in the Los Angeles Times, Long Beach Post, Orange County Register and numerous B2B publications. He’s currently the Western Region editor of Insurance Journal.