Power & Renewables
Our clients include junior operators and developers through to multinational power utilities, as well as institutional investors and strategic partners. We are supporting 3MW solar projects and 300MW geothermal power developments in diverse locations across Europe, East Africa and the Far East.
A Project Led Approach
Every project starts with a first step. An idea put together by a few people evolves into an initial concept; a plan and direction takes shape.
At CKRe we have the over 130 years of combined experience in power project management and development, emerging markets and global energy expertise, so we’ve sat at your side of the table. Bringing a power project from concept through to commercial operations is complex, with multiple risks on every line of the critical path.
We offer creative risk management advice and specialist performance products that can help satisfy the demands of investors while protecting your project from event driven scenarios that can cause expensive and time consuming delays.
Concept & Preparation – Understanding the dimensions of a project
The initial focus will be on devising a masterplan; setting out the critical path for a project and focusing on key commercial, technical and regulatory tasks. As a project gains traction, the team grows, with specialists coming on board to cope with a fast-growing workload. Often these activities will involve key team members travelling frequently to remote locations.
With so many moving parts, insurance and risk transfer requirements are often put on the back burner. At CKRe we understand that people are critical to project success. Early stage insurances such as Directors’ & Officers’ cover, Key Man and Kidnap insurance are part of a suite of workaday but essential insurances we can arrange with local and international insurers.
Feasibility – Proving project viability
During the feasibility phase, the management team will be working to demonstrate to shareholders, equity investors and development finance institutions that the aims of a project are doable and achievable. Regulatory and permitting commitments need to be agreed, transmission and connection arrangements in place and negotiations for a Power Purchase Agreement reaching conclusion. Any specialist feasibility activities such as exploration drilling need to be funded and underway.
Risk mitigation and risk transfer products that that can help underpin financial viability are a speciality area for CKRe. We have developed niche performance products to support early stage geothermal drilling and solar performance, and we have tailored wind performance and climate change mitigation packages for clients. We have strong relationships with institutional and multilateral investors, and we work with major trade credit and political risk insurers to devise packages of early support that will help move a project towards financial close. Traditional insurance arrangements also have a much higher profile at the feasibility stage, requiring dependable advice and budgeting. We can provide the full range of insurance requirements for asset protection, general liabilities and revenue protection to support the Power Purchase Agreement.
Plant Construction – The project takes shape
With feasibility studies complete, regulatory & permitting issues resolved and commercial agreement in place, the project will enter the next phase. Debt funders will come on board to support construction and grid/offtake connection. The lenders will require counterparty credit risks to be underwritten, with construction risks, transit and cargo, plant & machinery, property, liability, political risk and delay in start-up cover to be in effect.
Understanding the specialist risks and the interface between construction activities and early works for a specialist operation, such as a geothermal exploratory drilling programme, can be problematic. Risk registers are key. Insurers and brokers focused on product-line service delivery may fail to address the challenges and hurdles of the project cycle, rather than trying to help meet these challenges and hurdles. Understanding the importance of providing full client support is at the centre of the CKRe project led approach to insurance and risk management.
Commercial Operations Phase – Providing power and earning revenues
With construction complete the project moves towards the Commercial Operations Date, where the power will come online. Renegotiation of project finance into long term debt finance will need robust credit and political risk cover. Developers, operators and contractors remain at risk after project delivery and through the operational life of the power project. As renewable technologies mature, parastatal and private sector power customers are increasingly tough on tariffs while demanding stringent availability targets.
CKRe benefits from in-house advisors that still work in project development, so we understand these challenges. We work with insurers to create new performance related products to smooth out operational failures and unexpected changes in climate. We build on our relationships with international trade credit risk insurers, investors and DFI’s to help find practical solutions to underpin long-term customer agreements.
Innovative Performance Insurance for the Geothermal, Solar and Wind Renewable Sector
The CKRe geothermal facility has been designed to allow our clients to progress from the early stage insurances to the specialist performance cover supporting high-risk phases, and through to the necessary cover for construction, drilling and operational activities, all under the same umbrella facility. For Geothermal Power projects this seamless approach is critical, as speciality insurers in the renewable energy sector will not cover the project during a drilling phase under either a construction or operational policy. Further, there is very limited capacity for the Contingent Exploration Expense Insurance that CKRe and our partner insurers have developed.
We are building our range of specialist performance cover to help underpin the tight tariff margins increasingly demanded from solar and wind developers. We partner with insurers that also understand the need to adapt and innovate to suit longer term business opportunities for project delivery, rather than stick to the traditional product-line focus that can place burden on a project rather than provide benefit.