AIR Worldwide Announces Catastrophe Risk Solutions for Industrial and Renewable Energy Facilities Worldwide

Catastrophe modeling firm AIR Worldwide (AIR) today announced that its Catastrophe Risk Engineering (CRE) solutions now cover industrial and renewable energy facilities worldwide.

Published on May 2, 2011

The expansion of these risk solutions 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’s 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. “AIR now has the capability to conduct detailed, site-specific, engineering-based risk studies globally, through our Catastrophe Risk Engineering consulting services.”

Based on AIR’s recent research reports on the seismic and wind vulnerability of modern wind turbines and solar arrays, the quantification of the catastrophe risk of renewable energy assets pose several interesting challenges. First, renewable energy structures and systems are relatively new, and, as a result, there is an acute scarcity of data — not only on their historical performance under extreme loading, but also on available detailed characteristics of the assets. 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.

Additionally, 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. Consequently, a thorough understanding of renewable energy asset vulnerability is critical to managing and mitigating the risk associated with this rapid growth industry.

Motivated by these issues, AIR 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,” continued Dr. Gupta. “With this in mind, AIR conducts detailed engineering analyses for assets with unique risk characteristics to evaluate their behavior under severe ground shaking and winds.” The results show that the performance or damageability of such systems is highly sensitive to a multitude of site- and asset-specific details that make quantification of the risk difficult using broadly categorized approaches typically found in risk models.

Dr. Gupta concluded, “Based on our research findings, we believe 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.”

AIR has successfully translated detailed site-specific analysis work into catastrophe models as evidenced through the release of its engineering-based industrial facilities module within the U.S. Earthquake and Hurricane Models over the past two years. The industrial facilities module, which enables the sophisticated modeling of industrial facilities, is based, in substantial part, on site-specific engineering work done on specific industrial facilities. AIR envisions a similar track for industrial facilities and renewable energy infrastructure worldwide. Currently, AIR’s catastrophe risk solutions for industrial facilities outside the United States and for renewable energy facilities worldwide are available on a consulting basis. However, with increased application over time, these solutions will result in improved data and will be translated into robust catastrophe models.

AIR’s CRE services provide transparent and reliable loss estimates for industrial and commercial facilities. They are used by risk managers and brokers for risk assessment, mitigation, and emergency response planning. They are also used to facilitate decisions regarding insurance coverage. By combining CRE services with AIR’s state-of-art risk modeling, AIR is able to provide catastrophe risk solutions for industrial assets and renewable energy assets throughout the world.