Expert Risk Articles

One spot in the Mojave Desert is now hotter than ever before…

The Ivanpah complex is the world’s largest solar thermal plant. Its development is helping to transform the alternative energy landscape in the US, generating enough electricity to power 140,000 homes a year and doubling the commercial solar thermal energy capacity currently available.


As 2013 wound down, a dramatic new technology was fired up in California’s Mojave Desert. The world’s largest solar-thermal project was brought on line opening a new chapter in renewable energy.

Located 50 miles southwest of Las Vegas, the Ivanpah generating complex is jointly-owned by utility company NRG Energy, technology provider BrightSource Energy, and Google. According to the operating venture, it covers 3,500 acres of public land and uses three huge circular arrays of mirrors to focus the sun’s rays on three solar furnaces atop towers to create steam that turns turbines.

Once fully operational, the 392 megawatt (377 megawatt net) plant will generate enough electricity to power 140,000 homes annually. Ivanpah’s three power tower units will also nearly double the commercial solar thermal energy capacity now operating in the United States – Pacific Gas and Electric signed an agreement to purchase power from two of the generating units; power from the third is being sold to Southern California Edison.

In addition electricity from Ivanpah will avoid millions of tons of carbon dioxide and other air pollutants – the equivalent of taking 70,000 cars off the road. It is estimated the project will create more than 2,100 jobs for construction workers and support staff and 86 jobs for operations and maintenance employees in addition to hundreds of millions of dollars in local and state taxes. Little wonder then that the $2.2bn project is hailed by its stakeholders as “a durable model for far-reaching employment and economic benefit both locally and nationally.”

The tagline for the project, as outlined on its website, reads: “What if we could deliver on solar’s promise?” and the development of such an ambitious and innovative project offers further evidence of the increasing relevance and importance of solar as an alternative energy form in the US and California in particular.

A stellar year for solar

Of course there is still some way to go before the utilization of solar comes anywhere near to challenging the country’s reliance on fossil fuels. According to the US Energy Information Administration coal and natural gas plants produced 37% and 30% of US electricity respectively in 2012, while wind generated 3.5% and solar just 0.1%.

Yet the third quarter of 2013 was the second largest on record for the US solar industry, according to the Solar Energy Industry Association (SEIA).

Most of the solar energy generated in the US, and indeed around the world, is photovoltaic (PV), where light shining on silicon chips creates power directly.

There was 930 MW of new PV capacity installed in Q3 2013, representing a 35% increase in deployment over the third quarter of 2012. This strong third quarter kept the US market on pace for another record year.

Meanwhile, SEIA and GTM Research forecast that an additional 1,780 MW of PV and 800 MW of concentrating solar (or solar thermal, such as Ivanpah) would be installed in the fourth quarter of 2013 alone, bringing the total for the year to over 5,000 MW of new solar electric capacity. There are more than 10,250 MW of cumulative solar electric capacity operating in the US, enough to power more than 1.7 million average American homes.

And following the launch of the Ivanpah solar electric generating system, to give it its full title, it appears the solar sector in the US and the Golden State in particular is set to burn even brighter.

Project Cargo Underpins Solar Energy Innovation

The development of major infrastructure initiatives in remote locations can result in a number of significant challenges, particularly with regards to the transit portion of critical components.

Construction of innovative power projects such as the Ivanpah complex can often involve the transporting of a great number and variety of high-tech components from all around the world, due to the complexities of today’s modern supply chains, as Tim Donney, Global Head, Marine Risk Consulting AGCS explains to Global Risk Dialogue.

AGCS offers project cargo insurance for such scenarios ensuring the transportation of these components is fully protected and any loss or damage to the cargo is covered.

“For example, you can have mounting assemblies coming from Israel, hardware out of Malaysia, Indonesia, and Korea and steam turbines feed pumps out of Europe. The loss-control complexity can be very high,” he explains.

“So the project cargo process involves a lot of collaboration with the client, their suppliers and any other participating companies.”

“The key is communication and preparation. Nobody wants the loss-control surveyor to arrive and not be able to approve a move, because this creates needless delays and costs; so everyone needs to work very hard to review plans carefully in advance.”

Many regard the groundbreaking ceremony as the official launch of a development but the project cargo exposure really starts with the transportation of the components from around the world to the job site, adds Kevin Wolfe, Global Head of Project Cargo & Marine Head North East.

The project cargo policy in many instances is extended to provide coverage for loss of income, commonly referred to as “delay in start-up” or “advance loss of profits.” This is basically another form of business interruption insurance. Without the ability to demonstrate that “delay in start-up” coverage is in place, many projects would not receive the necessary funding, as lenders insist on this type of coverage as part of their loan agreements.

He adds more broadly that the key to marine underwriting and project management is not the obvious risks like mirrors or million-pound turbine components, but the non-obvious but critical things such as a custom-built crane or highly-specialized feed pumps.

Another non-obvious risk for any component or movement is the physical reality of the move itself. Limits of underpasses, bridges, and tunnels are obvious but limits such as turning radius for roads or land-transport complications to or from ports less so, because they may not be mapped.

“Overall the challenge for project cargo risk control is that technology keeps evolving,” says Wolfe. “The constant is that if one piece gets delayed or damaged, the projected ‘on time’ completion date for the project is in jeopardy. In some instances things are not simple or quick to repair or replace. We know we can’t eliminate risk, but we can manage risk if we work collaboratively with clients and brokers.”

The key, Wolfe says, “is open communication, from the underwriting on through loss-control to the broker and client. We always start with a kick-off meeting with our groups, including loss-control, and the client, especially their logistics group. We definitely want to get in touch early and keep in contact.”

Allan Breese, Senior Risk-Control Engineer, AGCS acknowledges that arranging and keeping to shipping schedules is always a challenge.

“The closer we get to the end of the project the more the pressure grows on scheduling because there is less and less time to recover from delays.

“Sometimes we get a critical shipment notice with very little time to arrange for a surveyor.”

Even when timing works well, there are instances when surveyors are not comfortable with the handling arrangements. “Sometimes it has to go back to the top of the food chain,” says Breese, “because if a situation like that continues unchanged it threatens the shipment.”

That said Breese is quick to add that “we are not hidebound. We like to find workable solutions and alternatives. In the end, everyone understands the implicit reality that risk management will be compromised if shipping standards are not upheld.”