Carl Gurney, Renewable Energy Director, Marsh Commercial
In 2010, the British government threw its weight behind the anaerobic digestion (AD) sector, arguing that turning the 10.2 million tonnes of waste produced in the country each year into energy was a “no brainer”.1
But as a relatively small sector with few insurance policyholders spread over a variety of insurers, this means the price of cover and excesses is pushed up. As a result, it’s vital that the entire sector understands and mitigate risks. Engaging with insurers early on enables them to review design plans, assess operational assets so they can offer loss control advice, and be happy to provide cover. Even if your plant has been running for some time, still give insurers plenty of time to assess it. Doing so can help minimise your own risks in finding suitable cover for your asset and people and enable insurers to offer the right cover.
10 factors to consider
- Navigate the site purchase
Risks: When selecting and leasing a site, be mindful that there may be restrictions on the land’s ownership and use. For example, it may be subject to covenants; limits on rights of way; or access restrictions for both vehicles and pedestrians. There may be missing documents or disputes over the title. Also, be aware that after planning permission is granted, third parties can call for a legal review to challenge the decision.
- Manage the construction process
Risks: Problems may occur while constructing buildings, erecting plant equipment, and commissioning and testing the facility. This can result in damage to equipment, plant and structures, which may lead to delays in the construction of your plant. Damage to third party properties, including the environment, as well as injury to contractors and the general public are also potential risks during these stages.
- Purchase and protect your equipment
Risks: The equipment and parts you buy could be damaged when being erected and tested or when travelling to you – either in transit or storage. To protect yourself against the latter, you should consider marine and transit cover. Damage at these stages could delay the start date of your plant, causing an income loss, asset damage and additional expenses, including increased costs. In operation, equipment could be affected by unexpected events such as fire, storms, theft, vandalism, breakdown and impact. There’s also a risk that the equipment you have purchased isn’t suitable for your plant.
- Disaster recovery and continuity planning
Risks: If there’s a breakdown, damage, disaster or security breach, your plant may be out of service for some time – typically 12 months after a major incident, and potentially longer to get back to similar productivity levels before the event. Depending on the nature of the incident, you may need to involve the Health and Safety Executive or Environment Agency / SEPA, which could extend the interruption further. During this time your costs may increase if you have to find a way around the problem and buy alternative materials or back-up equipment.
- Safeguard the environment
Risks: AD plants deal with potentially hazardous matter, so they pose a risk to the surrounding environment if they malfunction or if the correct systems and preventative measures are not implemented. This could have an impact on neighbouring properties, the surrounding environment, habitat and ecosystems. It could also interrupt your activities, cause you to incur Environment Agency / SEPA enforcements and fines and attract adverse publicity to your plant and the wider industry.
- Survive a cyber-attack
Risks: Cyber-attacks are increasingly common and our reliance on online systems means a breach can compromise the running of your entire plant. Your site may be held to ransom or there may be a security breach in your computer systems. The attack could also come from third party companies that access your site and from your own plant, attacking third parties.
- Support your directors
Risks: Your directors are personally responsible for many elements of your plant’s functioning. If any of them are believed to have breached a regulation or broken the law they may face investigation or even prosecution, especially if the breach leads to an accident or injury.
- Pre-empt and protect against legal matters
Risks: There are several points at which you may need legal support – for example, if you have a disagreement with an employee, public body or third party. These could lead to a dispute, claim or out-of-court settlement.
- Protect your staff, visitors and the public
Risks: AD plants can be dangerous. There is a risk to employees, visitors, passers-by or neighbours of being seriously hurt or worse because of your activities.
- Decommissioning your plant
Risks: At the end of its life, your AD plant will need to be decommissioned safely, which is a phase you need to prepare for in advance.
Here to help
For more information about what you can do to mitigate these 10 factors download your free copy of the Marsh Commercial Anaerobic Digestion whitepaper.
Plus, don’t miss Carl Gurney, Renewable Energy Director, Marsh Commercial at the World Biogas Expo 2022 as he joins the panel discussion “Biogas: How to build out fast and build out successfully” June 15 10:30-11:15, where he will be discussing what the insurance industry want to see in a project.
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This article is provided for the purposes of general interest and is not intended to apply to specific circumstances. You should obtain specific advice before deciding to act (or not act) on the contents of this article. This article does not constitute legal or regulatory advice. We are not qualified to provide, and will not provide, legal or regulatory advice. We recommend that you obtain your own such specific legal or regulatory advice on matters from relevant professional advisers.