In the UK, 2.3 million families struggled to afford their energy bills in 2016. In some parts of the US, the poorest households have to spend more than 50 percent of their income on heating and lighting their homes. The cost of energy can be so high, homes are forced to turn the heating off in winter, causing potentially fatal health problems like pneumonia and flu. “Cold homes are a bigger killer across the UK than road accidents, drug abuse or alcohol abuse,” according to Maria Wardrobe, director of National Energy Action.
This isn’t just a question of improving household finances and health among society’s poorest – it’s a challenge for the entire planet. The cheapest fuels have long been the most polluting, with sources of renewable energy such as wind and solar so expensive that they have not been considered a viable energy alternative. What the planet – and its poorest people – need is a way to reduce the cost of energy to make renewable energy more affordable and accessible.
Wind power is increasingly being recognized as a cost-effective clean energy solution. Once viewed as an ambitious — if not audacious — investment, offshore wind power generation is a rapidly expanding part of the global energy mix – an increasingly economical and sustainable source of renewable power that may help combat climate risk.
Since 2012, the cost of building and operating offshore wind farms has fallen by 32 percent. On top of advances in technology, a critical component of reducing the cost and encouraging the growth of offshore wind as a sustainable energy solution is risk management.
“The number of offshore wind farms across the world has grown dramatically over the last decade. Effectively managing the risks associated with these projects is a big reason for falling costs and the growth of this market,” says Greg Lowe, Global Head of Sustainability and Resilience, Aon. As the industry’s leading risk advisor, Aon has helped reduce risks and deliver cost-savings for 75 percent of all offshore wind farms in operation or under construction, strengthening their viability as a source of renewable energy for millions of people all over the world.
Aon is supporting the transition to clean power by helping clients, investors and insurers better evaluate and mitigate volatility. Grounded in an unmatched investment in data and analytics, Aon’s expertise ranges from giving investors greater certainty through detailed risk analysis, to helping to reduce weather volatility by insuring against periods of low wind intensity. “We see more data than anyone else in the industry, and we’re using that expertise to help make projects less expensive, less risky and less volatile,” says Kurt Cripps, Global Head of Weather Risk, Aon.
Through an exclusive agreement with Celsius Pro, a leading technology platform for weather risk management, Aon has assembled over 100 years of weather data to provide clients and investors with better insights into weather patterns and trends. These insights help reduce volatility caused by variations in wind volumes and energy output.
In 2002, DONG Energy commissioned the world’s first commercial offshore wind farm. Today, the firm has built more offshore wind farms than any company worldwide and powers more than one quarter of the total wind capacity in the market. Aon has played an important role in helping the company reduce costs and grow its global footprint. “As a strategic adviser, Aon helps us think about risk beyond insurance and ultimately brings down the cost of energy,” explains Hanne Aaboe, Director, DONG Energy. “If the cost of energy is not brought down to acceptable levels, consumers and businesses will never choose renewable energy over fossil fuels.” DONG Energy hopes to double its installed capacity by 2020, bringing clean power to 16 million Europeans.
Aon’s renewable solutions are encouraging the growth of offshore wind power. “The core of our mission as a firm is to create social impact every day,” says Sexton. “We believe we have a massive opportunity to use our insights and expertise to accelerate the growth of renewable energy worldwide.”
1. The Economist Intelligence Unit, Managing the Risk in Renewable Energy, 2011
2. International Renewable Energy Agency, Renewable Energy Innovation Outlook, 2016