OECD-CEFIM Focus Group Discussion on the use of insurance products to de-risk clean-energy-projects

1. 16 June 2021
Allianz Global Corporate & Specialty SE
OECD FOCUS GROUP
DISCUSSION -
GREEN ENERGY

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A key global line in Allianz Group’s Property-Casualty insurance segment, providing full range of products
and services covering corporate and specialty insurance as well as alternative risk transfer and capital
solutions worldwide.
Around 4,400 employees worldwide of some 83 nationalities in 31 countries.
A combined Allianz and partner network in more than 200 countries and territories worldwide.
Diversified risk portfolio and capital efficiency offers long-term stability.
Managing some 2,700+ lead programs for international insurance solutions.
Market leading capacity – to handle the largest risks.
Consistently strong ratings: AA (‘Very Strong’) from Standard & Poor’s, A+ (‘Superior’) from A.M. Best*
ALLIANZ GLOBAL CORPORATE & SPECIALTY
AT A GLANCE
*AGCS SE and AGCS North America, correct as at April 2021 (S&P) resp. September 2020 (A.M. Best)
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02
OUR PRODUCTS -
GREEN ENERGY
SOLUTIONS

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TECHNOLOGY EXPERTISE
Onshore Wind Photovoltaic (PV) Offshore Wind Other Renewables
Combined offering possible Combined offering possible
Including: related
infrastructure
Including: CSP, geothermal,
hydrogen, biomass etc.
Claims Handling
Risk Consulting (ARC) & Allianz Center for Technology (AZT)
EAR/CAR - ALoP/DSU - TPL MB/BI/IAR
Cross LoB Policies (incl. Cargo/ Cargo DSU & Public Liability)
Underwriting – full range of
Industries & Products
Traditional ENG Policies: project / operational
Combined Policies
Strategic appetite

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• Plausibility checks for technical constructions (incl. prototypes)
• Recommendations for risk improvements & damage prevention concepts (technical risk management)
• Supervision of acceptance tests (PAC/FAC)
• Consultation and certification of Condition Monitoring Systems (CMS)
• Review maintenance concepts
• Analyzing operating performance as well as loss analyses (RCAs), etc.
INSURANCE SOLUTIONS
Development Transport Construction Operation
• Operational All Risk
• Business interruption
• Public- and Product liability
In addition:
• Lack of sun/wind and other non-
traditional products (via ART)
• Environmental liability
• Erection All Risk
• Advance Loss of Profit (ALoP)
• Project liability (TPL)
• Cargo All Risks
• Cargo Delay in Start-Up (DSU)
• Planning liability for architects
and engineers
Consultant and risk management services across all project stages

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Represented
worldwide in more
than 20 languages
throughout
24 countries
Global network
featuring 260
engineers, experts
and risk consultants
Solutions for
minimising risk and
for insuring complex
risks
Support in technical
underwriting,
covering all sectors
Certified specialists
from all of our
customers' business
sectors,
AZT know-how
ALLIANZ RISK CONSULTING
Allianz Global Corporate & Specialty has a global network of experts who are committed to serving our customers and work together with
them to provide the best solutions possible to reduce, manage and control risk – wherever and whenever this occurs.
We provide various risk management services, ranging from brief studies through to detailed analyses of complex industrial activities and
financial risks in all sectors. For example:

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“Everybody talks about the weather, but nobody does
anything about it.”
Mark Twain (1835–1910)
Climate Solutions

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8
AGCS ALTERNATIVE RISK TRANSFER
CORE BUSINESS SEGMENTS
Characteristics
• Tailor-made solutions for
corporate clients
• ART fills gaps not catered to
by traditional products
Solution Examples
• Risk Financing Solutions
• Structured Solutions
• Captive Stop-Loss
• Structured Fronting
• Loss Sensitive Premium
Structures
Corporate Solutions
Characteristics
• Mitigate weather related
events and risks
• Complementary to existing
and/or traditional products
Solution Examples
• Index products that have at
least one weather variable
• Proxy Revenue Swaps
• Renewable Energy
• Agriculture
Climate Solutions
Characteristics
• Tailor-made risk solutions
for insurance clients
Solution Examples
• Capped Quota Share
• Per Risk / Event Coverages
• Catastrophe Agg. Covers
• Whole Account XS of Loss
• Structured Stop Loss
Reinsurance Solutions
Characteristics
• Facilitate investors access to
insurance risk
• Brand, Rating and market
reach the key differentiators
Solution Examples
• Nat Cat Swaps
• Derivatives, Parametric or
Indemnity
• Japan stand alone EQ
Capital Solutions

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Climate Solutions
CLIMATE SOLUTION EXAMPLES
• Lack or excess of rain can severely impact hydro power
generation and agriculture yields
• Other sectors affected by rain are construction, mining,
travel, retail, leisure, and entertainment
ART solution
• Lack of rain cover for hydro generators and farmers
• Excess rain protection for mining and construction
Rain
• Retail, aviation, municipalities, and transportation companies
incur significant costs for snow removal, less customer traffic
and cancellations, sometimes around major holidays
• Electric utilities, telephone, cable providers experience
damage to their systems from storms
• Ski tourism suffers from lack of snow
ART solution
• Critical day product to cover heavy snow
• Winter sport resorts, equipment, clothing and snow removal
companies protect against mild winters
Snow
• Crop is sensitive to late frost and excess heat
• Energy and construction companies are impacted
• Seasonal retail products, food and beverage sales are
influenced by heat and cold
ART solution
• Tailored crop solutions combine temp and rain
• Protect against warm winters and cool summers, typically
achieved with HDD and CDD deals
Temperature
Wind
• On- and off-shore wind farm operators and capital providers
depend on steady wind
• Too much or too little wind impairs energy production
• Too much wind delays off-shore construction
ART solution
• Solutions can cover lack of wind or volatility, increasing
credit quality, often over multiple years
• Excess wind covers are also sold during construction

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INDICATIVE QUOTE
Insured Renewable Energy Fund
Project: xxx Windfarm, Indonesia
Type: Derivative
Form: ISDA Swap
Inception: -/1/2022
Expiry: 29/02/2032
Tenor: 10 years
Net P50 (GWh): 247.90
Strike (%P50): 80%
Strike (GWh): 198.32
Settlement: Annual
Data Provider: TBA
Calculation Agent: TBA
Notional (USD/GWh): USD 100,000
Annual Limit: USD 5m
SAMPLE DEAL STRUCTURE
P50 means there is a 50% chance in any
given year that production will be at least a
specific amount. If an array has
a P50 production level of 500 kWh, it means
that on any given year there is a 50%
chance that production will be AT LEAST
500 kWh.

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AGCS PORTFOLIO &
TRENDS

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ONSHORE WIND TRENDS
▪ Pressure on maintenance budgets due to
reduced subsidies and increased competition
▪ Increasing unit size result in complex logistics
and supply chain (CBI risk, bottlenecks)
▪ Large scale windfarms
▪ Warranty covers expire
▪ Lifetime extension
▪ Modified control concepts
▪ Aging issues of components: gearbox, blades,
main bearing
▪ Continued issues with Lightning strikes: LPS
failure, delamination of blades
▪ Continued Fire losses

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OFFSHORE WIND TRENDS
▪ Cost pressure = cutting corners / time pressure
▪ Weakening of MWS
▪ Cable losses remain a challenge
▪ Increasing equipment size and water depths means
complex logistics
▪ Regulatory specifics (e.g. Jones Act US, Taiwan)
▪ Lack of local experience and capabilities (esp.
growth markets)
▪ Increased NatCat exposure due to globalization
(esp. tropical cyclone)
▪ Floating wind technology
▪ Defect issues with pre-fabricated items
▪ Conservative approach of RI markets

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PHOTOVOLTAIC (PV) TRENDS
▪ Large scale projects
▪ Standardized plant concepts and layouts
▪ Professional project and O&M companies
▪ Emerging/ new markets with little experience
▪ Ongoing price reduction of PV panels and inverters
creates competition (increased risks)
▪ Large combined PV and energy storage systems
▪ Module/ project certifications become more popular
▪ Investors are considering risk management for
bankability
▪ Technological developments (e.g. higher string
voltage)
▪ Maintenance - solar thermography

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THANK YOU