GEF and UNEP Commission Study on Weather Insurance for Wind Power Farms
9 October 2008: Commissioned by the UN Environment Programme (UNEP) and the Global Environment Facility (GEF), Paris Re and Marsh have produced an index-based weather cover for the wind energy sector. The study analyzes the technical, legal and financial feasibility of implementing weather coverage in Mexico.
The study aims to instill confidence in investors and facilitate the financing of wind farm projects in developing countries by providing coverage against the risk of the lack of sufficient wind. It further states that protection against this risk may be integrated into the financing scheme at different levels. The study finds that, by containing the volatility of revenues, it is possible to significantly improve credit conditions and, consequently, the rate of return on investment. The simplicity of the mechanism resides in its capacity to rapidly indemnify the insured in the event that wind sustainability should fall below a prescribed threshold. [GEF Press Release]