The breadth of biomass technologies underscores the diversity of risk management issues to be considered by plant owners. Focus areas include:
- Location, design, and layout.
- Urban or industrial locations: Space limitations may lead to suboptimal plant layout. Inadequate fire protection and poor separation from combustible feedstock storage are common issues.
- Rural or agricultural locations: This can mean slow incident identification and response as well as greater exposure to malicious damage and losses. These sites also may face greater exposure to natural perils, especially flood and wildfire risks.
- Feedstock quality and security. Feedstock is an essential input for biomass plants, and key considerations include:
- Shortages: This may be specific to an individual supply source or a more global issue, such as a poor harvest or shipping restrictions, that could increase feedstock prices and impact operating margins.
- Security – Overdependence on one or two suppliers, or limited scope to source suitable alternatives, may compromise biomass supplies.
- Off-specification – Contaminated or lower-quality feedstock may disrupt plant operations or reduce plant efficiency.
- Contractors and maintenance. The technology range and often modest scale of biomass plants mean that less experienced and more generalist EPC and O&M contractors may be employed. This could lead to:
- Poor project execution: Deviations from design specifications, and delays due to re-work or incidents, pose long-term consequences for operational efficiency if defects and errors are not identified or rectified.
- Inadequate O&M: –Poor operating practices and reactive, rather than preventative, maintenance can cause damage or disruption.
- Insurability. The loss record for the biomass sector has generally been poor. Insurance considerations include:
- Risk-specific characteristics — type of plant, design, technology selection, and contractor experience.
- Warranty breadth and duration.
- O&M arrangements, including any long-term service agreements.
- Compliance with lender insurance requirements where project financing is involved.
