Offshore wind energy — contractual risks and liabilities

The UK offshore wind energy sector has come a long way since the first offshore wind farm was completed in 2000 at Blyth Harbour in the northeast of England, with just two turbines totalling 4MW. A critical element of further expansion is to address the contractual interface between owners/developers and contractors early in the project lifecycle, so that risk and responsibility can be considered in detail and allocated.

When deciding which contracting strategy to use for the construction of an offshore wind farm, a project owner has a number of options. These include: an engineering, procurement & construction (EPC) contract; multi-contracting; and alliancing contracting.

In the context of offshore wind, each of the above options has advantages and disadvantages. An EPC contract, for example, may appear attractive to a project owner since its fixed price and relatively low risk makes it easier to finance. However, presently there are few offshore wind EPC contractors who are able and willing to take on the high level of risk involved — adverse weather and subsea conditions being just two of the perils. This can mean limited options and a high price tag for a project owner wishing to use this model…

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