IMCA says offshore wind targets ‘at risk’ from unsustainable approach to contracting

IMCA has just published an update to its contracting principles in the marine renewable industry, a piece of work it describes as “essential” due to “progressively poor market conditions.”

The new publication, ‘IMCA Renewables Contracting Principles (IMCA LCIC 014),’ reviews in detail the contractual challenges faced by industry.

IMCA chief executive Allen Leatt, who will be presenting on this subject at the 2023 Offshore Wind Journal Conference in London on 7 February, explained the challenges.

“Marine contracting in offshore renewables has become increasingly unsustainable, which in turn places the long-term sustainability of the offshore wind energy industry at risk,” Mr Leatt said.

“This situation can only be reversed with a fairer allocation of risks and the shared alignment of project goals between government, investors, developers, and the supply chain. 

“We need an allocation of risk that recognizes the reality of offshore construction and reflects the need to encourage the development of increasingly technologically advanced project solutions.

“Greater flexibility and fairness is needed by allocating the risk to the party who created it, or is best placed to manage it, and take responsibility for it.”

Mr Leatt added, “Solutions are readily possible by developers and contractors working to achieve a common alignment on project cost, schedule, and quality objectives; and thereby allocate the risks and rewards fairly and responsibly.

“Without this sort of approach, which we have seen in several business cycles within the offshore construction industry, we will be unable to address the inevitable inflationary cycle, which will place project investment decisions at risk.

“Our member companies play a vital role in the global offshore wind industry and have been heavily engaged with pretty much all the major offshore windfarms outside China. Without a significant change in contracting strategy, the ambitious targets set by governments, investors, and developers, will not be achieved.”