New contract for offshore wind projects ‘ensures fairer distribution of risk’

IMCA said the contract “has been written to ensure a fairer allocation of risk.” Building on the release of IMCA’s Contracting Principles in January 2023, its publication comes on the heels of an IMCA-led campaign for an industrywide discussion on sustainable contracting in offshore wind.

The campaign was highlighted by the UK’s Offshore Wind Champion Tim Pick in his report to UK government in March 2023, which noted IMCA’s Contracting Principles, “is a helpful piece of thought-leadership”.

“In recent months, several high-profile projects have been deferred in both the UK and the US. For the offshore wind sector to be truly sustainable, there needs to be a fairer allocation of risk across the supply chain, including for offshore contractors, to avoid more projects potentially falling through,” said IMCA.

IMCA’s standard T&I contract follows the ‘FAIR’ contracting principles, developed by IMCA’s legal, contracts, insurance and compliance (LCIC) Committee, which encourage an equitable allocation of risk. These propose that contracts should be: fair, with a realistic allocation of risk in proportion to relative rewards; appropriate, with a distribution of risk to the best placed party; insured and have sufficient scope of cover; and reasonable, to avoid duplicate risk assumptions and minimise the potential for disputes.

Commenting on the contract’s release, IMCA chief executive Iain Grainger said, “It’s not hyperbole to suggest that net-zero targets around the globe are at risk if offshore wind projects continue to be delayed and cancelled.

“I also know from my discussions with members how concerned they are with current market conditions and frustrated with having to deal with inappropriate contracts, which require lengthy and costly rounds of renegotiation.

“While we won’t have all the solutions for a complex and challenging marketplace, our new standardised T&I contract – written following extensive industry engagement – is a positive step in the right direction. With widespread adoption it can become the foundation for a fairer and more sustainable approach in offshore wind.

“We will now be engaging with developers and other trade bodies to encourage its adoption by the industry, including at ’Navigating offshore wind contracts,’ an industry seminar we are organising in London on 6 December."

IMCA LCIC committee chair and Subsea 7 general counsel Nathalie Louys said, “This first contract recognises the current reality of offshore wind construction, including the development of increasingly complex project solutions. Reflecting the FAIR allocation of risks, IMCA aims to set the tone so that the industry can move forward productively and collaboratively as we gear up to help meet global ambitions for offshore wind.”