LONDON — The International Marine Contractors Association (IMCA) has updated its contracting principles for the marine renewable energy industry.
It follows progressively poor market conditions resulting from unrealistic expectations of the capital costs and risks of developing offshore wind energy, the association said.
Its new publication, IMCA Renewables Contracting Principles (IMCA LCIC 014), examines the contractual challenges faced by the industry.
According to IMCA CEO Allen Leatt, “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. 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.
“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 are needed by allocating the risk to the party who created it, or is best placed to manage it, and take responsibility for it.”
Leatt added that developers and contractors should focus on achieving a common alignment on project cost, schedule and quality objectives, allocating 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," he said. "Our member companies play a vital role in the global offshore wind energy industry and have been heavily engaged with pretty much all the major offshore wind farms outside of China. Without a significant change in contracting strategy, the ambitious targets set by governments, investors and developers will not be achieved.”