Marine contracting in offshore wind has become “increasingly unsustainable”, according to the International Marine Contractors Association (IMCA).
IMCA has published an update to its contracting principles in the marine renewable energy industry, which it has called “essential” due to progressively poor market conditions created by “unrealistic expectations” of the capital costs and risks of developing offshore wind energy.
IMCA Renewables Contracting Principles (IMCA LCIC 014) reviews in detail the contractual challenges faced by industry.
The association’s CEO, Allen Leatt, said: “Marine contracting in offshore renewables has become increasingly unsustainable, which places the long-term sustainability of the offshore wind energy industry at risk.”
He said the 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 recognises 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 which created it, or is best placed to manage it, and take responsibility for it,” Leatt said.
He added that 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.
Leatt said: “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.”
Throughout the year IMCA will continue to engage with key industry stakeholders globally, including relevant government departments, industry bodies and trade associations, offshore clusters, developers, investors and the insurance market.