THOUGHT LEADERSHIP
There is a well-known saying that no two projects are ever the same. Even when parties have worked together before, the bargaining position of each party changes over time; designers introduce new technology; and companies change the way they are structured.
What is constant, however, is the need to minimise risk and maximise bankability for a project.
Here are 50 questions that are useful to consider during the negotiation of contracts for offshore wind turbine supply, BOP, foundations, cabling and O&M:
1Can the wind farm be developed using a single contractor on a turnkey EPC basis, if not, how many separate contracts will there be?
2Will advance payments be necessary?
3What will the aggregate liability caps and carve-outs be for each package?
4How will interface risks be managed?
5To what extent will design information be shared between contractors?
6To what extent will a contractor be able to verify site conditions?
7To what extent will a contractor be able to verify design information provided from one contractor to another?
8How dependent is each scope of work on site conditions or design information that a contractor cannot verify?
9What insurance arrangements are needed for the use of new technology?
10Will there be an extended defects liability period for new technology?
11What performance security will be necessary?
12When is the transfer of title for major equipment?
13What are the termination rights for extensive no-fault delays?
14How will contractor-on-contractor delay be considered?
15Will the developer have rights to terminate for convenience?
16What is the risk of insolvency for each party?
17Will the developer be limited to the cost to complete or is rejection available as a remedy?
18Will there be cross-termination clauses between different agreements?
19What happens to the O&M agreement if the Turbine Supply Agreement contract is terminated?
20Will the WTG availability warranties be contained in the Turbine Supply Agreement or in the O&M agreement?
21Will there be an option to extend the O&M warranties?
22Will there be risk sharing across different packages?
23How will installation vessel risk (including adverse weather) be allocated?
24Will conversion vessels be acceptable as an alternative to purpose-built vessels?
25Which party will assume the risk of interventions by marine warranty surveyors?
26What variations to the scope of work under the Turbine Supply Agreement would be technically and logistically feasible for the WTG supplier?
27Will an express fitness for purpose warranty be included, if not, are the warranties for WTG availability, power and defects sufficient?
28Which party will take the risk of non-compliance with laws and permits regarding noise emissions?
29Which party will take the risk of non-compliance with laws and permits regarding noise emissions?
30Which party will take the risk of grid code compliance?
31Will defects liability periods apply on a package-by-package basis or on an individual WTG basis?
32What will the length of the defects liability period be under the Turbine Supply Agreement and how will defects be rectified under the O&M agreement?
33In the event that a defect is rectified, will the defects liability period be extended, and if so whether this is limited to only the affected part?
34Does a mandatory decennial liability period apply within the jurisdiction to the WTG towers, foundations and offshore substations, and if so, is insurance available?
35Will the WTG supplier be entitled to any relief of the defects liability period for developer defaults?
36To what extent will there be serial defect protection?
37Over what period will the power curve tests be carried out?
38Will Taking Over occur on a package basis, in strings or on an individual WTG basis?
39Will Taking Over be tied to revenue commencement?
40Will early generation revenue be shared with the WTG supplier?
41Will the SCADA system be installed and tested prior to the whole of the wind farm achieving Taking Over?
42Will cables be tested by cable, by string or by site sector?
43How much will the compensation be for a failure to reach guaranteed performance levels?
44Who will carry the risk for a delay between readiness for final completion testing and its commencement?
45How many WTGs will be included in the power curve tests?
46How many power curve retests will be permitted and over what period?
47Will there be any events that give rise to adjustments in the warranted power curve?
48How will compromised availability of the electrical systems be compensated?
49Will a reduction in transmission capacity of a cable be included in the defects liability period?
50What will the compensation be for a reduction in transmission capacity that cannot be remedied?
Authored by
Michael Dickin