The government wants about 2500 wind turbines constructed in six years, many on the North Sea. This raises interesting contractual issues for those building them …
The Energy Act 2004 came into force on 22 July 2004. The aim is to promote the increased use of renewable energy with a commitment to obtaining 10% of electricity from renewable sources by 2010. So what opportunities does this present for the building industry?
It is envisaged that most of this target of 10% will be met by developing wind farms, both on land and offshore within the UK’s territorial water limits of 12 nautical miles. Part 2 of the Energy Act 2004 creates renewable energy zones outside this limit. Developers are able to apply for licences from the crown to develop wind farms in what the United Nations Convention of the Law of the Sea calls exclusive economic zones, or EEZs. The EEZ extends 200 nautical miles from the territorial water limit.
Onshore wind farms have met with considerable opposition from residents, the Ministry of Defence – which claims that the turbines interfere with radar – and even Prince Charles. So a decision was made to develop wind farms where fewer people could see them – a number of miles off the coast.
So what issues would a developer or contractor face when trying to build a wind turbine in the middle of the North Sea for example? The construction of wind turbines is not particularly detailed. After all, they are only a single-pile structure, known as a “mono pile”. But when one considers that these turbines will be installed in 50 ft of sea water in the middle of the North Sea and driven into the sea bed, the risk and ultimately the cost increases.
Contractors and developers have frequent arguments about unforeseen ground conditions for onshore construction and who should take responsibility.
Issues as to who should take responsibility for unforeseen sea-bed conditions are not quite so black and white. Typically developers will want to place the risk on to the contractor and may provide it with a copy of the geological survey the developer carried out for the purposes of the initial design.
But, to what extent can a geological survey prepared by the developer for the purposes of designing the mono piles be relied upon by the contractor for installation? Contractors should be wary of relying on surveys carried out by developers for the purpose of installation without passing the risk of delays from inaccurate surveys back on to the developer.
Another issue is the weather. The North Sea is pretty unwelcoming at the best of times and contractors are usually faced with a narrow weather window in which to complete the construction. The bigger the wind farm, obviously the more difficult this becomes. Any slight problem with, for example, marine ground conditions makes missing the weather window more likely and may result in considerable delays to installation.
Linked to this is the speed with which they can be installed. If anyone has seen a wind turbine in the flesh, they will appreciate that they are large. Transporting them from land to their sea home is challenging, especially when not all of the harbours along the coast are big enough to house the size of vessels required to carry the turbines themselves.
So what does the future hold for the wind energy industry? There is a huge backlash against onshore wind farms although they are arguably much easier to install and do not suffer from the same weather window problems that potentially slow down offshore construction. On this basis, onshore wind farms are the way forward but try telling that to local residents.
In the face of opposition to onshore wind farms the government has implemented a regime to encourage the development of wind farms offshore which is good news for contractors and potential developers.
The opportunities for those who are willing to dip a toe in the North Sea are considerable – to achieve the government’s 2010 renewable energy target about 2595 turbines of 4.2 MW generating capacity will be required. Currently in the UK only 6% of these turbines have been built.
For contractors, though, the issues are logistical and contractual: how will such wind farms be built and who is to carry the risks?
Joe Griffiths is a solicitor at Kendall Freeman firstname.lastname@example.org