The Law of Wind: A Guide to Business and Legal Issues

The Law of Wind: A Guide to Business and Legal Issues

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Alan R. Merkle
Karl F. Oles
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  • Bree Metherall Director of Business Development 503.294.9435

Design, Engineering, Construction, and Turbine Purchase Agreements

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This chapter provides an overview of the contractual structures commonly applied to the construction of wind energy projects, including (i) design, engineering, and construction of project infrastructure facilities (e.g., access roads, foundations, crane pads, substations, transmission lines, and maintenance facilities), (ii) procurement of wind turbine generators and related equipment, (iii) erection of wind turbine generators, and (iv) construction of ancillary facilities. This discussion is written from the perspective of a wind energy project developer; however, the information set forth below should interest design and engineering, construction, and operations and maintenance contractors and major equipment suppliers. As with any complex negotiated transaction, there is considerable value to be gained or lost by all parties and, therefore, significant potential for creative legal and commercial strategies to enhance value for all sides.

I. Construction Related Agreements. Critical to the development of any wind energy project are the various agreements that a project developer must enter into for:

  • design and engineering;
  • procurement of wind turbine generators (including nacelles, blades, and towers);
  • assembly, erection, installation, and commissioning of the wind turbine equipment;
  • materials and services to construct balance of plant facilities, such as foundations, roads, crane pads, lay down areas, collection systems, interconnection and transmission facilities, substations, and maintenance and support facilities;
  • service and maintenance of the wind turbine equipment; and
  • operation and maintenance of the completed facility.

Frequently, engineering, procurement, and construction tasks are combined in a single agreement (an “EPC agreement”). Separate agreements may provide for or anticipate other services, such as warranty services or operations and maintenance services for the completed facility.

Sometimes, all the design and engineering, procurement, and construction and erection services for the entire project are addressed in a single agreement (“full wrap agreement”) pursuant to which a single entity is responsible for executing the entire project. However, full wrap agreements are vendor specific, not an option with all wind turbine suppliers, and are more common for wind projects outside the United States. In North America it is more common to break up the execution of the works into separate agreements, such as design, engineering, construction, and erection agreements (“balance of plant agreements”), and procurement agreements for major pieces of equipment, using one or more contractors for each of the various services. Depending on how the contract is structured, warranties, insurance, and other matters may be addressed in a single master agreement or in individual agreements.

II. Design and Engineering Services. Wind power projects require design and engineering expertise that is unique to this sector of the power generation industry. Historically, relatively few companies have designed and manufactured wind turbine generators. However, with the growth and maturation of the industry, new vendors enter the market from time to time. There is a certain degree of standardization in the design of wind turbine generators, and each vendor manufactures a limited range of wind turbine generators to suit market requirements. Although smaller units used to be more common, most onshore units are now in the 2.5 – 3.6 MW range with some 5 MW, 6 MW, and even 7 MW units installed in Europe. Similarly, tower heights have increased in the last decade from nominally 60 meters to 100 meters and more, with rotor sizes to match. Larger units are also the norm in offshore projects. Turbine capacity is, in part, dictated by the operating parameters of a project, which in turn are dictated by the project’s location and meteorological conditions. A turbine supplier may offer a developer several variations of its wind turbine products so that the developer can select different tower and hub heights, blade lengths, control systems, and related equipment to optimize power production in different environments. Each of these variations is designed and engineered by or for the turbine supplier. When a developer acquires wind turbine generators, it also acquires license rights in certain vendor technology. This technology may include the turbine vendor’s turbine control and monitoring system experience, components and materials experience, and weather mitigation packages. Many variations of Supervisory Control and Data Acquisition systems are now available. Also, the interconnecting utility grid requirements may dictate various low or zero voltage ride through control characteristics.

III. Balance of Plant Design, Engineering, and Construction Services. As described above, developers of wind energy projects generally acquire licenses to use vendor technology as part of the wind turbine generators purchased. This still leaves substantial design and engineering work to be performed, including geotechnical studies, micro siting, design and engineering of crane pads and turbine foundations, road design and other earthworks, environmental mitigation, and related activities, as well as collection systems, switch yards, substations and interconnection, and, possibly, transmission lines. This design and related procurement and construction balance of plant work could be performed by the turbine supplier under one or more agreements but is more typically provided by a third party contracting directly with the project developer pursuant to a balance of plant agreement.

IV. Typical EPC Agreement Structure for a Wind Project. In light of the multiple factors influencing the development of a wind energy project, no single contractual structure applies to all projects. However, the following example is typical of how many developers address certain common issues.

In this example, a project developer wishes to acquire wind turbine generators (the design of which is proprietary) and to use the turbine supplier’s services to commission the wind turbine generators. The developer also wants to contract with the turbine supplier to provide certain operations and maintenance and warranty related services.

The developer and the turbine supplier enter into a turbine supply agreement whereby the project developer agrees to purchase a specific number of wind turbine generators from the turbine supplier, along with the turbine supplier’s services to deliver the turbine equipment to the project site and commission the same.

The project developer also enters into a balance of plant agreement with an experienced contractor whereby the contractor will design and construct the other necessary facilities for the project, such as turbine foundations, roads, crane pads, lay down areas, collection systems, substations, transmission lines, and maintenance facilities. The contractor will also receive, inspect, unload, and erect the turbine equipment. Care must be taken in the relevant agreements to carefully match up the work scope and schedule interfaces between the turbine supplier and contractor. The agreement must avoid interference, duplication, or omission between the scopes of work of the turbine supplier and the balance of plant contractor, and it must ensure that, collectively, the agreements will result in a fully constructed, integrated, and operational project. Depending on the complexity of the project, the project sponsor may wish to enter into an interface agreement with the turbine supplier and the balance of plant contractor to carefully align the execution of each party’s scope of work. Close coordination between the turbine supplier and the balance of plant contractor decreases the likelihood of the occurrence of construction and commissioning delays.

The issues that the parties address in the turbine supply and balance of plant agreements include the scope of work, payment provisions, measures of completion, warranty obligations, and limitation of liability (particularly as it relates to the turbine supplier’s and balance of plant contractor’s liability for failure to complete their obligations by certain key dates tied to the developer’s power purchase commitments). These issues are discussed below.

A. Scope of Work. The scope of work should describe, in detail, the actual design, construction, and equipment installation and schedule obligations of the contractor. A turbine supplier’s scope of work typically includes the manufacture and delivery of the wind turbine generators, including principal parts and components such as nacelles, hubs, blades, and towers, as well as the commissioning of the wind turbine generators. The turbine supplier’s services might also include aviation lighting and weather mitigation packages as options to the turbine equipment. Depending on the turbine supplier, its scope may also include transportation to a port of entry or to the project site. The balance of plant contractor’s scope of work may include transportation, if not provided by the turbine supplier, and will typically include crane pad and wind turbine foundation engineering and construction, road design and construction, earthworks, collection and electrical systems, transmission lines and structures, and erection of turbine equipment and related work. As with other aspects of such an agreement, the scope of work provisions will probably be heavily negotiated. Some developers routinely contract with separate entities for each of the sub disciplines mentioned above. Care must be taken to carefully integrate and coordinate the scopes of each to minimize conflicts or gaps in the scope.

B. Payment Provisions. In order to ensure timely procurement of wind turbines and other materials and the progress of the balance of plant works, the project sponsor must make timely payment to the turbine supplier and balance of plant contractor, respectively. In the case of the turbine supplier, the project sponsor typically provides a down payment in an amount agreed with the turbine supplier. The down payment is used to pay for long lead time items and to permit the turbine supplier with the resources necessary to initiate the manufacture and delivery process. The remaining balance of the contract price is typically paid to the turbine supplier upon (1) the shipment ex works of the wind turbines and related components, (2) the delivery of the wind turbines and related components to the project site, (3) the commissioning of the wind turbines, (4) the installation and related testing of the control and monitoring system, and (5) the final sign off by the parties on the project. The actual percent of contract price due at each milestone and which milestones trigger payment are a matter of negotiation on each project. The project sponsor may wish to retain a portion of each payment under the turbine supply agreement to ensure that funds are available to cover any warranty issues that may arise following commissioning and startup of the project. In the event the project sponsor fails to pay the turbine supplier, such failure may permit the turbine supplier to suspend performance under the turbine supply agreement until payment is received. If the payment delay extends beyond a certain period of time, the turbine supplier may have the right to terminate the turbine supply agreement. Similar concepts usually apply to the balance of plant agreement. The project sponsor will provide the balance of plant contractor with an advance payment equal to an agreed percentage of the contract price in order to permit the balance of plant contractor to mobilize for execution of the works and to order long lead time equipment and materials. The remaining payments will be made upon the completion of certain construction activities (“milestones”) by the balance of plant contractor. Upon completion of each milestone, the balance of plant contractor is required to submit a payment request to the project sponsor describing the completed milestone along with lien waivers from the balance of plant contractor and its subcontractors. Once the project sponsor has confirmed completion of a milestone, it will issue payment in accordance with the terms of the balance of plant agreement. Any non justified payment delay would provide the balance of plant contractor the right to suspend performance or terminate the agreement if payment is not received within the time period specified in the balance of plant agreement.

C. Completion and Start up Obligations. How, when, and by whom the wind turbine generators are to be commissioned should always be set forth in the scope of work provisions of the relevant agreement. Currently, almost without exception, the turbine supplier is responsible for commissioning the wind turbine generators that it supplies. Accordingly, the sequence of events for a typical North American project is as follows. The turbine supplier delivers the turbine generators to the site, and they then become the responsibility of the contractor. The contractor then erects and makes the units “mechanically complete” and then turns the units back over to the turbine supplier. Once a unit is mechanically complete and backfeed power is available, the turbine supplier then commissions each unit and makes it ready to generate power to the grid. Commonly, for projects outside of Canada and the United States, the turbine vendor also erects the turbine eliminating one interface with the balance of plant contractor. These interfaces are key milestones in the development of the project, and failure by one party to timely perform its obligations will lead to schedule and cost impacts to other parties. Accordingly, the details of when and how those interfaces occur and are determined become very important. When these progress milestones are achieved, completion is generally evidenced by certifications of, for example, “delivery” (to be accomplished by the turbine supplier), “turbine mechanical completion” (to be accomplished by the contractor), or “commissioning completion” (to be accomplished by the turbine supplier). Each such certification is considered an incremental milestone that each wind turbine generator must satisfy in order to progress to the next milestone. Upon completion of all milestones the project will reach substantial completion. Failure to achieve substantial completion by a date agreed to by the parties may subject the balance of plant contractor to liquidated damages.

D. Warranty Obligations. Warranty obligations are likely to be an issue of substantial negotiation between the parties to turbine supply, installation, and balance of plant agreements. The nature and scope of a contractor’s warranties will, however, depend on what services, materials, and/or equipment the contractor is required to provide. A turbine supplier’s warranties generally include such things as a general parts or component warranty (the definition of a defect can be important when determining what is included or excluded as a defective or non conforming part or component in a wind turbine or related facility), a power curve warranty (this refers to the measurement of a wind turbine generator’s power performance), an availability warranty (this refers to whether the wind turbine generators are actually available to generate power), a sound level guaranty, and related matters. For a contractor providing non turbine services and materials such as balance of plant services, the warranties would be limited in scope relative to those of a turbine supplier but would still include warranties relating to parts and materials used in any construction and engineering services provided.

The issues that contracting parties consider in respect of warranties include: (1) the period or term of a particular warranty and whether the term can be extended (the turbine supplier may offer extended warranty services for an added price), (2) the definition of a defect and a serial defect if available (wind turbine generators use identical parts and components; serial defects are those that appear in multiple units or components), (3) warranty limitations arising from acts of third parties (such as operation and maintenance contractors) or certain conditions at the project site (such as weather and wind conditions outside of the wind turbine generator’s design parameters), and (4) the remedial measures that a contractor may take to cure any defect. Additionally, a project developer may require that any third party or subcontractor warranties that the turbine supplier or contractor possesses with respect to any parts or components used in its wind turbine generators are “passed through” to the project developer.

E. Limitation of Liability. Like other contractors and vendors, turbine suppliers and balance of plant contractors invariably seek to limit their liability to a project developer. A common request is for a waiver of consequential, indirect, incidental, and special damages. Such clauses and any exclusions contained therein must be negotiated carefully, because the definitions of such damages may be ambiguous. Both the turbine supplier and contractor will usually seek to have their respective liability for damages for late performance limited to liquidated damages of a certain value, with a maximum cap equal to an agreed on percentage of the value of the relevant agreement. The parties may specify the maximum aggregate liability a contractor can have; however, the parties can, by agreement, carve out additional liability for the contractor. For instance, the contractor could agree that the contractual limit on its aggregate liability would not apply in cases where the developer has failed to (1) satisfy its contractual commitment under a power purchase agreement, or (2) obtain a certain time sensitive tax benefit or credit because of contractor caused delays.

F. Certain Tax Benefits. A wind energy project’s economic viability often depends on obtaining certain benefits provided under federal and state law for renewable resources energy projects. Production tax credits (“PTC”) and investment tax credits are currently available only for projects on which the taxpayer began construction before January 1, 2019. The amount of the PTC stepped down by 20 percent in 2017, and steps down further by 40 percent in 2018 and by 60 percent in 2019. Accelerated depreciation (MACRS) is also part of the current federal scheme to support and provide incentives for wind development. In addition to federal tax incentives, many states provide tax incentives for wind energy projects. The project developer must be aware of the specific requirements that it must satisfy to obtain these benefits when negotiating the turbine supply and balance of plant agreements. A broader discussion of these issues is set forth in Chapter 10 of this book.

V. Other Issues.

A. Financing Issues. A wind energy project developer often requires some form of substantial debt financing or joint venture financing to pay for the design, engineering, procurement, construction, and initial operation of the project. Financial institutions and potential investors will demand the opportunity to review and comment on the suite of turbine supply and balance of plant agreements (as well as related operations and maintenance and warranty agreements) before committing funds. Of special interest to prospective lenders and investors are any provisions in the agreements that provide the lender or investor with the ability to take over the project if the project developer (the borrower) defaults, and any provisions that specify the extent and nature of any damages available to a project developer from a contractor for late completion or for failure of the project to generate expected amounts of power. Additionally, financial institutions will want to comment on the payment plans, security, warranty, and inspection provisions set forth in the project agreements.

Due to such involvement, and to avoid issues arising from any potential inconsistencies, the project developer should be prepared to present a consistent and cogent set of project agreements to lenders and investors and to listen to their suggestions for such agreements. Further, a project developer should be prepared for the possibility that lenders and investors may want to make substantial changes to the negotiated agreements. For instance, lenders will often be interested in the project’s financial and operational viability (as may be reflected in a feasibility study) and much of that interest will necessarily focus on the project developer’s rights under the relevant agreements. In particular, lenders will be interested in the extent, limitation, and operation of any contractor warranties, contractor indemnities, insurance policies, progress or performance test milestones and payments, and performance and payment guarantees. Lenders will also want to know whether the various agreements are entered into on an “arm’s length” basis, meaning (among other things) that the terms and conditions of such agreements are based on typical commercial terms and standards.

B. Performance and Payment Guarantees Issues. A project developer will usually cause the various balance of plant contractors to procure, for the benefit of the project developer, performance and payment guarantees in the form of payment and performance bonds or a standby letter of credit to secure the obligations of the various contractors (whether engineers, constructors, or procurement contractors) to complete their work on time and in accordance with the requirements of their various agreements, and to protect against liens and claims from unpaid subcontractors. Some of the issues arising with respect to these guarantees are described below.

  • Performance Bond: A performance bond is usually issued by a bank or bonding company, selected or approved by the project developer, and states an agreed on “penal sum.” This sum is payable upon the project developer’s demand if the contractor fails to perform its contractual obligations in a proper and timely manner. For instance, if the contractor defaults on or cannot complete the project, the project developer may call on the bond to pay another contractor to complete the project. The project developer will want to reserve its other rights against a defaulting contractor if the performance bond does not fully cover the project developer’s costs (1) of completing the project or (2) associated with damages the project developer may owe to a third party as a result of any default by the project developer.
  • Payment Bond: A payment bond is intended to ensure that if the contractor defaults on the project, its subcontractors and suppliers will be paid without the necessity of filing liens or other security interests against the project developer’s property. If a lien claim is asserted, it may be “bonded over” so that it attaches to the payment bond or other security instead of the property. Lenders, upon their review of the agreements, may require payment bonds or other guarantees to enhance their security interests in the project.
  • Standby Letter of Credit: When project financing is involved, the project developer may require that the balance of plant contractor provide a standby letter of credit (“SLC”) issued by a financial institution (the “issuer”) approved by the project developer. The SLC essentially substitutes the creditworthiness of a financial institution for that of the balance of plant contractor and ensures timely payment of any amounts claimed under the balance of plant agreement. The amount of an SLC is typically a percentage of the contract price and is to be delivered as a condition for commencement of the work. In the event of a balance of plant contractor default, the project developer may draw upon the SLC by submitting a drawing request to the issuer. Upon receipt of the documentation required in the drawing request, the issuer will render payment to the project developer in the amount requested up to the stated limit of the SLC. In most instances, SLCs are issued and valid for a period of 12 months, which may require the balance of plant contractor to renew the SLC during the execution of the project. Failure to maintain or renew an SLC is typically regarded as a material default under the balance of plant agreement. Project sponsors typically favor SLCs due to their liquidity and ease of execution, while balance of plant contractors raise concerns regarding the cost associated with obtaining SLCs.

The project developer or the lenders may require other security from contractors, such as parent guarantees, reserve accounts, and other forms of assurance that the contractors will perform. The contractors will demand to be given ample opportunity to cure any default or delay and will seek to limit the project developer’s ability to draw on SLCs or call in performance or payment bonds without notice. Further, contractors will usually demand some form of reciprocal payment security issued by the project developer or its parent company, including parent guarantees, payment guarantees, and the like, particularly if the project developer’s only substantial asset is the project itself.

In connection with turbine supply arrangements, it is commonplace for the project developer to request that the turbine supplier deliver and maintain performance guarantees in the form of financial guarantees, parent company guarantees, and SLCs or a mix of such instruments. In return, the turbine supplier will condition its performance on the receipt of adequate payment guarantees including parent company guarantees, payment bonds, and SLCs.

C. Lien Release Issues. When the project developer pays a contractor, it should obtain subcontractor lien releases as confirmation that the contractor has paid its subcontractors. A lien release will help protect the project developer from liens being filed on the project. Such liens are undesirable because, once filed, they can delay or interfere with the project’s financing. Even worse, if a lien claimant is successful, such a lien could be used to force the sale of the project, or part of it, as well as to interfere with the sale of the project by the project developer. For projects outside the United States where no comparable mechanics’ lien/materialman’s lien regime is in effect, the project developer is advised to obtain affidavits attesting to the receipt of payment in full by contractor and subcontractors. The receipt of payment affidavits will be a condition for receiving milestone payments and for certification of final completion.

D. Insurance and Indemnity Issues. A project developer should obtain appropriate indemnities and insurance coverage from the various parties with which it contracts, including the turbine supplier and balance of plant contractor, and should require those parties to obtain similar protections from their subcontractors and material suppliers for the benefit of the project developer. Relevant indemnities may include a general indemnity for personal injury, death, and property damage claims arising from the indemnitee’s activities; the contractor’s indemnity against subcontractor liens; an indemnity for taxes (other than those payable by the developer); an indemnity for violation of applicable laws; and an indemnity for intellectual property infringement claims. Appropriate insurance policies may include commercial general liability, workers’ compensation and employer’s liability, automobile, errors, and omissions (for design and engineering services), and builder’s all risk (property insurance for the project). Such policies should, if permitted, name the developer and its financing party as additional insureds and contain appropriate waivers of subrogation. Appropriate policy limits will vary with respect to the nature of the work being performed and the scope of the project. A project developer should consult with an insurance or risk management specialist to ensure that appropriate types and levels of coverage are obtained.

VI. Current Developments.

A. International Markets. As the wind energy market continues to evolve, it is clear that wind energy will continue to play a dynamic role in the energy future of the United States, China, and Europe and increasingly in Latin America and Southeast Asia. The globalization of wind power in developing markets continues to advance as demonstrated by highly successful renewable energy procurement processes in Brazil, Mexico, Chile, and Argentina. South Africa has also looked to wind power to add renewable generation assets to its aging energy infrastructure to become Africa’s green energy leader. We expect to see continued development of wind energy projects in international markets, which creates additional opportunities for equipment suppliers, specialized contractors, and operation and maintenance providers and for the transfer of technology to previously underserved communities.

B. Repowering. There are also new opportunities developing to repower first generation wind energy projects in the United States. The State of California was one of the first places in North America to implement wind energy projects on a large scale in the 1980s. With technological advancements in wind turbine design, developers are pursuing opportunities to repower existing sites with proven wind resources with modern wind turbines that are capable of producing greater generating capacity with fewer turbines.

Repowering projects may be either full repowering projects or partial repowering projects. In a full repowering, the old turbines, foundations, and electrical systems are decommissioned, demolished, and removed from the project and thereafter new turbines are erected on fresh foundations designed specifically for the new turbines. When added to new collection circuits and control systems, the repowered site is capable of extending the life of a project for at least an additional 10 year period. Developers are able to reuse previously constructed access roads, pads, and lay down areas and may upgrade substations and shared facilities rather than constructing new facilities, which reduces that overall cost when compared to a new greenfield generation facility.

Project developers may also carry out a partial repowering that allows existing wind power projects to be updated with equipment that increases energy production, reduces machine loads, increases grid service capabilities, and improves project reliability. A partial repower project involves the integration of new, upgraded parts and equipment with the existing project infrastructure. In many cases, a turbine supplier has developed a retrofit kit for existing turbines designed to improve the capacity and efficiency of the existing equipment. These changes typically take the form of installing new blades, rotors, drive shafts, and control systems while reusing the existing tower and foundation. With the increased capacity of repowered turbines, the developer may also be required to carry out upgrades to the existing electrical system and interconnection substation. The integration of existing infrastructure with new equipment may present a number of challenges. First, the existing infrastructure including towers and foundations must have sufficient structural integrity to support the load profile of the new turbines. If the wind regime at the project site is aggressive, the stress placed on the existing foundation may have decreased the structural integrity of the foundation rendering the existing foundation unsuitable for repowering without a costly retrofit. A second consideration involves obtaining adequate warranty protection. While new turbines and upgraded electrical equipment will typically come with a manufacturer’s warranty, the protection afforded by the warranty may be impaired if the damage caused to the covered equipment is caused by a failure of the original equipment or infrastructure. This will result in greater risk to project developers. While repowering may appear to be a more cost effective way of extending the life of a proven wind energy resource, the performance risks associated with integrating new equipment with older infrastructure may be challenging.

In either case, a repowered project will have to ensure that it does not exceed the performance criteria set out in the interconnection agreement with the grid operator. In the event a repowered project is expected to exceed the grid operator’s operational parameters, the project developer may be obligated to perform additional interconnection studies at its own expense. Revenue may also be impacted. It is common in power purchase agreements to have a maximum production cap. In the event the repowered project exceeds the production cap, the project may be subject to a secondary pricing structure that would reduce the revenue of the project. Due to possible contractual constraints, project developers are encouraged to carefully review all existing contractual relationships and evaluate the operational and revenue impacts of repowering.

C. Offshore Wind. The end of 2016 witnessed the commencement of the first operational offshore wind farm in the United States. The Block Island Wind Farm developed by Deepwater Wind is located off the coast of Rhode Island. The 30 MW project consists of five General Electric 6 MW turbines, and, though relatively small compared to utility scale projects, its inauguration marks an important milestone for the renewal energy market in the United States.

According to the U.S. Department of Energy’s (“DOE”) National Offshore Wind Strategy report, offshore wind represents a significant opportunity to increase national renewable energy capacity. By the DOE’s estimate, offshore wind has the potential to produce 7,200 terawatt hours of electricity per year. As the market for offshore wind continues to mature, the expansion will create new opportunities for turbine vendors and contractors specializing in marine construction.

While offshore wind projects face a number of challenges including the overall cost of project execution, a number of developers are pursuing large scale projects. Although the project does not currently have an offtake agreement in place, permits have been issued on the Fisherman’s Energy Atlantic City Wind Farm off the coast of New Jersey. At completion, the project will generate 24 MW from six turbines each with a nameplate capacity of 4 MW. Further up the Atlantic Coast, the significantly more ambitious Cape Wind Project failed to receive sufficient financing to proceed, but many others are proceeding apace in New York, Massachusetts, Delaware, and elsewhere. The Pacific Coast is also seeing increased offshore wind development activity. Offshore wind developer Trident Winds is pursuing the development of a 650 MW floating wind farm off the coast of San Luis Obispo County, California. The Morro Bay Project will deploy 100 6.5 MW turbines and will be the first wind farm of its kind in the United States and a first for the California renewable energy market.

From a supply and construction perspective, the execution of an offshore wind project is a vast logistical challenge. Such projects typically involve multiple contracts and require the coordination of complex marine logistics in an evolving supply chain that increases the risk of delays, cost overruns, and weather related delays. Multiple delivery and staging locations can give rise to Jones Act U.S. flagged carrier issues. Also, as of this writing, there are no permanently stationed installation or maintenance vessels on either the West Coast or the East Coast capable of erection or major warranty work of large offshore units. Such vessels must come from Europe or the Gulf Coast. As a result, construction risk for offshore wind projects is higher than for land based wind projects. Given the unique and challenging nature of offshore wind projects, successful execution will depend on the participation of experienced contractors and turbine vendors, prudent structuring of the interface between equipment suppliers and specialized contractors, as well as a reasonable construction schedule that takes into consideration the impacts of weather related delays, and other risks commonly associated with complicated marine construction.

More information on offshore wind development is presented in Chapter 4. Download The Law of Wind - 8th Edition (PDF)

Key Contributors

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  • Bree Metherall Director of Business Development 503.294.9435
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