Energy consultancy Xodus Group and legal advisors Shepherd and Wedderburn have joined forces to urge the wind industry to move towards standardised contracts to help reduce risk and save project time.
The companies, which both have renewable business streams and huge experience of delivering dozens of projects in the energy sector, are urging offshore wind developers to start a dialogue towards standardisation similar to that used by the oil and gas industry.
Richard Cockburn, Partner in the Energy Group at Shepherd and Wedderburn said: “Developing a new standardised form of contracts for the offshore wind industry would slash time on negotiations between developers and the supply chain and save money. The industry should develop a bespoke contracts system for offshore wind that allocates technical and commercial risks in a fair and appropriate manner and is project finance friendly.”
Eric Doyle, Alternative Energy Manager at the Aberdeen-headquartered Xodus Group is also warning offshore wind developers to take a ‘long sighted’ approach or risk losing some of their supply chain to oil and gas projects as the industry picks up over the coming two years.
Doyle explained: “Both industries share many of the same suppliers such as manufacturing, engineering consultancy and suppliers of cabling, so there is a real risk of creating a bottle neck, which could impact on project time. There has been a lot of consolidation recently of small and medium sizes oil and gas operators, which is giving a renewed boost to offshore orders, which could mean that the wind industry risks losing out if it does not plan for the longer term.”
Xodus Group is introducing its web based risk management tool to the energy market, which will be on display at Offshore Wind 2010. XRISK maps out likelihood, severity and cost implications of risk and prioritises counter activities.
Doyle added: “The offshore wind industry should not underestimate the cost of risks and planning ahead with standard contracts can help to minimize some of those liability issues from the start of a project. We have developed XRISK in response to the need for a single, securely shared risk register which allows managers anywhere in the world to build plans and track and manage actions in real time. It can even consider reputational damage and sends direct alerts by email or SMS if action is not followed up.”
Aimed primarily at Project & HSEQ engineers and managers, who need to understand how risk needs to be managed in order to deliver success, Xodus developed the software to provide visibility on project risks and their effective management.
Cockburn added: “There currently seems to be less of a focus on HSE issues in the renewable sector compared to oil and gas, but it will only take one incident to impact on the reputation of those involved in the industry. It is important to get it right from the start and learn lessons from other sectors.”
Xodus Group has an Environmental Division called Xodus Aurora and is rolling out an increased service offering to the growing global renewable industry and the emerging Carbon Capture and Storage (CCS) market. Turnover in the offshore renewable business stream is predicted to grow to over £3 million in the next two years as the company grows from wave and tidal into environmental consultancy for offshore wind.
Clients in this sector include SSE Renewables, RWE Npower Renewables, Scottish Power Renewables Aquamarine Power, Pelamis Wave Power and Green Ocean Energy.
Xodus Group employs over 270 people with offices in Edinburgh, London, Orkney and Perth Australia. The company has five divisions which include Xodus Aurora, Subsea, Technical, Safety & Risk (TSR), Integration Technology and Process & Facilities.
Shepherd and Wedderburn has worked on more than 80 on and offshore windfarm projects in the last five years. Current offshore work includes the contract to advise Smart Wind Limited as it develops the 4GW Hornsea zone, of the UK’s biggest round 3 offshore wind zones. The firm will advise Smart Wind on consenting, grid connection, third party leases, contracts and health and safety as it develops the zone in a series of blocks, with each one being around 500 MW.
The Offshore Wind conference takes place in Liverpool on 29 and 30 June. Xodus will be exhibiting at stand A5.