Contract strategies play critical role in obtaining project finance in the offshore wind sector

Cost reduction remains priority number one for companies working in the offshore wind space; retaining that rank for the past decade. As the current cost of energy production remains high (£140 per MGW/h according to a survey by the Crown Estate in 2012), the number of external investors looking to enter the market stays low, urging the industry to demonstrate better results towards sustainability.

Even though offshore wind projects are now constructed faster and safer than ever before, the industry as a whole is still perceived as "high risk'' by the majority of external investors. The main reason for this remains the high cost of energy production coupled with the limited financial stability of some contractors. In most cases, utilities/IPPs have to choose between working with one (usually large and financially stable) or numerous (smaller and with a reduced balance sheet) contractors.

A single contractor is prone to have higher initial cost but lower potential risk later on. In fact significantly lower due to the ability of a larger contractor to foresee and rectify any construction problems. Multiple contractors often retain a higher level of specialised knowledge whilst be more willing to negotiate to partnership that benefits both sides as entrance to the market is currently an obstacle. Additional factors that go into the choice include project specifics, lending ability, weather conditions and experience. This is not a decision that is taken lightly.

Wind Energy Update are pleased to address these key industry challenges and to identify possible action steps. Many senior industry decision makers will gather in London this March at their 3rd annual supply chain meeting. The developer supply chain forum is the where companies including Dong Energy, Vattenfall, C-Power, NorthWind, RWE and many more will exchange their knowledge and experience on supply chain management for the benefit of all attendees. This exclusive two day event has been specifically designed to provide technical, project, procurement and planning managers from all EU utilities/IPPs with the tools and directions they need to avoid bad contracts in 2013 and beyond.

For more information please visit the official event website here or contact the organisers at

To share last year lessons learned and to put plans for action for the upcoming 12 months, the industry elite will gather in London this March at its 3rd annual offshore wind developer supply chain meeting.

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