News recently of the collapse of a wind turbine in Northern Ireland has prompted concerns in the renewables industry regarding the operation of turbines both big and small. The collapse of a turbine of the scale of the affected turbine at the Screggagh windfarm in County Tyrone is very rare in the UK, given the number of turbines now in operation.
It is too early to speculate on the cause of this incident, but no doubt the parties involved will be checking the contractual position once the exact circumstances are known. Beside the understandable health and safety concerns, it is also relevant to consider the obligations and entitlements of the parties involved. Turcan Connell advise rural businesses and landowners on these matters regularly in relation to similar projects.
There are several key contractual questions which arise from events like this. Is there a contract governing the operation of the turbine? Who bears the responsibility for the cause of the incident? Does the landowner need to take urgent steps as a result of the incident?
Windfarms using turbines of this scale (the turbine in question had a hub height of 80m and was capable of power output of approximately 2MW) should ideally be maintained by competent contractors under a contract covering both operations and maintenance (an"O&M contract"). This would normally follow successful installation and commissioning carried out under a turbine supply contract (usually referred to as the"TSA"). At Turcan Connell, we would always recommend that for windfarms of this scale, a robust O&M contract is put in place. This is also often a funder requirement.
For the developer of the windfarm, there are several key protections which O&M contracts can provide:
- Regular scheduled maintenance of turbines: with any form of machinery, regular maintenance is beneficial. Given the mechanical and electronic complexity of large wind turbines, developers will not have the expertise to carry out maintenance themselves and should be dissuaded from doing so. Competent contractors should be obliged to carry out regular checks to large turbines for the whole period of the operation of the windfarm;
- Unscheduled maintenance: in addition to"scheduled" maintenance, it is key that if issues arise contractors respond promptly to address and mitigate these issues. Developers should not bear the responsibility for monitoring or checking the operation of large turbines, particularly as modern turbines are monitored on a 24/7 basis through remote internet or satellite connections by contractors; and
- Guarantees: turbine suppliers commonly offer guarantees to developers regarding the technical performance of their turbines. These often cover availability, power curve performance and sound levels. Where a turbine performs at a level lower than percentages guaranteed under the O&M agreement, the contractual sanction may lead to the turbine supplier being liable to a windfarm developer for damages in respect of a shortfall.
TSA contracts will have a contractual"defects liability" period, however, it is not sufficient to rely on this as the developer's sole remedy in respect of issues arising with the turbine. While a defects period under a TSA may last for 6 or 12 months following commissioning, the expected working life of a large wind turbine can be 15 years. An O&M contract should be in place for this whole period.
Not all issues which can affect the operation of a wind turbine are mechanical in nature – severe weather, lightning strikes, grid issues, or the actions of the developer or third parties can all reduce a turbine's operational effectiveness. Where such issues arise, an O&M contract should require the maintenance contractor to respond, however, the developer may require to make additional payments in respect of such"additional" services.
Developers should negotiate O&M contracts robustly, and seek that maintenance contractors are required to provide clear and comprehensive scopes of service, with prompt response requirements in relation to unscheduled incidents. Payment profiles under O&M contracts can also be negotiated – while damages should be payable for under-performance, it is possible to achieve a common purpose between the developer and contractor with gain-share or bonus arrangements where turbines operate at higher-than-expected availability, leading to increased revenues being generated.
While issues such as a turbine tower collapse are thankfully rare, there is a risk in the current market that O&M contracts are not being negotiated as they should be. O&M contracts can be seen as less important than the preceding TSA. This can often be the case, particularly given the proliferation of new developments and imminent Feed-in Tariff digressions. The result of this may be that developers find themselves without a contractual remedy if issues affect a turbine during its operation phase. With robust negotiation, and good legal advice, developers can reach a solid contractual position with their maintenance contractors, protecting themselves should similar situations arise as those seen in Northern Ireland.