Legal risks in the Marine Renewables sector

Whilst legal issues are, understandably, not typically at the forefront of considerations in planning offshore operations, it is important that they are considered. Failure to make provision for potential issues early on can mean funding is difficult or impossible to obtain, costs may rise and there is a risk of criminal prosecution or civil claim.

There is a difference between risks during development and risks for those technologies that are operational and are being deployed on a commercial scale. This article is aimed at the latter, but there are obvious synergies.

The Crown Estate is only responsible for seabed licences, it is not responsible for offshore planning. Under the Marine and Coastal Access Act 2009, the Marine Management Organisation ("MMO") is starting to take responsibility for offshore planning in English waters. The MMO, which has equivalents in Wales, Scotland and Northern Ireland, is also responsible for the protection of marine life, either specifically (for instance seals) or through marine conservation zones (still being planned with full designation by 2012). The first marine conservation zone is off Lundy Island.

In a recent case demonstrating the importance of complying with on and offshore planning regimes, an offshore windfarm was delayed due to the local planning authority rejecting the design of the landfall. Naturally, there is still the issue of whether the onshore grid is able to cope with the power being brought ashore.

Contracts for the transmission and offtake of power are with an Offshore Transmission Owner ("OFTO"). There is a competitive regime for the award of OFTO contracts and, since the regime is relatively new, there have been some problems to overcome.

In addition to the general financial situation, lenders are preoccupied with two major issues. Firstly, although the Energy White Paper has now been published, there is uncertainty as to the level of renewable support that will be available in the new Feed in Tariff Contract for Difference for offshore schemes. Given that offshore schemes are considerably more expensive to install and maintain than onshore schemes, this is of obvious concern. Secondly, contractors are not prepared to wrap the construction phase as a turnkey contract and, therefore, separate contracts have to be let which adds to the risk of delivery (the riskiest phase so far as lenders are concerned).

The Health and Safety Executive ("HSE") and the Marine and Coastguard Agency ("MCA") have overlapping responsibility for safety at sea. They do have a memorandum of understanding between them dividing this responsibility and, as a result, working on a ship would be a MCA responsibility and on an offshore structure a HSE responsibility. Having two responsible bodies tends to add to costs and risks. Additionally, Trinity House - and its equivalents in Scotland (Northern Lighthouse Board) and Northern Ireland (Commissioners for Irish Lights) - are responsible for maintaining their own navigation aids and inspecting and auditing private ones around the UK coast.

There are many other users of the seas including the Ministry of Defence, fishermen, shipping (commercial and leisure)  and the oil and gas industry. If the proposed installation is to be close to land, there may also be opposition from local residents. Despite the sea being a vast expanse, parts of it are intensively used. International regulations for preventing collisions at sea apply and, although a marine contractor will take this into account when planning installation and maintenance, there is some evidence that the power companies are not as aware as they should be of the problems of operating at sea. Ships and marine operations are far more subject to the elements than operations on land, and even the most careful planning can be ruined by the tide or weather. 

If a ship runs into your properly charted installation, although there could be potentially expensive damage to repair and loss of revenue, much of the cost should be for the ship owner, charterer or insurers. But, if your device breaks from its moorings and creates havoc in the shipping lanes or manages to cause damage somewhere else, that could be your risk and expense.

None of these risks are insurmountable as the offshore windfarm programme proves. Some should be relatively simple to resolve, but they do all need early consideration.

Ashfords LLP is Authorised and Regulated by the Solicitors Regulation Authority. The information in this note is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances. Links to other sites and resources provided by third parties are included for your information only.  We have no control over the content and accept no responsibility for them.