One of the main bottlenecks for achieving these targets is the limited capacity of the supply chain and of the vessels and further marine spread required. Another issue developers are being confronted with are prices which have risen, coupled with a significant "deflation" of risk appetite on the contractors' side. These are all consequences of the disruptions of the last years, but also of the general movement towards a contractors' market.
At the same time, almost decoupled from the international offshore wind industry and development, China has been developing a massive offshore wind supply chain over the last ears and has been breaking records with the speed and volume of offshore wind capacity added in its waters. Capacity-wise it is by far the leading nation. In 2022, China reached a total installed capacity of 31.44 GW, which almost equalizes that in the entire rest of the
world, which was at 32.86 GW.
As a consequence, international developers are increasingly looking towards China and its huge offshore wind supply chain as a means to still secure required supplies and equipment at reasonable conditions. The offshore wind farm ("OWF") Taranto, as developed by Renexia, for example showcases MySE 3.0-135 wind turbines from MingYang Smart Energy. Other European projects which source out to China-based contractors include the 500 MW Greater Gabbard (with ZPMC as supplier) and Moray East in the UK (with CSSC CWHI supplying steel for the jackets and transition pieces flanges). Dajin Heavy Industry is supplying to the 850 MW Moray West by Ocean Winds' (monopiles and transition pieces), RWE's 1 GW Thor in Denmark (monopiles), Ocean Winds' 496 MW Iles D'Yeu et Noirmontier (monopiles), SSE Renewables, Equinor, and Vårgrønn's 3.5 GW Dogger Bank in the North Sea (tower barrels), among others.
However, contracting with Chinese suppliers and contractors still causes a certain, often undefined feeling of uneasiness among many sponsors and financiers. In this publication, after a brief market overview, we will be setting out what the issues and topics are that need to be looked at, when contracting with parties from China, and how to overcome or mitigate relevant risks involved.
Please be aware that these general considerations are not meant to replace or make redundant project specific legal advice.
Authored by Christian Knuetel, Zhen (Katie) Feng, Liang Xu, Owen Chan, Rupert Sydenham, Angelina Leder, Thore Feil, Carla Luh, Adrian Walker, Christian Ritz, Christelle Coslin, Susanne Reil, Lourdes Catrain, Stephanie Seeuws, Sebastian Polly, Roy Zou, Mark Lin, Christian Stoll, and Mark Lee.
