Marine renewables: the importance of understanding risk

The extent of the potential crossover remains to be seen and it may well be that there will be different, or indeed no, crossover for different parts of the marine renewables sector.

One of the key areas of concern in any industry is the health and safety of its workforce. The risks involved for workers need to be identified, appropriately provided for and managed, and then continuously monitored. Regulations set out the principles to be applied in implementing preventative and protective measures. These include avoiding risks; evaluating risks which cannot be avoided; combating risks at source; adapting the work to make it appropriate (for example, the design of workplaces, choice of equipment and methodology); adapting to technical progress; replacing the dangerous with the less dangerous; developing a coherent overall prevention policy, covering technology, organisation and working conditions, and including factors relating to the working environment; giving priority to collective protective measures over individual protective measures; and giving appropriate instructions to employees.

In the field of health and safety of personnel, all of these principles now come into much sharper focus since the Corporate Manslaughter and Corporate Act 2007 introduced provisions which render a company liable to prosecution for corporate manslaughter (or corporate homicide as it is known in Scotland), based, among other things, on the culture within an organisation, specifically the attitudes, policies, systems or accepted practices that were likely to have encouraged any failures in duty, or have produced tolerance of it.

The marine renewables sector has an opportunity to write good practice into all levels of operation from the outset and in doing so will no doubt foster a good and healthy working relationship with the Health and Safety Executive. The industry will be regulated in different ways in respect of different areas of activity, but good and positive industry led relationships with regulators will make a positive difference.

A full consideration of all the risks arising throughout any particular project will allow developers not only to be known as safe developers, but will also have significant commercial implications. Marine renewable developers are at the forefront of new technology in environmental conditions which are, by definition, harsh and challenging. As the industry looks towards improving the new technologies and bringing them to the stage of commercial delivery, a full review of all the risks involved in the project, from conception through funding and manufacture to deployment and operation, will be essential. Risk cannot necessarily be entirely avoided, but it can be identified, mitigated, managed and provided for.

Early identification of risk will allow developers to look to put in place the appropriate contractual frameworks which will not only serve their interests well, but, importantly, which will also satisfy funders that risks have been identified and appropriately allocated between the various contracting parties. As well as the health and safety risks involved there are many others, such as those relating to technology, compliance, deployment, marine and operational, infrastructure and weather, which will all bear on the financial and strategic risk of any project, and thus pose risk to the business proposition itself. The other side of the coin of risk is potential liability, and that is something all businesses wish to minimise and control.

Many industries, and the industries which provide services to and support them, have developed their own industry standard clauses which can be used as the basis for contracting. The finalising of contractual terms on which risk is allocated between parties can sometimes be left to a very late stage of a project. The focus can understandably be on the physical infrastructure required to deliver. However, the potential down sides of a badly framed contract can be as bad as, if not more severe than, the absence of an appropriate piece of installation equipment at a particular time. Identifying the risks as part of the ongoing development process is therefore essential.

In an environment where weather windows will be short, and weather down time potentially large, the implications of badly written contracts can be very costly. Oil and gas industry contracts will not necessarily be transportable straight across to the marine renewables industry. However, it is wise to consider employing some of the approaches used in the oil and gas industry to help simplify procedures and save costs, such as CRINE (Cost Reduction Initiative for the New Era), which has already been used beyond that industry. That will involve not only developers but also marine contractors and service providers, in looking at where they fit into the supply chain matrix and how they are prepared to fulfil the demands on them in that context. Innovation, but also appropriate standardisation, will be required.

As well as the physical challenges of installation of the seabed kit to which devices should be secured, the commercial, legal and intellectual challenge of a carefully considered contractual structure should not be forgotten. Those who do that early and understand the risks will be well placed to shape the agenda and the nature of the outcome.