The offshore wind sector needs to go beyond allocation of commercial risk in contracts to deal with growing political and security threats, says Richard Booth, a partner at the international law firm HFW.
The renewables industry is entering a new era, one defined not just by innovation and sustainability, but by the urgent need to navigate a world marked by geopolitical and economic volatility. Since 2020, a series of global disruptions ranging from the Covid-19 pandemic and the war in Ukraine to surging energy prices and inflation have reshaped the risk landscape for infrastructure projects. These events are not isolated and instead are part of a broader pattern of instability that includes rising geopolitical tensions almost on every continent.
In 2025, the cumulative effect of these developments is impossible to ignore. For the offshore wind sector, which is facing the task of delivering both clean energy and energy security, the implications are far reaching. Parties must now think beyond allocation of commercial risk in their contracts, as political and security threats are no longer remote possibilities but active concerns.
Contractors are unlikely to be able to rely on standard force majeure clauses as many of today’s risks are already known. For example, cyberattacks, trade wars and hostile state actions are no longer hypothetical – they’re actively happening now. Subsea infrastructure has been covertly surveyed and some pipelines damaged or destroyed, GPS spoofing has caused vessel groundings in the Arabian Gulf and cyber incidents continue to disrupt global operations.
To protect the offshore wind industry and its stakeholders in this era of geopolitical instability, contracts must evolve in several ways.
Firstly, in relation to force majeure clauses, these should be broadened in scope. Rather than being limited to the offshore site itself, these clauses should extend to the entire geographical reach of the supply chain. They should also include an open-ended list of triggering events, allowing for flexibility in the face of emerging threats. This ensures that disruptions in any part of the supply chain (whether due to conflict, cyberattack, or political unrest) can be addressed within the contractual framework.
Secondly, contracts should include provisions that allow for the safe withdrawal of assets and personnel in the event of escalating regional tensions. If a situation arises where vessels or equipment maybe at risk or where the safety of workers could be compromised, there could be a mechanism for demobilisation under the contract. This would go beyond a traditional force majeure clause and would require careful drafting.
Thirdly, insurance arrangements must be also revisited as a part of this exercise. Contracts should require a thorough assessment of the types and extent of insurance cover needed to address these evolving risks.
Fourthly, during such events, parties should consider as to whether liability caps could be adjusted accordingly. It may also be appropriate for a ‘knock for knock’ indemnity regime in these circumstances where each party bears its own losses regardless of fault, especially when adequate insurance cannot be procured for these types of events.
Fifthly, price indexation clauses can be used to protect against the inflationary effects of global instability. The cost of materials, labour and logistics can fluctuate dramatically in response to geopolitical events and without indexation, suppliers and contractors may be left bearing the financial burden of price increases that are entirely outside their control.
Finally, contracts should require the development of an effective crisis management response plan. This plan should outline how the parties will respond to these events, including communication protocols, decision-making processes and mitigation strategies.
Richard Booth is a partner at the international law firm HFW.
