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Harland & Wolff Group completes termination of Scottish wind farm contract

By: Tom Russell 20/02/2023 Harland & Wolff Group Holdings

General Windfarms

Harland & Wolff Group Holdings plc (H&W), announced that, further to the announcement made on 30 December 2022 in relation to the termination of the Saipem project, negotiations have now concluded with Saipem.

Harland & Wolff Group (H&W) revealed back in December that is planned to to terminate the contract for the fabrication of four wind turbine generator jackets for the Neart na Gaoithe (NnG) Project. The original contract was entered into in April 2021, and was subsequently de-scoped from eight wind turbine generator jackets to four in October 2022. Then in December, H&W revealed it planned to terminate the contract entirely.
The contract value has been finalised at £16m, representing approximately 70% of the contract value as per the deed of variation signed in September 2022 as part of descoping from eight jackets to four. The entire amount has now been paid in full and final settlement of the contract.

Having completed the contract settlement with Saipem in its entirety, the Company will undertake a process of rationalising the Methil facility's workforce to approximately 115 core personnel in order to align the Company's resources and cost base with the level of work being undertaken at the site whilst protecting its margins.

As the Company sets it sights on 2024 and beyond, Harland & Wolff expects the renewables market to demand more local fabrication capacity in the UK than is currently available. The Company considers that the lead time to secure contracts in the renewables space takes approximately 12 - 36 months and a number of such tenders have already been submitted for additional work at Methil over the mid-to longer term. Meanwhile, the Company is also advancing on a pipeline of nearer term smaller projects which it expects to undertake over the coming months.

John Wood, Group Chief Executive Officer of Harland & Wolff comments: "The Saipem project was the first project to arrive in Methil after our acquisition of the facility. With the previously announced delays and the changed economic position of this project, it was in the Company's best interests to draw the project to a mutually acceptable close. The project has been a helpful learning curve for the business in this environment and we will take the lessons learnt forward into our next major project. In the meantime, the teams are focusing on constructing barges whilst contract discussions and negotiations advance foranother large project. In the interim, the Company is focused on progressing the Company's pipeline of opportunities across its different sites and markets and remains steadfast in its approach to executing on contracts which maintain strong and attractive margins."

The 450 MW NnG wind farm is 15km off the coast of Fife and is owned by EDF Renewables and ESB. The offshore wind farm will be equipped with 54 Siemens Gamesa SG 8.0-167 DD turbines with a tip height of 208m. They will be mounted on foundations laid at a water depth of up to 55m.

Once fully operational, it is expected to generate electricity for around 375,000 homes, or all domestic properties in a city the size of Edinburgh, and to displace 400,000 tons of CO2 annually. LCCC awarded it a CfD in February 2015, with a strike price of £114.39/MWh. The first turbines are scheduled to be operational in time for the wind farm to begin generating power in 2023, with completion scheduled for 2024.

Saipem is the EPCI contractor for foundations across the wind farm. This includes supply and installation of the 2 substation jackets, using Saipem 7000. Saipem will also undertake T&I of the topsides.

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Harland & Wolff Group completes termination of Scottish wind farm contract

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