The Dutch offshore wind foundation manufacturer, Sif, has received a notice of termination of its Empire Wind 2 monopile contract from the joint venture owned by BP and Equinor, who have just terminated their Offshore Wind Renewable Energy Certificate (OREC) agreement for the 1,260 MW project with the New York State.

Sif was contracted to manufacture 54 monopiles and 54 transition pieces for the 816 MW Empire Wind 1 and 84 monopiles for Empire Wind 2. The company was also in exclusive negotiations for the manufacture of the transition pieces for Empire Wind 2 as well.

Sif has removed the contracted capacity from its order book and, under the terms of the contract, is entitled to compensation in the case of the contract being cancelled. Furthermore, the termination will affect the sequence of manufacturing for 2025 and 2026, but the financing of the expansion of the manufacturing facilities at Maasvlakte 2 in Rotterdam remains secured with the share of the advance factory payment for Empire Wind 2 converting into a perpetual bond, according to Sif.

“Under the terms of the contract for monopiles for Empire Wind 2, Sif is entitled to cancellation fees in the event of early termination of the contract. Equinor will endeavor to fill the gaps in Sif’s production schedule that arise due to the termination of the Empire Wind 2 contract. A successful effort could result in mitigation of the compensation fees to which Sif is entitled under terms of the contract,” the company said on 4 January.

“The cancellation does not affect the financing of the expansion plans in Rotterdam that are in execution and on schedule. A budget of €328 million for the expansion plans has been secured including €50 million in advance payments by Empire Offshore Wind that were paid in 2022. The part of the advance payments that relates to Empire Wind 2 (€30.5 million) will be converted into a perpetual bond. The bond has no fixed maturity date and can be redeemed by Sif at its principal amount together with accrued and deferred interest at any time at their convenience. There is no risk of a covenant breach because of this cancellation.”

The contract for Empire Wind 1 will continue as planned, with manufacturing scheduled to commence in the second half of 2024.

As reported earlier today, 4 January, BP and Equinor have also cancelled their contract for the Empire Wind 2 offshore substation, worth USD 250 million (around EUR 228 million), signed last year with the Singapore-based company Seatrium.

Commenting on Sif’s cancelled contract for Empire Wind 2, Fred van Beers, CEO of Sif Holding: “While it is disappointing that Empire Offshore Wind had to terminate supply contracts for their Empire Wind 2 US project for now, it is also clear that Sif’s monopile contract for Empire Wind 1 is not affected.”

“From a broader perspective we are confident that offshore wind developments in the United States, as is the case in Europe and the United Kingdom, will continue to ramp up given the urgent need for green energy and reduction of global warming.”

Van Beers highlighted that Empire Wind 1 remained the launching project for Sif’s newly expanded production facility at Maasvlakte 2. The production for the 815 MW Empire Wind project is scheduled to start at the end of July 2024 with first steel deliveries expected in January and February 2025.

“Over the coming period, we will enter into discussions regarding the effects of this termination in the same constructive manner as we have always done with Empire Offshore Wind, as a respected client and one of our launching customers, and with Equinor as a shareholder in the company. Together we will, as much as possible, pursue mitigating measures for the effects for both Empire Offshore Wind and Sif. This includes our full support to investigate the possibility of rescheduling and/or booking other projects for the relevant capacity,” Fred van Beers said.

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