Fortum launches arbitration against Vestas

Fortum sues Vestas in arbitration over wind projects in Russia cancelled due to sanctions. The two companies are fighting over contractual obligations and prepayments, raising questions about the risks of doing business in politically unstable environments.

Partagez:

Finnish state-owned Fortum has initiated arbitration proceedings against Danish wind turbine manufacturer Vestas over advance payments made for more than 50 wind turbines for Russian projects. These payments were later cancelled due to sanctions.

Vestas refuses to reimburse advance payments and other project costs

The company claims that Vestas has failed to meet its contractual obligations and has refused to refund advance payments and other project costs. Fortum was already seeking more than 200 million euros ($218 million) in compensation from Vestas after sanctions prevented the latter from delivering, installing and servicing wind turbines at four wind power plants owned by Fortum’s Russian subsidiary, WEDF.

Vestas, meanwhile, cites “sanctions-specific” clauses in its contracts with WEDF, which give each party the right to terminate contracts when Western countries imposed sanctions on Russia following its invasion of Ukraine in 2022. Vestas claims that the clauses explicitly included the sanctions against Russia and that the company had already manufactured some of the wind turbine components “worth far more than the advance payments it had received” at the time the EU imposed the sanctions. The Danish company added that it would defend itself “vigorously” against what it described as a “baseless arbitration procedure”.

The parties enter into an arbitration procedure to settle their contractual dispute

After months of unsuccessful discussions with Vestas, Fortum says it “had no choice” but to take the dispute to an arbitration tribunal at the International Chamber of Commerce in Stockholm. Fortum’s general counsel, Nora Steiner-Forsberg, said she was confused as to why their longtime business partner, Vestas, would suddenly question their compliance with EU sanctions in this case.

This dispute between Fortum and Vestas highlights the risks associated with operating in a constantly changing global environment. In this case, both parties appear to have assumed risks that ultimately led to the arbitration process. The outcome of the proceedings will be closely watched by the industry, as it could set a precedent for future litigation arising from sanctions or other political upheaval.

Energy company TGS has won a major high-resolution geophysical imaging contract for offshore wind site characterization in Norway, strengthening its position in this rapidly growing market.
Iberdrola Australia secures crucial approval from Australian authorities to begin metocean studies for its 3GW Aurora Green offshore project off the coast of Victoria, marking a decisive stage in its development.
ENGIE begins full operation of the Red Sea Wind Energy wind farm in Egypt, increasing its capacity to 650 MW, four months ahead of schedule, now powering over one million homes in the region.
Tokyo Gas, through TOWII Renewables, a joint venture with EWII, purchases two onshore wind projects developed by Finnish company Puhuri, totalling 74.4 MW, marking its expansion beyond the Danish market.
The European Investment Bank grants EWE AG historic €450mn financing for the installation of 2,600 km of underground power lines and the upgrade of over 1,100 substations in Lower Saxony.
Japan’s Ministry of Industry and Siemens Gamesa Renewable Energy launch a strategic partnership to develop local offshore wind supply chains and strengthen the country's industrial competitiveness in this energy sector.
Energiekontor AG confirms financial close for the Nartum wind farm, adding 23 megawatts to its owned portfolio and starting the construction phase in the Rotenburg district, Lower Saxony.
Airloom Energy begins construction of a pilot site in Wyoming to test an innovative turbine aimed at enhancing American energy security in the face of anticipated growth in electricity demand.
ACCIONA Energía transfers the San Juan de Marcona wind farm to Luz del Sur S.A.A., a major player in Peru's energy sector, for up to USD 253 million, pending necessary regulatory approvals.
German operator Encavis AG strengthens its portfolio by acquiring two wind farms in Lower Saxony and Saxony, totalling 59 MW, in a transaction with Energiequelle GmbH, thereby expanding its renewable energy assets.
Ocergy officially launches an industrial project aiming to install by 2028 a new-generation floating wind turbine of over 15 MW, in partnership with EnBW, Kyuden Mirai, and TEPCO Renewable Power.
France officially commissions its first floating wind farm, consisting of three turbines with a combined capacity of 25 megawatts, introducing strategic technology in the Mediterranean, vital for national energy goals.
Inaugurated on 20 June, the five-turbine plant of wpd onshore France feeds 18 MW into the grid and unlocks new tax revenue for four Côtes-d’Armor municipalities.
Statkraft refocuses investments on flexible Nordic hydropower and reduces commitments in offshore wind and hydrogen to lower operating costs, amid an uncertain economic environment and pressured profitability.
Suzlon Group receives third consecutive order from AMPIN Energy Transition to supply 170.1 MW of wind turbines for a project in India's Andhra Pradesh state, strengthening their strategic industrial partnership.
The Muir Mhòr floating wind project secures Aberdeenshire's onshore consent, paving the way for the potential production of one gigawatt of electricity, enough to power up to 1.2 million British homes by the early 2030s.
Iberdrola España and Renfe conclude a virtual power purchase agreement for 370 GWh per year for ten years, strengthening the use of renewable energy in Spanish railway transport.
TotalEnergies has been awarded a concession in the North Sea enabling the development of a 1GW offshore wind project, reinforcing its strategic presence in Germany.
With an annual increase of 14%, global offshore wind capacity now reaches 85.2 gigawatts, driven mainly by China, the United Kingdom, and Germany, while another 27.3 gigawatts are currently under construction.
Seabed exploration begins in Jammerland Bay to validate the placement of sixteen turbines and the cable corridor, the first tangible step before construction of the project led by TotalEnergies and European Energy.