The maritime industry is required to continue to reduce its GHG emissions. One way to achieve this is to use onshore electrical power (“OSP”), often referred to as “cold ironing” or “alternative marine power”.

Some larger ocean-going vessels calling at the EU will soon need to be built or retrofitted to exclusively use electrical power from the onshore grid at berth and avoid running their auxiliary engines. Potential advantages are lower bunker consumption resulting in reduced GHG emissions, as well as less air and noise and localised pollution in the port vicinity.

This article also considers regulatory drivers behind the use of OSP such as FuelEU Maritime and the operational and charterparty considerations
FuelEU Maritime Requirements for Passenger and Container Ships to Use OSP

The European Union’s FuelEU Maritime Regulation promotes the use of OSP by passenger and container ships in EU ports. From 1 January 2030, it will be mandatory for container and passenger ships with a gross tonnage of 5,000 or more to connect to a shoreside power supply in designated EU ports when at berths for more than two hours.

On the flip side, EU ports will be obligated to develop the necessary infrastructure to provide shoreside power to compliant ships. The infrastructure must be capable of supplying at least 90% of the ship’s electrical demand. There are some limited exceptions to the mandatory connection requirement – e.g. ships using zero-emission technologies or for short stays of less than two hours.

Charterparties and contractual concerns

Most standard form charterparties were drafted and have been in common use long before today’s regulatory challenges. Consequently, they do not specifically address the issue of OSP. The effect on Owners’ and Charterers’ rights and obligations in relation to its use may need to reflect on the following.

Charterers’ Obligations:

– There is no express obligation on Charterers to arrange or pay for shoreside power under the most commonly used pro-forma time charter forms, including NYPE ’46 and ’93, and Boxtime.

– It may be argued that Charterers’ duty to nominate safe ports and berths or to exercise due diligence in this regard requires considering the availability and use of shoreside power, especially if it is mandatory. This may be more straightforward for vessels on a liner service or with a fixed passenger itinerary, compared to tankers and dry bulk carriers or other types of cargo vessels performing spot fixtures.
– Under long term charters, fluctuations in the price of electrical power and adjustment factors may need to be considered.

Owners’ Obligations:

– Under standard time charter terms and as a matter of English law, Owners usually have general or due diligence obligations to deliver and maintain the vessel in a seaworthy condition. It may be argued such obligations extend to ensuring the vessel is equipped to receive shoreside power, if it is available and mandatory.

– Charterparties are likely to include terms requiring Owners and the vessel to comply with local laws, requirements and port regulations generally. These can be widely drafted but for clarity and to avoid the potential for disputes, charter terms may benefit from amendments and/or the inclusion of separate specific provisions to cater for any mandatory OSP usage.

– Owners may be responsible for ensuring compatibility with the terminal’s equipment and system and any additional costs associated with the use of shoreside power, unless otherwise agreed.

– Consideration of clauses to allocate costs and share the savings or other benefits of Owners fitting their vessel out for OSP and incurring any additional usage costs may be needed.

– Provisions ensuring adequate training for crew members to connect to and use OSP need consideration to enhance crew safety and wellbeing and to minimise risks associated with human error.

Breakdowns and Force Majeure:

– If the use of OSP is mandated by law or port regulations, and unavailability or breakdown causes delay or prevents or prejudices the performance of a charter, this could potentially be excluded under existing laytime and demurrage exceptions or force majeure clauses, which will be needed to be carefully considered and clearly drafted.

– Under time charters, specific off-hire provisions and other clauses allocating responsibility for any other losses and liabilities resulting from the unavailability or breakdown of OSP infrastructure would ideally need to be agreed.

Key potential amendments and additions to standard charter terms could therefore include:

– Obligations to use OSP – i.e. obligations for Owners and/or Charterers to ensure the vessel uses shoreside power when available, subject to certain conditions including in respect of price and safety.

– Cost Allocation: clearly defining which counterparty bears the costs associated with OSP.

– Exceptions and off-hire: including clear charter terms on whether unavailability of shoreside power or inability of the vessel to connect and use OSP constitutes an exception to laytime and/or demurrage in voyage charters, and whether it is an off-hire event under time charters.

– Allocating liability for losses and agreeing obligations for handling claims and issues related to the use of or unavailability of OSP, or any inability to use OSP because of ship/shore compatibility issues.

Ship and shore

Use of OSP also has the potential to create new areas of dispute between the ship and shore. Two key areas where disagreements may arise are in relation to meter readings and billing, and maintenance of connection points and cables. By addressing these issues upfront, the ship and shore can help to ensure a smooth and efficient cold ironing arrangement and help to minimise the risk of disputes.

Meter Readings and Billing:

• Accuracy: There may be discrepancies between the meter readings recorded by the ship and the shore. This could lead to disputes over the amount of electricity consumed and the corresponding charges.
• Billing Frequency: Disagreements may arise over the frequency of billing and payment terms.
• Tariff Structures: The choice of tariff structure can also be a source of contention. Shipowners and time charterers may prefer a fixed rate for certainty, whilst the shore side may prefer a variable rate based on peak and off-peak usage.
• Maintenance of Connection Points and Cables:
• Responsibility: Typically, the shoreside operator is responsible for maintaining the shore side’s connection points and cables used for cold ironing. This is because the shoreside operator is usually responsible for providing the electricity supply to the ship and is therefore in the best position to ensure that the connection points and cables are safe and functioning properly. However, arrangements may vary depending on the terms of the agreement between the ship and the shoreside operator. In some cases, the ship may be responsible for maintaining certain components of the connection, such as the plugs or sockets on its own vessel. The user agreement between the ship and the shoreside operator should as precisely as possible determine the exact responsibilities of each party to avoid disputes if equipment malfunctions or damage occurs. Alignment with any provisions regarding allocation of these responsibilities under charter terms also may need to be considered.
• Standards: The parties may have different standards for maintenance and inspection, which could lead to disagreements over whether the equipment is being properly maintained. The vessel will also need to ensure that its connections and other equipment are compatible with each terminal’s connection points and power supply system.

To minimise the risk of disputes, it is important for the ship and shore to have a clear and comprehensive agreement that addresses these issues. The agreement should specify:

• The method for recording and verifying meter readings.
• The frequency of billing and the tariff structure.
• The responsibilities of the ship and shore for maintaining the connection points, cables, sockets, and plugs on each side
• Procedures for resolving any disputes.
  Source: North Standard