The renewable energy sector is changing rapidly, from funding and legislation through to technology and supply chain. With these changes come new legal requirements and exposure to risk. To plan successfully for any renewables projects, it is essential that you identify the key issues that can occur in each stage of the renewables project and the legal issues that you may face.
Below we have outlined six key areas for you to consider. Please use the links to quickly navigate to each area.
- Corporate, finance and insurance issues
- Real estate
- Commissioning, grid connection and construction
- Commercial, operation and maintenance
- Regulation and incentivisation
Areas to consider:
Proper planning is essential for any renewables project. Early involvement and a sound understanding of all the issues are fundamental if each team member is to provide a considered contribution to the success of the project as a whole.
Feasibility and planning issues include undertaking due diligence on potential sites, and providing assistance on complex planning issues. Scoping will have highlighted the potential for the specific project, but a developer will have to carry out more site specific assessments and surveys in order to satisfy the planning authorities and statutory consultees.
A comprehensive scoping and site assessment process is needed in order to lower development risks, costs and increase long term profitability.
Investment of public money in a private undertaking may be state aid and maybe key to making a renewables project viable.
Whether you need to set up the correct form of company entity or conduct the ultimate sale of your commissioned project, corporate, financial and insurance issues will be key to the success of your project. These include:
- Delivery structures including joint ventures, partnering arrangements and mutuals
- Finance including structured, project, property and asset based finance solutions
- Regulated activities including those falling within the Consumer Credit Act and Financial Services and Markets Act
- Consideration of the structure for future acquisitions and disposals, and how the sale and purchase of minority and majority interests will be carried out, including novation of licences and agreements, and obtaining relevant consents to the transaction
- Insurance is also a key consideration – namely, the need to protect your investment by minimising risk.
Real estate issues may cover areas as diverse as the purchase of land for development, to the conduct of significant rent review arbitrations. The key issues that need to be considered for real estate are:
- The financial and commercial consideration of managing a property portfolio to maximise energy efficiency
- For the public and third sectors there are additional social drivers including combating fuel poverty and promoting opportunities for the local workforce
- In the public and private sector real estate and facilities management sectors, issues may include consideration of asset rationalisation, retrofit, renewables installations, energy performance contracting and the Green Deal.
Whether you are a contractor, developer, consultant or funder, renewables projects can involve a variety of construction risks, most notably those in the area of offshore wind. Smaller scale projects may often have the same risks as larger ones, especially when dealing with newer technologies. The commissioning process is key to making sure that all the equipment has been installed correctly and is complying with the performance criteria. In particular, offshore wind involves special attention to cable connections where damage can go unnoticed.
Grid connections remain important across all renewables projects, especially as the reliance on renewables becomes greater.
When it comes to bringing the project in on time, within budget and in accordance with quality standards, there are a range of legal issues that need to be addressed. The key issues are always build, design and development, compliance, payment delays and any limits on liability.
The commercial, operation and maintenance of your renewables projects will need to be able to promote increased operating efficiency and less downtime. Operational parameters need to be analysed, from understanding how performance can be enhanced to improvements in health and safety. In such a dynamic market, having a strong understanding of the latest policy and regulatory changes is essential.
With the drive to ensure that the UK (and other parts of the European Union) produces more of its energy requirements from renewable and sustainable sources, the UK government has introduced financial incentives in relation to energy production and consumption.
Given the breadth and depth of these incentives, and their application to different technologies or sectors, it can be difficult to identify and understand the opportunities that these incentives bring as well as negotiate your way through the maze of environmental levies and taxes that exist.
The key considerations and issues that must be considered are:
- Replacing the Renewables Obligation scheme with Contracts for Difference (CfD)
- The Electricity Market Reform (EMR) presents both opportunities and challenges for those involved in the sector
- Introduction of a capacity mechanism
- Implementing the carbon price floor, an adjustment to the Climate Change Levy (CCL) that aims to discourage investment in traditional fossil-fuelled generation
- Emissions Performance Standard (EPS) for new fossil fuel power stations over 49MW
- Bringing forward arrangements to achieve electricity demand reduction
DWF Renewables Task Force
At DWF we have developed the renewables task force that gives our clients access to our team of experts who have worked on energy projects and their financing for many years across the UK and overseas. This gives us real experience in all aspects of the evolving renewables sector. Our aim is to gain a thorough understanding of your needs and help you overcome your renewable energy challenges.
To find out how DWF can support your renewables project, request our Renewables Task Force Guide.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.