Renewables are key for legal advisers focused on creative and longer-term solutions

Richard Turnbull is an energy partner at TLT, the Bristol-headquartered law firm that acquired Scottish firm Anderson Fyfe back in 2012. "When Anderson Fyfe merged with TLT we inherited a strong renewables and energy practice they had built up, mainly in the South West of England. I joined the firm from Pinsent Mason’s renewables team, with the brief to grow the Scottish side of the practice. We are continuing to grow within Scotland," he comments.

The firm has been heavily involved in the acquisition and sale of wind and solar portfolios for some of its clients. "Basically, developers who have built out projects find themselves with assets that have a guaranteed 20 or 25 year revenue stream. This makes those assets highly attractive to investment and life and pensions funds, for example, who are keen to match their multi-decade liabilities with assets that have a similar long-lived and highly reliable revenue stream associated with them,"
he comments.

This makes for a very convenient fit between potential buyers and sellers, and we can expect the secondary market in renewable generating resources to be lively for the foreseeable future. However, all is not entirely plain sailing in these types of transactions and the advisors need to dot the ‘i’s and cross the ‘t’s meticulously to ensure that all goes well. The kind of elephant traps we are looking to avoid for clients involve factors such as property rights and planning consents and ensuring that the grid connectivity arrangements are watertight," he comments.

The client wants to be certain that the project has been built out in accordance with the planning consent and that all necessary property rights are in place for access, construction and exporting power to the National Grid. With Renewables Obligation Certificate (ROCs) now ended for new projects, the lawyers have to check very carefully to ensure that the project has a secure income stream for the time frame the client expects.

"We also look very carefully to see that all construction documentation and warranties are in place and available to the buyer, and that all contractual provisions and protections that a funder or a bank would expect to see are in place."

To add to the complexity, these projects have been subject to project finance and have often been refinanced. "With ROC applications, the cut-off point for onshore wind was at the end of March 2016 (subject to certain ‘grace period’ exceptions), so in the lead up to that, a lot of developers were rushing to get projects built and commissioned on time, and were financing projects at expensive rates. Many of those projects are now being refinanced, and that too is creating business for us," he notes.

With the UK Government’s policy moving against onshore wind, Turnbull says that the market response has been to move towards new technologies. One of the most exciting of these, he says, is energy storage, and the firm is now getting involved in several such projects.

"Energy storage is seen by many as a way of getting the most out of existing renewable assets, but we are also seeing energy storage being put forward as stand-alone projects which are used to balance both the frequency and capacity requirements of the national grid, in addition, behind the meter storage projects are also used on a commercial scale to time shift power by storing it at off-peak rates, making it available during periods of high demand, avoiding peak time electricity charges," he notes.

Conventional battery storage projects are interesting to land owners because they have minimal impact on the land and require a relatively modest amount of land that is positioned near a power substation often in return for competitive rentals. "These projects are largely driven by the National Grid Frequency Response and Capacity Market Tenders," Turnbull notes.

In August 2016, for example, the National Grid awarded frequency response contracts to eight providers. They use battery technology to store power which can then be used for balancing services at grid scale. According to National Grid, these tenders will result in over £200 million of savings as it manages energy supply and demand across Great Britain.

Doing this job means that the system frequency has to be maintained at 50Hz. With the variable power generation provided by renewables, which ebbs and surges as the winds dictate, the National Grid needs to be able to call on additional power at sub-second response times, and large scale, battery-based power storage facilities, some of which are fed by renewable technologies, are a near perfect solution.

"These projects range from 10MWs in scale typically up to 50MWs and are purely commercial power stabilisation contracts with the National Grid. The other storage play is colocation with smaller scale wind and solar sites often used as direct power sources for industrial users, where battery storage units store power during periods of high generation and release it when generation is low and there is a demand for power, avoiding reliance on conventional grid supplied power during these periods. This is great for industrial premises or supermarkets, for example."

Developers are also looking increasingly at renewable generation technologies as a way of meeting the needs of a localised group of businesses, without reference to the National Grid, Turnbull says.

"We are seeing industries adopting renewables not just for profit but because it plays well with the company’s long term sustainability goals. Brewers and distillers, for example, have been among the early adopters," he comments.