Renewable Energy 2020 Energy Renewable Renewable Energy 2020 Contributing editor Eric Pogue © Law Business Research 2019 Publisher Tom Barnes [email protected] Subscriptions Claire Bagnall Renewable Energy [email protected] Senior business development managers Adam Sargent 2020 [email protected] Dan White [email protected] Contributing editor Published by Law Business Research Ltd Eric Pogue Meridian House, 34-35 Farringdon Street Hunton Andrews Kurth LLP London, EC4A 4HL, UK Tel: +44 20 3780 4147 Fax: +44 20 7229 6910 The information provided in this publication is general and may not apply in a specific Lexology Getting The Deal Through is delighted to publish the third edition of Renewable Energy, situation. Legal advice should always which is available in print and online at www.lexology.com/gtdt. be sought before taking any legal action Lexology Getting The Deal Through provides international expert analysis in key areas of based on the information provided. This law, practice and regulation for corporate counsel, cross-border legal practitioners, and company information is not intended to create, nor directors and officers. does receipt of it constitute, a lawyer– Throughout this edition, and following the unique Lexology Getting The Deal Through format, client relationship. The publishers and the same key questions are answered by leading practitioners in each of the jurisdictions featured. authors accept no responsibility for any Lexology Getting The Deal Through titles are published annually in print. Please ensure you acts or omissions contained herein. The information provided was verified between are referring to the latest edition or to the online version at www.lexology.com/gtdt. July and August 2019. Be advised that this Every effort has been made to cover all matters of concern to readers. However, specific is a developing area. legal advice should always be sought from experienced local advisers. Lexology Getting The Deal Through gratefully acknowledges the efforts of all the contribu- © Law Business Research Ltd 2019 tors to this volume, who were chosen for their recognised expertise. We also extend special No photocopying without a CLA licence. thanks to the contributing editor, Eric Pogue of Hunton Andrews Kurth LLP, for his continued First published 2017 assistance with this volume. Third edition ISBN 978-1-83862-152-0 Printed and distributed by Encompass Print Solutions Tel: 0844 2480 112 London August 2019 Reproduced with permission from Law Business Research Ltd This article was first published in September 2019 For further information please contact [email protected] www.lexology.com/gtdt 1 © Law Business Research 2019 Contents Global overview 3 Korea 56 Eric Pogue and Mike Klaus Hoon Lee and Pan-Soo Kim Hunton Andrews Kurth LLP Jipyong The global trend of offshore wind energy 5 Mexico 63 Lauren A Bachtel Rogelio López-Velarde, Amanda Valdez and Daniela Monroy Hunton Andrews Kurth Dentons López Velarde SC Brazil 7 Nepal 70 Fabiano Ricardo Luz de Brito, Giovani Loss, Pablo Sorj, Mahesh Kumar Thapa Sinha Verma Law Concern Marina Anselmo Schneider and Ana Carolina Calil Ryan T Ketchum Hunton Andrews Kurth LLP Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados Nigeria 74 Chile 14 Ike C Ibeku and Ifeyinwa Ufondu Felipe Bahamondez Prieto, Paulina Farías Castro and Benchmac & Ince Diego Peña Diez DLA Piper Chile Spain 83 Gonzalo Olivera and Alberto Artés Egypt 21 King & Wood Mallesons Donia El-Mazghouny Shahid Law Firm Taiwan 91 Grace Chih-Wen Chou and Sean Yu-Shao Liu Ethiopia 26 Lee, Tsai & Partners Attorneys-at-Law Mahlet Kassa Woldesenbet LLP Lidet Abebe Tizazu Law Office Ryan T Ketchum Hunton Andrews Kurth Tanzania 98 Nicholas Zervos, Clara Mramba and Seif Ngalinda Germany 30 VELMA Law Christine Bader and F Maximilian Boemke Watson Farley & Williams LLP Turkey 105 Mehmet Feridun İzgi India 36 Fırat İzgi Avukatlık Ortaklığı/Fırat İzgi Attorney Partnership Dibyanshu, Prateek Bhandari and Shikha Rastogi Khaitan & Co Ukraine 115 Igor Dykunskyy and Yaroslav Anikeev Iran 44 DLF Attorneys-at-Law Behnam Khatami, Masoomeh Salimi, Niloofar Massihi and Farzaneh Montakhab United Kingdom 125 Sabeti & Khatami John Dewar and Seyda Duman Milbank, Tweed, Hadley & McCloy LLP Japan 50 Norio Maeda, Amane Kawamoto, Keisuke Yonamine, Kentaro Moriya, United States 133 Yuto Tokoro and Yooya Jung Mike Klaus, Jeff Schroeder, Eric Pogue and Laura Jones Nishimura & Asahi Hunton Andrews Kurth LLP 2 Renewable Energy 2020 © Law Business Research 2019 Global overview Eric Pogue and Mike Klaus Hunton Andrews Kurth LLP We are excited to introduce this updated and expanded third volume of (i) the project company sells electricity generated by the project Renewable Energy. into the wholesale market at a floating market price at the grid As will become apparent from a review of the country-specific node; (ii) the corporation purchases electricity for its own needs discussions, renewable energy law continues to evolve in many from the utility at the floating market price; and (iii) the project different directions around the world. Although each jurisdiction is company and the corporation enter into a hedge agreement, under unique, common themes continue to emerge with respect to the legal which the corporation pays to the project company a fixed price per issues that practitioners face in this space. unit of electricity produced by the project, and the project company One major recent theme in the renewable energy industry, particu- pays to the corporation the market price at a designated trading larly in the United States, is that newly constructed renewable energy hub (or a net settlement payment is paid by one party to the other). projects are often generating revenue under contracts other than power Such structures are often referred to as ‘virtual’ or ‘synthetic’ PPAs purchase agreements (PPAs) with utilities. Under the traditional model because the arrangement achieves the same result as a PPA – the for project finance, a special purpose entity that owns an energy project project company receives a fixed rate for electricity generated by (a project company) sells electricity under a long-term PPA with a regu- the project and the corporation pays a fixed rate for such electricity lated utility that has a monopoly over retail electricity sales in its service over a long term. In addition to supporting the development of territory. Although financing parties generally continue to require a new projects by entering into virtual PPAs that make the projects long-term contract that covers the sale of electricity at a fixed price, financeable, companies that use large amounts of electricity enter as a result of new legislation and new demand for renewable energy into hedges in order to lock in power prices over 10 to 25 years from corporations and communities, the revenue contract is taking new rather than rely on sometimes volatile market prices from their forms, such as: local utility. Corporate procurement Community solar Many of the largest companies have committed to procuring all of their Under community solar programmes, which are spreading through the power from renewable energy. The RE100 initiative keeps an updated United States, multiple customers participate in a net metering pool and list, which at the time of writing identified more than 175 companies purchase net metering credits from a renewable energy project. State that have committed to this 100 per cent goal (see http://there100.org). legislation for these programmes typically provides that (i) a renewable These include many of the largest and most influential companies in energy project delivers electricity into the utility company’s grid; (ii) the the world, such as Facebook, Diageo, Goldman Sachs, Nestlé, General utility company’s commercial or residential electricity customers may Motors, among others. Two power purchase models that have emerged purchase, and the project company may sell, net metering credits asso- for these companies are: ciated with a percentage of a project’s electricity production; and (iii) • PPAs for onsite generation. In certain markets, a corporation may the customers may apply the net metering credits as an offset against enter into a PPA with a project company that constructs and owns their electricity bill with the utility company. These programmes thus an onsite energy project (such as a rooftop solar project), and extend the availability of net metering to customers that do not have the corporation purchases electricity from the project company an onsite project to meet their electricity needs. Key legal issues that under the PPA to meet a portion of its electricity needs at the arise for project developers and financing parties for these projects particular site. Many states have enacted ‘net metering’ legislation, include the risk of a change in law, such as a change in the value of which allows a utility customer to sell to the utility any electricity the net metering credits or caps on the capacity of projects that are produced by an onsite solar project that exceeds the customer’s eligible under a specific programme, and rights of a project company needs at any time (such as electricity generated during a weekend to replace customers that default on their obligations to pay for net or another time that the customer does not need all of the elec- metering credits. tricity that is generated) and receive a credit on its electricity bill from the utility.