Shared Ownership Hydro Projects

Transcription

1 Shared Ownership Hydro Projects British Hydro Power Association Annual Conference Anna Cameron Associate, Cameron McKenna

2 A top 10 global law firm and the largest in Europe 59 offices, approximately 4,000 lawyers and a turnover of over $1 billion. Our business is structured according to the industries in which we work with energy as a key focus area. Our multi-disciplinary team across the U.K. focuses on the renewables sector and is involved in all aspects of renewable energy projects.

3 Current Policy: Scotland SNP Manifesto 2016: We will ensure that, by 2020, at least half of newly consented renewable energy projects will have an element of shared ownership.

4 Current Policy: UK Shared Ownership Taskforce DECC s Community Energy Strategy (published on 27 January 2014) states: We expect that by 2015 it will be the norm for communities to be offered the opportunity of some level of ownership of new, commercially developed onshore renewables projects. We will review progress in 2015 and if this is limited, we will consider requiring all developers to offer the opportunity of a shared ownership element to communities.

5 Principles to guide Shared Ownership development Helping deployment Flexibility Increasing understanding and engagement Cost-neutral Inclusive Distinct from community benefit funds Mutually beneficial Contingent on policy The Scottish Government add: Should engage and motivate people Local participation should be prioritised Timing Transparency Liability

6 Application What type of project? When and to whom? How much? What type of shared ownership?

7 Shared Revenue Developer enters into agreements with a community enterprise to provide a share of net project revenues or profit investing with a return, but without physical ownership. Limited risk exposure (involvement at commissioning stage) but what is the realistic return, and how would such a scheme be treated?

8 Split Ownership A legally constituted community enterprise buys a proportion of the developer s physical assets, for example, one hydro turbine. Tried and tested schemes: 1. Pooling costs and income to meet a percentage of the operating costs, regardless of individual turbine performance. 2. Generating equipment is in separate ownership, without pooling income or direct expenses, but grid access is shared.

9 Shared Connection Sites: Project finance lender security required; Grid connection arrangements; Interface agreements; Step-in agreements; and Required co-operation between the parties should always be borne in mind.

10 Joint Venture Commercial operator and community enterprise work together, from the beginning, to create a joint venture to developer, own and manage a renewables scheme local to the community Successful schemes: An SPV set up with a shareholding offered to a local community development company funding secured from different lenders for each party, and revenue shares governed by the shareholders agreement.

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12 Conclusion Flexibility can be embraced there are advantages and disadvantages to every approach, but a community should be able to tailor one to their needs. In addition to the options mentioned, there are others - crowd funding and renewable bonds, as an alternative, or in addition, to more traditional routes. Different funding options are available via more traditional project finance, and REIF. Good luck!

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