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Energy and Natural Resources

quotes Very experienced team led by solicitors who are specialists in their field. Legal 500, 2020

Volatile markets, new technologies, diverse sources of funding, a changing regulatory environment and the climate challenge; these are just some of the issues that our clients face in this sector.

We closely monitor legal and regulatory developments at an international and EU level, so as to anticipate potential changes and opportunities for our Energy and Natural Resources clients. Our lawyers spend a significant part of their time researching and analysing key developments.  We liaise closely with our counterparts within the Multilaw Energy and Natural Resources specialist practice group, in order to keep on top of relevant developments.

We see major changes in this sector, driven by:

  • The overriding imperative on the international community to respond to the threat of climate change
  • State aid and support for the renewables sector
  • Security of supply and interdependence for Energy and Natural Resources
  • Greater focus on public–private partnerships to deliver energy solutions to the market
  • EU climate and energy policy developments, carbon pricing and non-binding renewables targets
  • The SEM Market Design and future Feed-In Tariffs / supports for renewables, both in the domestic and export market
  • Innovations in interconnection, Offshore Grid and Electricity Storage
  • The impact of Unconventional Gas Exploration and Extraction on domestic and international gas markets
  • The opportunities presented by energy efficiency, retrofitting and green financing
  • Constraints imposed by planning and environmental assessment, to ensure sustainable development and resource efficiency
  • The need to source a domestic supply of conventional energy

Our clients in this sector include:

  • Sustainable Energy Authority of Ireland
  • Companies developing and investing in renewable energy, particularly onshore wind, offshore wind and biomass
  • Companies involved in exploration, production and storage of offshore oil and gas
  • Environmental Protection Agency, in the context of the Unconventional Gas Exploration and Extraction (UGEE/ Fracking) Research Programme
  • Oil distributors
  • Companies involved in the import and distribution of coal and related products
  • Government Departments, Local Authorities and Agencies involved in local energy projects
  • Energy Services Companies and Local Energy Supply Companies
  • Green investment funds and financial institutions
  • Companies involved in the forestry sector
  • Agencies with responsibility for the marine environment, fisheries and aquaculture
Array ( [0] => WP_Post Object ( [ID] => 9079 [post_author] => 4 [post_date] => 2019-05-16 09:18:05 [post_date_gmt] => 2019-05-16 09:18:05 [post_content] => The first stage of the selection process for the DS3 System Services Volume Capped competition is underway. This DS3 System Services competition aims to procure between 91MW and 140MW of Services under fixed contracts in accordance with the SEM Committee’s Decision on DS3 System Services Fixed Contracts Procurement Arrangements (SEM-18-049). This competition focuses on “high availability technologies” such as battery storage, flywheels and demand side units whose availability are not linked to energy market dispatch. It is expected that battery energy storage will secure most of the contracts awarded under the competition.   In this first stage (scheduled to complete shortly), candidates must meet the appropriate contractual and technical pre-requisites in order to then be selected to progress to the second stage and be invited to tender for the provision of the System Services. The winning bids will be ranked based on price.   In respect of the technical requirements, Providing Units will be required to provide a sub-set of DS3 System Services as well as Over-Frequency Response. Service Providers with non-firm connections will take the risk of network unavailability due to network limitations and will not be remunerated if unavailable in such circumstances. The maximum contracted volume per separate grid connection will be set at 50MW.   In advance of the second stage of the tender process, EirGrid published on the 15th of May 2019 a draft of the template contract to be awarded to the successful Service Providers. This draft contract takes into account the responses received by EirGrid to the Consultation on the DS3 System Services Volume Capped Fixed Contracts dated the 25th of October 2018.   Some of the noteworthy provisions contained in the draft contract include:
  • The maximum duration of the contract will be eight years which includes a build period of up to two years from contract execution (the “Target Go-Live Date”) plus a maximum of six years duration for the payment of the Services.
  • EirGrid will have a right to terminate the contract if the Providing Unit has not commenced providing the Services by the Target Go-Live Date.
  • Prior to entering into the contract, the Service Provider must have received a connection offer for the Providing Unit.
  • Payment will be contingent on compliance requirements being met.
  • No payments will be made where the Providing Unit is prevented from providing the Services by reason of Force Majeure or the Providing Unit is de-energised, decommissioned or disconnected pursuant to its connection agreement, interface agreement or use of system agreement or pursuant to the provisions of the contract.
  • A performance bond (or in certain circumstances an alternative form of collateral may be accepted) will be required to be provided by the Service Provider prior to entering into the contract as a means of incentivising service delivery by the Target Go-Live Date.
  • EirGrid may extend the deadlines for achievement of the performance milestones and the Target Go-Live Date where delays in service delivery have been caused by acts or omission of EirGrid itself or by Force Majeure.
  • EirGrid will be entitled to terminate the contract where there is a failure to make the Services available such that the Availability Performance Scalar value is 0 for three consecutive months.
  • Providing Units will be given a scheduled outage allowance of 1.4% per calendar year and will not be treated as unavailable for any scheduled outage where its outage rate is below this allowance. Any unused allowance can be carried over into the subsequent year.
  • Providing Units will not be permitted to simultaneously receive payments under both the Regulated Arrangements and the Volume Capped Arrangements for the provisions of the same sub-set of Services.
  The conclusion of the first stage of the selection process of the DS3 System Services Volume Capped competition is imminent with EirGrid shortlisting candidates who will be invited to tender for the contracts. We have advised on a number of investments and development opportunities in this area over the last few months, in particular for clients with experience in battery energy storage and the provision of System Services in other markets. Many energy market players are eagerly awaiting the outcome of this competition.   For more information on DS3, battery storage or any other aspects of the Irish energy market, please contact Siobhán McCabe, Partner and Head of Energy at Philip Lee.   Article written with the assistance of Harry O’Malley. [post_title] => Battery Storage and the DS3 System Services Volume Capped Fixed Contracts [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => battery-storage-and-the-ds3-system-services-volume-capped-fixed-contracts [to_ping] => [pinged] => [post_modified] => 2019-05-16 09:18:44 [post_modified_gmt] => 2019-05-16 09:18:44 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

The first stage of the selection process for the DS3 System Services...

See Full Article
Array ( [0] => WP_Post Object ( [ID] => 7060 [post_author] => 4 [post_date] => 2018-04-17 07:41:11 [post_date_gmt] => 2018-04-17 07:41:11 [post_content] => As published in the Energy Ireland Yearbook, April 2018.   Corporate Power Purchase Agreements or “Corporate PPAs” are getting a great deal of attention in the energy sector, and rightly so. Though not a new concept, with the first Corporate PPAs being entered into around a decade ago, recently there has been a dramatic increase in the number and size of Corporate PPAs being entered into globally. In a nutshell, a Corporate PPA is a long-term contractual arrangement under which a corporate (rather than a utility/licensed electricity supplier) agrees to purchase electricity directly from a renewable energy generator at a fixed price. The green rights attributable to such power typically transfers to the corporate. According to a recent Bloomberg New Energy Finance Report, a record number of Corporate PPAs were entered into in 2017 (43 corporates in 10 different countries) amounting to 5.4GW of clean energy. Most of these deals were entered into in the United States, where Corporate PPAs are common. Momentum is gaining in the European markets and many expect a surge in Corporate PPAs over the next year or so. This rise in popularity of Corporate PPAs has not gone unnoticed in Ireland and at Philip Lee, we advised a large multinational on one of the first renewable energy Corporate PPAs in Ireland and continue to advise generators and corporates exploring similar opportunities.   Benefits of Corporate PPAs Corporate PPAs are attractive to both renewable energy generators and corporates for a variety of reasons. For the corporates, particularly large tech companies with high energy demand and climate change high on their corporate agenda, entering into Corporate PPAs provides an opportunity for them to commit to using renewable energy, thereby enabling them to meet their sustainability and carbon reduction targets. The appetite to ‘go green’ is growing, with many corporates setting ambitious targets for renewable energy sourcing (often 100%) or emissions reduction. A further driver for corporates is economics. Corporate PPAs allow corporates to lock in a fixed energy price, often at below-market prices, eliminating exposure to volatile energy prices. For generators, entering into Corporate PPAs guarantees a long-term (typically 10-15 years) revenue stream and unlocks the availability of funding required to build out projects. The growth in Corporate PPAs worldwide is, in part, attributable to the fact that many of the government subsidies for renewable energy are diminishing or coming to an end and Corporate PPAs can, in some instances, act as a viable alternative route to market. In Ireland, the REFIT support schemes are closed to new entrants and their successor, the new Renewable Electricity Support Scheme, which will be an auction based regime, is unlikely to be available until 2019. The uncertainty as to timing or extent of support available for projects, and in particular certain technologies, leaves generators with little prospect of securing funding for their projects. A Corporate PPA with a financially strong counterparty would provide financial certainty and enhance the bankability of a project, whether or not it receives a subsidy.   Key Risks to be Managed In considering entering into a Corporate PPA, both generators and corporates should be aware that there are a myriad of factors and risks to be addressed in the negotiations of the contract, for example: Counterparty Credit Risk – The creditworthiness of the counterparty is a key issue for generators and their funders and requires evaluation prior to entering into the contract. Energy Price Fluctuations - Given the long-term position taken on energy prices under a Corporate PPA, there is a risk that the Corporate PPA may not, during certain periods, offer the best price to the parties. This risk may be addressed in a number of ways in the Corporate PPA, such as including price floors and caps and collars. Market Change - As the energy market is continuously evolving, these contracts should include a mechanism to address market and regulatory change. Typically this mechanism limits a party’s ability to terminate the Corporate PPA and instead provides for the contract to be re-negotiated to reflect the market changes whilst preserving the commercial balance between the parties. The Integrated Single Electricity Market (“I-SEM”), scheduled to go-live on 23 May 2018, will impact on Corporate PPAs and in particular, parties will need to agree who will be responsible for trading the electricity in I-SEM and how balancing risk will be shared.   Structure of Corporate PPAs Corporate PPAs may take a number of different forms, ranging from physical transfer of power (sleeved) to a pure financial derivatives contract (synthetic). In Ireland, the most likely form will require the corporate to establish its own licensed supply company (similar to the ‘Supplier-Lite’ structure) and such affiliated supply company to then enter into the Corporate PPA with the generator. The corporate will also enter into an electricity supply contract with its affiliated supply company.   Conclusion The significant growth in Corporate PPAs is a welcome development for the renewable energy sector as a whole. Although the original pioneers of Corporate PPAs were the high energy demand tech companies, all types of corporates can enjoy the environmental and economic benefits emanating from Corporate PPAs. For generators, Corporate PPAs may offer an alternative route to market where subsidies are unavailable. The complexity of Corporate PPAs should not dissuade generators and corporates from exploring these possibilities, as experienced advisors will be able to assist in managing the risks. [post_title] => The rise of the Corporate PPA [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-rise-of-the-corporate-ppa [to_ping] => [pinged] => [post_modified] => 2018-04-17 07:51:49 [post_modified_gmt] => 2018-04-17 07:51:49 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As published in the Energy Ireland Yearbook, April 2018.   Corporate Power Purchase Agreements...

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Philip Lee

Alice Whittaker

Rachel Minch

Hugh Cummins

Siobhan McCabe

Eimear Fitzgibbon

Thomas O’Malley