The power pack

The renewable energy sector is growing. Patrick Robinson and Ross Fairley report on how UK regional firms are gettng involved

Expansion in the UK renewables sector over the past few years has by any measure been astonishing. Many people associate renewable energy with wind turbines, which is testament to the tremendous lobbying work carried out by bodies such as the British Wind Energy Association, but there are many other renewables technologies being developed and beginning to come on stream.

The South West continues to position itself as a leader in the renewables field and is committed to remaining there. One only has to look at the developments coming forward, such as Devon’s proposed wave hub to harness wave power and tidal technology, which is being pioneered by Marine Current Turbines. As the wind sector continues to develop and the first offshore wind farms begin operations, the Government is starting to turn its attention to biomass and is pumping resources in the form of capital grants and energy crops grants into the biomass sector.

At the end of 2004, a government taskforce, headed by former National Farmers’ Union president Sir Ben Gill, was announced to stimulate biomass supply and demand. This came about partly in response to the Royal Commission on Environmental Pollution’s special report on biomass, which had criticised the Government for neglecting biomass as a renewable form of energy capable of tackling climate change.

Just as the renewable energy sector has developed, so the role of lawyers in these types of projects has evolved. At the outset of the renewable energy boom, the lead role for lawyers was centred very much on the planning permission and consenting process. Specialist advice was needed on how to negotiate the intricacies of planning. Planning advice is still very important, particularly for the novel projects and controversial areas of the country.

This is never more the case than when a proposed generation plant exceeds a capacity of 50MW, when the authorising process for it becomes vested in the Department of Trade and Industry (DTI) under Section 36 of the Electricity Act 1989. A consent under this act operates as a planning permission, avoiding a separate process. It is essential to have lawyers on board at an early stage, recognising that, although with the standard planning application negotiation can continue until a decision is made and then an appeal can be run when lawyers can be involved to ensure the case is properly prepared, with a Section 36 consent no such appeal procedure exists. If a proper planning case is not made to the DTI, the application will fail. It is here where a skilled lawyer comes into their own, ensuring that not just the environmental and land use implications of the scheme are satisfied, but also that the scheme is deliverable in all other respects. Without this second aspect, DTI support for the scheme will fade rapidly.

So it is not surprising that developers, investors and lenders now look for legal advisers that can provide input not only from the consenting side, but more importantly on the commercial side of these types of projects, with advice focusing on the ultimate intentions of the developers of projects, the electricity infrastructure and the offtake arrangements surrounding a project and the financing strategies for it. Recent years have seen a number of AIM listings of renewables companies requiring the input of strong commercial and corporate lawyer teams with track records and market reputations in this type of work.

Among the developing technologies, law firms have had to get to grips with the fact that many of the renewables projects coming forward are small-scale developments where professional advisers’ costs are a sensitive issue. Perhaps this is why the regional and national firms have so far taken a key role in advising on renewables developments and will continue to do so.

More sophisticated clients now also realise that, as well as their lawyers being able to offer advice on the whole lifecycle of a project, they must also be able to demonstrate a thorough knowledge of all the related technologies and drivers that may have an effect on their proposals. Renewable energy has become unavoidably entwined with the whole issue of waste disposal, community heating, security of electricity supply and carbon trading, to name but a few. Knowledge of one isolated sector, however deep, will simply no longer suffice.

The planning system itself has recognised this diversification. Planning Policy Statement 22 (PPS 22), issued at the end of 2004, recognised the commitment of the Government in shaping the planning system to allow it to authorise sufficient new development to meet the Government’s white paper targets for new renewable sources. From the outset, PPS 22 recognises the links with both energy-from-waste and combined heat and power plants and directs readers to Planning Policy Guidance 10 (planning and waste management) and the Government’s Waste Strategy 2000.

There is a long way to go before we get anywhere near meeting the Government’s targets for renewable energy generation (15 per cent of UK electricity supply by 2015), but good regional and national firms will continue to play a key role on the legal side in developing this sector.

Patrick Robinson and Ross Fairley are partners in the renewable energy team at Burgess Salmon