Legal Aspects of Clean Energy ProjectsClean Energy Project Analysis Course

Photo Credit: Andrew Carlin, Tracy Operators/NREL PIX

Biomass Fired Power Plant, USA

Objectives

Raise awareness of legal issuesaround clean energy projects

Outline key legal documents that are used in clean energy projects

Introduce participants to the RETScreen Legal Documents Toolkit

Question

What are the legal barriers to the developmentand implementation of clean energy projects?

Legal Barriers

Legal documents for a clean energy project must be: Appropriate Comprehensive Customized

Costs on an average project can range from tensto hundreds of thousands to millions of dollars

Risk

Legal aspects of a clean energyproject are fundamentally about identifying, managing,and mitigating risk

Shielding from liabilityPhoto Credit: Nordex Gmbh

600 kW Wind Turbine installation

What is RETScreen?

World’s preeminent clean energy decision-making software

35 languages covering more than 2/3rds of the world’s population

More than 186,000 users in 222 countries

Provided free-of-charge by the Government of Canada

www.retscreen.net

RETScreen Legal Documents Project

In keeping with RETScreen’s objective of reducing the transactional costs/barriers to clean energy projects,the Project Goal is to help reduce legal barriers by:

Making the legal requirements of a clean energy project more accessible

Bringing together sample legal documents freely available overthe Internet that can be used as templates, examples, or customized

Developing new documents for public use where none exist

Project Partners

Lead by RETScreen International/CanmetENERGY/Natural Resources Canada (NRCan)/Government of Canada

Partnership with Energy + Environment Foundation With pro bono contribution of content by lawyers from leading

firmsin New York and Washington

Financially supported by a grant from the Renewable Energy and Energy Efficiency Partnership (REEEP)

Energy + Environment Foundation

Strengthen energy and environmental education in developing countries

Promote renewable energy

Build capacity to solve energy and environmental challenges

RETScreen Legal Documents Toolkit

Legal Aspects Web Portals (at www.retscreen.net and www.energyenvironmentfoundation.org)

Also available within the RETScreen User Manual (in V4 of the software)

e-Textbook Chapter and Training Slides

Legal Discussion Forum through Energy + Environment Foundation website

Importance of Legal Counsel

Complexity of energy-related legal agreements

Highly dynamic nature of clean energy law

Differing interests/power imbalances

Transfer of risk

Legal Framework

Role in project

Type of project

Scale of project

Timing of projectPhoto Credit: Nordex Gmbh

Legal Framework (continued)

Legal Environment:

Obligations vs. considerations

Jurisdiction and paramountcy

International Law

Project Legal Documentation

Real Property

Broad category of documents related to the physical land and/or facilities that will be involved in the project

Green Lease

Regulatory and Permitting

Regulatory issues: obligations to a level of governmentto either perform an action or refrain from performingan action

Permitting: the formal approval process given by a levelof government to allow the project developer to engagein an activity or action

Power Purchase Agreement

Fundamentally, an agreement for the purchaseand sale of electricity

Perhaps the central legal document in a cleanpower project

Level of complexity

Energy Performance Contract

Agreement to make energy-saving capital and operational improvements to a building or industrial facility

Normally financed through the cost savings resultingfrom improved energy performance

Role of ESCOs

Design, Engineering, Procurement, Fuel Supply, Construction, O&M

Broad suite of documents to build and run the project

BOT and BOOT

Fuel Supply

Tendering

Interconnection Agreement

Secures a right to feed generated electricity into the grid

Often integrated into PPA

Transmission AgreementPhoto : SNC-Lavalin

Environmental

Environmental Impact Assessment

Emissions Trading Agreement ERPA

Environmental Attributes Trading Agreement

Other Legal/Quasi-Legal Issues

Corporate Structure

Monitoring, Targeting & Verification

Intellectual Property

Dispute Resolution

Other Legal/Quasi-Legal Issues

Decommissioning

Labour

Indigenous Peoples & Ethnic Minorities

NIMBY Factor

Project Finance

Legal strategy + documentation = $$$

Equity Financing

Debt Financing

Public-Private Partnership

Government-Linked Financing

Financial Incentives Tax incentives Net-metering

Legislated Incentives RPS/EEPS Feed-in Tariff Photo Credit: Strong, Steven DOE/NREL

Typical Financial Documentation

Overall purpose is to…

Provide incentive to the lenders to advance monies; AND

Provide security to lender for monies advanced

SECURITY is key as is management of risk

e-Textbook Chapter & Slides

See e-TextbookClean Energy Project Analysis:

RETScreen® Engineering and Cases

Legal Aspects of Clean Energy Projects Chapter

Conclusions

Legal issues and documents are an important part of anyclean energy project AND can represent a major expense

RETScreen has developed tools that will raise awarenessof legal issues in clean energy projects and reduce transactional legal costs

Project developers may experience significant savingsby taking advantage of the documents and tools thathave been identified and developed

Disclaimer

The RETScreen Training Course (i.e. presentation slides, e-Textbook chapters, linked documents, etc.)is provided for informational purposes only and does not necessarily reflect the views of the Government of Canada nor constitute an endorsement of any commercial product or person. Neither Canada nor its ministers, officers, employees or agents make any warranty in respect to this Training Course or assumes any liability arising out of the use of this Training Course.

The documents linked to herein are examples of documents available through a free and public Internet search. They are provided to the public as information resources only. No warranty, express or implied,is made by the Government of Canada, Natural Resources Canada, CanmetENERGY, RETScreen International (collectively "Natural Resources Canada") or any of its employees or consultants with regards to any aspect of the documents, including but not limited to their proprietary or intellectual property status. Natural Resources Canada does not accept any responsibility or liability for loss or damage through unauthorized use or misuse of the documents, or through lack of appropriateor sufficient due diligence. The legal documentation linked to:

is not necessarily comprehensive, complete, accurate, or up-to-date; is linked to external sites over which Natural Resources Canada has no control and for which Natural

Resources Canada assumes no responsibility; and does not constitute professional or legal advice. If you require specific legal advice,

you should always consult a qualified professional.

Questions?

www.retscreen.netFor further information please visit the RETScreen Website at

Legal Aspects of Clean Energy Projects Module

RETScreen® International Clean Energy Project Analysis Course