Legal Aspects of Clean Energy Projects Clean Energy Project Analysis Course Biomass Fired Power Plant, USA Photo Credit: Andrew Carlin, Tracy Operators/NREL PIX

Objectives Raise awareness of legal issues around clean energy projects Outline key legal documents that are used in clean energy projects Introduce participants to the RETScreen Legal Documents Toolkit

Raise awareness of legal issues around clean energy projects

Outline key legal documents that

are used in clean energy projects

Introduce participants to the

RETScreen Legal Documents

Toolkit

Legal Barriers There are significant legal barriers to clean energy projects Legal documents for a clean energy project must be: Appropriate Comprehensive Customized Costs on an average project can range from tens to hundreds of thousands to millions of dollars

There are significant legal barriers to clean energy projects

Legal documents for a clean energy project must be:

Appropriate

Comprehensive

Customized

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

Risk Legal aspects of a clean energy project are fundamentally about identifying, managing, and mitigating risk Shielding from liability Photo Credit: Nordex Gmbh 600 kW Wind Turbine installation

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

Shielding from liability

What is RETScreen? World’s preeminent clean-energy decision making software More than 210,000 users in 222 countries and territories Used by more than 200 educational institutions worldwide

World’s preeminent clean-energy decision making software

More than 210,000 users in 222 countries and territories

Used by more than 200 educational institutions worldwide

What is RETScreen? 35 languages covering more than 2/3rds of the world’s population Responsible for over $4 billion in user savings to date Provide free-of-charge by the Government of Canada

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

Responsible for over $4 billion in user savings to date

Provide 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 over the Internet that can be used as templates, examples, or customized Developing new documents for public use where none exist

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 over the Internet that can be used as templates, examples, or customized

Developing new documents for public use where none exist

RETScreen Legal Documents Project Led 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 firms in New York and Washington Financially supported by a grant from the Renewable Energy and Energy Efficiency Partnership (REEEP)

Led 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 firms in New York and Washington

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

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

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

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 project Photo Credit: Nordex Gmbh

Role in project

Type of project

Scale of project

Timing of project

Legal Framework (continued) Legal Environment: Obligations vs. considerations Jurisdiction and paramountcy International Law

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

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 government to either perform an action or refrain from performing an action Permitting : the formal approval process given by a level of government to allow the project developer to engage in an activity or action

Regulatory issues : obligations to a level of government to either perform an action or refrain from performing an action

Permitting : the formal approval process given by a level of government to allow the project developer to engage in an activity or action

Power Purchase Agreement Fundamentally, an agreement for the purchase and sale of electricity Perhaps the central legal document in a clean power project Level of complexity

Fundamentally, an agreement for the purchase and sale of electricity

Perhaps the central legal document in a clean power project

Level of complexity

Energy Performance Contract Agreement to make energy-saving capital and operational improvements to a building or industrial facility Role of ESCOs Results- or Performance-based contracting

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

Role of ESCOs

Results- or Performance-based contracting

Design, Engineering, Procurement, Fuel Supply, Construction, O&M Broad suite of documents to build and run the project BOT and BOOT Fuel Supply Tendering

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 Agreement

Secures a right to feed generated electricity into the grid

Often integrated into PPA

Transmission Agreement

Environmental Environmental Impact Assessment Emissions Trading Agreement Environmental Attributes Trading Agreement

Environmental Impact Assessment

Emissions Trading Agreement

Environmental Attributes Trading Agreement

Other Legal/Quasi-Legal Issues Corporate Structure Monitoring, Targeting & Verification Intellectual Property Dispute Resolution Decommissioning

Corporate Structure

Monitoring, Targeting & Verification

Intellectual Property

Dispute Resolution

Decommissioning

Other Legal/Quasi-Legal Issues Labour Indigenous Peoples & Ethnic Minorities NIMBY Factor

Labour

Indigenous Peoples & Ethnic Minorities

NIMBY Factor

Project Finance Legal strategy + documentation = $$$ Equity Financing Debt Financing Public-Private Partnership

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

Financial Incentives

Tax incentives

Net-metering

Legislated Incentives

RPS/EEPS

Feed-in Tariff

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

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-Textbook Clean Energy Project Analysis: RETScreen ® Engineering and Cases Legal Aspects of Clean Energy Projects Chapter

Conclusions Legal issues and documents are an important part of any clean energy project AND can represent a major expense RETScreen has developed tools that will raise awareness of legal issues in clean energy projects and reduce transactional legal costs Project developers may experience significant savings by taking advantage of the documents and tools that have been identified and developed

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

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

Project developers may experience significant savings by taking advantage of the documents and tools that have been identified and developed

Disclaimer The RETScreen Training Course 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 appropriate or 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.

The RETScreen Training Course 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 appropriate or 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.net For further information please visit the RETScreen Website at Legal Aspects of Clean Energy Projects Module RETScreen ® International Clean Energy Project Analysis Course