On September 19, 2017, the Court of Appeals of North Carolina (“Court”) held that companies that install solar panels on customer rooftops are “public utilities” under state law, at least when they retain ownership of the panel and sell the output to the customer. The ruling represents a blow to potential solar providers, and a victory for North Carolina’s franchised utilities, which believe that rooftop solar will undermine their rate base, increasing expenses for other customers.
Large-scale solar development is big business, and solar EPC Contracts are big business by association. In Q2 2017, the U.S. solar market installed 2,387 MWdc, an 8% increase year-over-year, and the largest second quarter everi. Utility PV accounted for 58% of those installations, making that the seventh consecutive quarter that the utility-scale space added more than 1 GWdcii. In today’s solar market, there is significant competition among project developers in search of debt lending and equity investment partners. This means that in order to develop a competitive edge, developers need to prepare a solar project with the strongest level of guaranteed revenue in order to increase the likelihood of selling the project to such potential debt and equity companies. Given that the majority of a solar project’s capital expenditure is EPC costs (approximately 70%-90%)iii, the cornerstone of any bankable solar project is a properly negotiated EPC Contract. As such, developers must offer lenders and investment partners bankable EPC Contracts that centralize the responsibility for meeting many of the perceived challenges associated with a big solar project and make the risk profile of the entire solar project more attractive to such potential partners. This article identifies the five fundamental risks facing any project developer in an EPC Contract and lays out an easy to use checklist of legal and commercial tools to mitigate them and to ensure the developer is able to present debt lenders and equity investors with the most bankable EPC Contract possible - one that is the most likely to deliver a well-performing solar project on time and on budget.
On June 9, 2017, Beaver Creek Wind II, LLC and Beaver Creek Wind III, LLC (together, “Beaver Creek”) responded to a deficiency letter from the Federal Energy Regulatory Commission (FERC or the “Commission”) staff seeking further information on Beaver Creek’s calculation of the “one-mile” rule in its applications for certification as qualifying small power production facilities (QFs). At issue is Beaver Creek’s proposed “weighted geographic center” methodology used to calculate the distance between wind projects consisting of multiple pieces of geographically dispersed electric generating equipment (i.e., wind turbines) for the purposes of applying the one-mile rule under the Public Utility Regulatory Policies Act of 1978 (PURPA). With a potential FERC quorum on the horizon, the instant case provides the new FERC commissioners with an opportunity to establish a preferred methodology, if any, for measuring one mile for purposes of PURPA. As such, the outcome could have immediate impacts for renewable energy project developers, particularly those developing wind projects, as they perform due diligence on property selection and equipment siting when planning multiple projects.
(Houston) – On June 14, Akin Gump lawyers held the firm’s semiannual energy briefing in its Houston office, with guests in attendance at the event as well as via webinar around the world.
(Houston) – Lawyers and advisors at Akin Gump held a briefing today, titled “The Global Energy Industry: A Look to the Year Ahead in 2017,” addressing some of the big issues likely to affect the global energy industry in the coming year. The event was held as an in-person briefing in the firm’s Houston office and as a webinar for participants around the world.
Globe Law & Business, in its new book Oil and Gas Sale and Purchase Agreements, has included several chapters written by Akin Gump lawyers. The chapters and their corresponding authors are as follows:
- “Conditions precedent and deferred completions,” by oil and gas partner John LaMaster
- “Oil and gas warranties,” by oil and gas counsel Caroline-Lucy Moran
- “Environmental provisions in upstream acquisitions and divestitures,” by environment and natural resources partner emeritus Paul Gutermann
- “Decommissioning,” by oil and gas counsel Nicholas Antonas and partner Marc Hammerson
- “Anti-corruption provisions,” by international trade counsel Nicole D’Avanzo and partner Tatman Savio
- Oil and gas boilerplate provisions,” by John LaMaster
Akin Gump recently hosted the webinar “30 Days Postelection, Reading the Tea Leaves on the U.S. Renewables Market,” looking at the future of renewable energy under the incoming Trump administration. Panelists included the following members of the firm’s global projects and finance and public law and policy practices:
- Former U.S. Senator John Sununu (R-NH), adjunct senior policy advisor, public law and policy
- John Marciano, partner, renewable energy tax
- Jeff McMillen, partner, public law and policy
- Ed Pagano, partner, public law and policy
- Brian Pomper, partner, public law and policy
- Ed Zaelke, partner, renewable energy & chair, global project finance practice
The speakers addressed several topics of interest to U.S. and European private equity funds invested in renewable energy as well as renewable energy investors, developers, tax equity investors and lenders. The panel discussed how issues such as tax credits, trade policy and environmental concerns might be addressed during a Trump administration.
Please click here to listen to the webinar in its entirety.
On November 17, 2016, the Federal Energy Regulatory Commission’s (FERC or “Commission”) Office of Enforcement (“Enforcement”) released its annual Report on Enforcement (the “2016 Report”). This year’s report is the 10th such report to be issued. Enforcement began the practice in November 2007 in the wake of Congress’ passage of the Energy Policy Act of 2005 (“EPAct 2005”), which substantially expanded the Commission’s enforcement authority and the commission’s promulgation in 2006 of its rule prohibiting market manipulation (the “Anti-Manipulation Rule”). FERC’s current and former chairmen and commissioners have consistently implored FERC-regulated entities to study the annual report for guidance on how the Commission approaches compliance and enforcement.