CONTENT Consulting Editors, Matt Bonass and Michael Rudd; featuring a preface by Governor Gray Davis, 37th governor of California; published by Globe Law and Business.
by Anne McIvor
‘Renewables – A Practical Handbook’ is the impressive result of a project steered by MattBonass and Michael Rudd. When Matt invited me to review the fruits of their labours, I must admit that my heart sank, just a little. Both Matt and Michael are lawyers, so I expected a legal text book. But I agreed to read it and – thankfully – I was in for a very pleasant surprise.
This is a genuinely fascinating read for anyone involved in – or considering entering into – the clean technology and renewable energy industries, either as an operator, investor or advisor. Chapters which do focus on legal issues avoid legal jargon and are easy to read. There is extensive coverage of financing and structuring issues which, combined with the legal context, contributes to making this a truly ‘practical handbook’ for the renewables industry.
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The scale of the renewable energy opportunity is a key message emerging throughout the book, which kicks off with an introductory chapter penned by Matt Bonass entitled ‘Why Renewable Energy? One obvious answer is that this is a rapidly growing industry: Matt points out that the International Energy Agency anticipates investment of $125 billion a year over the next 20 years.
Part 2 continues to set the scene with a focus on regulation and policy. Gil Forer and Joseph A. Muscat (Ernst & Young LLP) point out that the renewable energy industry is still experiencing the growing pains of adolescence in ‘Renewable energy: at a growing age’, a chapter addressing the potential for the industry within the context of the broader clean technology market.
“That classic first-jobber bind: getting hired without experience” is the dilemma they use to describe the situation in which many promising renewable energy technologies find themselves. The challenge, for both renewable projects and technologies, of securing finance from banks or investors is frankly assessed. Concluding on an upbeat note, Forer and Muscat cite expectations that the renewables market will quadruple by 2030 and express their confidence that “the technology will have matured beyond its current awkward, adolescent age long before that”.
Next up are Katy Hogg and Ronan O’Regan (PricewaterhouseCoopers LLP), with an overview of renewable energy support mechanisms such as feed-In tariffs. Hogg and O’Regan conclude that “the success of the deployment of renewable energy in different markets depends on the political support for renewable energy within that market”.
Part 3, ‘Financing and structuring issues’, includes three chapters: ‘Issues for financiers’; ‘Risk allocation in renewable projects’; and ‘Structuring the project vehicle’. In ‘Issues for financiers’, Nicholas Sinden and Siobhan Smyth (HSBC Bank plc) describe typical structures used by financiers when lending to renewables projects. This chapter includes case studies of innovative finance deals, ensuring that the issues come to life. A Fred Olsen deal, which was closed at the height of the credit crisis in 2008, is one such case study. Chosen by Sinden and Smyth as an example of a deal with an innovative flexible structure, this transaction incorporated four wind farm projects in Scotland (Crystal Rig I, Crystal Rig II, Paul’s Hill and Rothes) with a combined capacity of 315.5MW. It provided Fred Olsen with an open-ended portfolio which can accommodate projects with different types of power purchase agreement and levels of contracted offtake – apparently a first in the industry.
Part 4 delves deeper into individual renewable energy technologies and the issues arising from each. It includes four chapters on matters arising from wind, two chapters dedicated to solar, one to small-scale hydropower, a chapter focusing on energy efficiency and renewables, one on combined cooling, heat and power generation – and finally a perspective on embedded generation in the UK.
It’s impossible to do justice here to the depth of information provided in this part of the book. The wind chapters, for example, combine to offer an in-depth explanation – over almost 70 pages – of what is required for a successful project: from technical issues to financing and legal issues all the way through to decommissioning or repowering at the end of the project’s life. A theme running through the pages is the connection between technical factors, such as choice of turbine technology and wind data measurement, or the importance of industry benchmarks such as probable energy yields, and requirements of financiers. This is much more than just a technical or legal handbook, it also provides an insight into the minds of financiers and investors in renewables projects – and equips project developers with knowledge of what is needed to secure financing.
‘Renewables – A Practical Handbook’ concludes in Part 5 with a look at the broader perspective: a chapter on emerging renewable technologies (focusing on wave, tidal and – somewhat surprisingly – algae) and a chapter on carbon capture and storage.
In the words of Gray Davis (Governor of California 1999-2003), who contributed the preface, this book has been “‘developed as a tool for the business community...”. It was published before the recent catastrophe at the Fukushima nuclear plant in Japan, which will almost inevitably result in upward revisions to projections for growth in the renewables industry – implying a greater audience for the insights provided within the book’s pages. ‘Renewables – A Practical Handbook' is set to serve, in the words of Governor Davis, as “an invaluable guide for the business community as it participates in this growth area”. And I can confirm that it’s a really good read as well!
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