FEATURE SPONSOR ADDRESSING CONCERNS
In an attempt to address these concerns for existing projects where the additional tax expense was not factored into original funding models, the government has announced that there is the possibility of ‘grandfathering’ shareholder or related party loans agreed prior to the publication of the May 2016 consultation document. This is welcome news for many existing
projects but there is still a concern that the exclusion of this debt from the exemption will create a funding source bias, distorting competition between third party and related party debt providers. Furthermore, it has been announced that ‘grandfathering’ will only be available where 80% of the company’s expected qualifying income has been materially fixed for at least 10 years by long-term contracts with, or procured by, public bodies or their wholly owned subsidiaries. It is not clear whether ‘grandfathering’ can apply to renewables projects – would a ROC Contract, Contract for Differences, FIT contract, generation license etc count as a long term contract for these purposes? We await the further details to clarify the position.
SIGNIFICANT AND COMPLICATED CHANGE
All in all, the rules represent a very significant and complicated change in the way tax relief is obtained for debt funding and need to be carefully considered. Even groups whose net interest expense falls below the de minimis level (the first £2m of interest each year can benefit from tax relief in full regardless of its nature) will face more onerous tax compliance requirements. We strongly recommend that groups
in the renewables and similar sectors assess the potential applicability of the exemption as soon as further details are published. It is also possible that there will be a further short consultation phase and we would encourage groups to actively participate by providing feedback if this is the case.
PwC
COST OPTIMISATION
DIVERSIFICATION INTO OFFSHORE WIND
Fletcher Offshore is well known as a platform supply vessel operator, having worked in the North Sea for over 20 years.
With experience carrying out ROV operations and boulder clearance for the renewables industry, Keith Fletcher, Managing Director, saw an opportunity for expansion.
The diversification process sees Colin Millum, (who designed and manufactured leading ROVs and propulsion systems during his reign at Sub-Atlantic), brought in to head up the technical team, amongst other new recruits.
ONE-STOP-SHOP SERVICE
The company provides a one-stop- shop service for sea-bed preparation including survey and boulder clearance, UXO identification and de-risk and cable intervention. Working for a major power company on a wind turbine project in the English Channel recently, they successfully cleared 9,000 boulders from the cable path in a very short time frame.
NEW BUSINESS MODEL
Fletcher have a new business model which will make dramatic savings for the industry.
SCAN/CLICK Savings will be made by… MORE INFO
• Using their own low-cost dynamically positioned platform supply vessels rather than expensive diver/ROV vessels
• The company has created its own ROV – The Zodiac TT, which does a number of tasks including surveying the sea bed, clearing it and then protecting the cables which have been laid. This method is also environmentally friendly compared to other dredging methods
• One company doing all of these tasks means there’s no middle man, and they are ready to mobilise quickly
NOVEL METHOD
Keith Fletcher, commented: “The novel method of combining our own dynamically positioned supply vessel with our own technology for sea bed preparation offers the industry much needed efficiencies and genuine cost reduction.” Mike Porter, Operations Director,
added: “Fletcher will be employing people traditionally working in oil & gas, giving them an opportunity to transfer to renewables. We are building the UK’s ability to service windfarm contracts across offshore Europe. Renewables is an exciting new part of Aberdeen and the UK’s future as an Energy hub.”
Fletcher Offshore
www.windenergynetwork.co.uk
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