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March 2012 www.lawyer-monthly.com Gillespie Macandrew and Ater Wynne 37
tribe’s long-term goals relating to sovereignty, sustainability, and financial security. In Indian Country the past decade has brought with it a renewed focus on tribal self- determination, with tribes asserting more control over their land, resources and self-governance. Renewable energy may support a wide range of tribal economic activities, from tourism and gaming to manufacturing and telecommunications. Many tribes have also begun to experiment with their unique legal status to accelerate their economic development efforts. Energy development is one way tribes are creating the infrastructure and capacity to achieve economic independence.
Trends affecting community potential in remote areas in Scotland
In the UK and across Europe, the incentive regimes for Renewables vary, but all are under pressure from the current economic crisis and increasingly from politicians listening to consumer pressure groups, leading to a perception of lack of certainty for funders of projects. However, hope is again in the air. As elsewhere, in the UK, and in Scotland in particular, the current government policies are to actively encourage and incentivise renewable energy and low carbon projects, and politicians are looking for that balance to ensure much desired clean energy enters the mix.
The regulatory authority Ofgem is
currently considering and researching an important change in the way to incentivise development of Renewables in remote onshore and offshore sites which, if delivered, would help offset some of the impact of diminishing feed-in-tariffs and other Renewables incentives. The aim would be to balance all access charges across the UK, effectively removing the current ‘subsidy’ afforded to Nuclear and other projects in the South of England. The impact for remote areas could be as much as an 80% reduction in charges to connect and transmit.
This is the reversal of the current grid and
transmission arrangements whereby the power stations in the UK's populous and industrial South East benefit from lower access and transmission charges, thus incentivising power projects that are located as close as possible to the principal power markets to keep consumer prices low. While this policy has served well in the past and appears logical at first sight, it has been a huge barrier to renewable energy developments which invariably offer the greatest potential
The EU consideration of a ‘supergrid’, with a possible link from Scotland across the North Sea to Continental Europe and Scandinavia, will also increase the potential export markets for remote developments. The key for Scotland will be the need to ensure it is tied into a grid balanced cross-border to cope with the energy mix needs of an efficient grid system.
Dealing with Community interests
For any law firm working on Renewables projects early identification of and thereafter engagement and close consultation with community interests is vital and we have several case studies.
Take, for example, a community group
interested in a wind farm development in a forested area. Their goal was to persuade a public interest disposal of the forestry land for this purpose, but they lacked funding to effect the purchase. We identified a forestry management company who could secure the timber rights and who were willing to release sufficient funds to the community securing against the land interests. Any surplus contribution to the community to facilitate the deal over and above the timber rights will be repaid out of the power project.
Aiming for longer term relationships is also
important. We have represented several communities in purchasing islands or large crofting estates. We have assisted such communities in projects led by Government development agencies to establish proper financial,
corporate and governance
structures to develop, separately, community energy projects and port facilities. This enabled the establishment of other economic activities in these remote areas, some of which will use the power generated. Such organised community companies can become serous players (and clients) in their own right.
In one of Scotland’s most significant
Renewables projects yet our practice group, using our specialist rural land team, has been commissioned to research and identify over 300 individual land interests, several public and private stakeholders and a number of community interest groups. Understanding how to identify and define community interests, whether protected at law or otherwise, is key to the services we provide as lawyers to our developer and investor clients.
Future Opportunities in remote areas.
Connection and transmission costs are only a part of the capital and operational cost barriers to such projects, but any reversal of such locational signals would vastly improve the prospects for maximising Renewables potential.
Looking ahead, anticipating further interaction with communities when private equity investors purchase developed Renewables projects will also be key. Communities have rights and are seeking to reinvigorate their remote areas and economies aided in part by Government policies. Communities can also raise objections to development, for example, where
Doug MacCourt is a Partner in the main US office of Ater Wynne LLP in Portland, Oregon (a member of Lexwork International) where he Chairs the Indian Law Group and has practiced energy and environmental law for the past 24 years.
1 Douglas C. MacCourt, Renewable Energy Development in Indian Country: a Handbook for Tribes (NREL 2010). 2
See, e.g., S.1684, Indian Tribal Energy Development and Self-Determination Act Amendments of 2011 (introduced by Sen Barrasso, John [WY] 10/12/2011); H.R.3532, American Indian Empowerment Act of 2011 (introduced by Rep Young, Don [AK] 11/30/2011); H.R.205 HEARTH Act of 2011 (introduced by Rep Heinrich, Martin [NM-1] 1/6/2011); S.1000 : Energy Savings and Industrial Competitiveness Act of 2011 (introduced by Sen Shaheen, Jeanne [NH] 5/16/2011).
3 4 REN 21, 2011, Renewables 2011 Global Status Report, at 18 (Paris: REN 21 Secretariat), at www.ren21.net
World Energy Outlook 2010, International Energy Agency as referred to in the IRENA factsheet on Renewables at http://www.irena.org/DocumentDownloads/factsheet/factsheet.pdf
local socio-economic impacts are identified, and early recognition and understanding of this influence - and the likely solutions - are key to the lawyers offering added value advice to such projects.
Lest we forget the sheer size and potential
of the global market for Renewables requiring legal services, much of which involves remote areas subject to local and indigenous community interests, note that according to the 2011 REN21 annual report:
• Renewable energy supplied an estimated 16% of global final energy consumption
• Solar PV more than doubled thanks to declining costs
• Global Investments in Renewables Up Over 30% to a Record $211 billion
Finally, and where legal skills can assist mass programmes of International and Governmental schemes for small community developments in emerging economies, currently, 1.4 billion people (more than one in five of the world’s population) have no access to electricity. Most of them live in Sub-Saharan Africa, India and developing Asian countries, but many Native American communities suffer the same problem. A whole different side to community interest. LM
Derek McCulloch is a Partner within the Energy, Climate Change and Natural Resources practice group of Gillespie Macandrew LLP in Edinburgh, Scotland, which represents landowners, communities and major utilities and developers. He is founder of the Lexwork International global energy group