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PROFESSIONAL SERVICES - DUE DILIGENCE


TECHNICAL DUE DILIGENCE ON WIND FARMS THOROUGH TESTING TO TURN WIND INTO A WINDFALL


When wind farms change owners, expertise is in high demand. As in real-estate and company acquisitions, risks unknown and hidden at the time of contract conclusion may be transferred along with the ownership of the turbines.


Possible consequences include incalculable costs, low energy production or liability risks that impact on returns on investment and the cash flow. Using case studies as examples the wind experts from TÜV SÜD and MVV Windenergie GmbH point out what to look out for.


As trading and sale takes place at all phases of wind-farm projects, the transactions involve various types of risk that will normally be uncovered by a due diligence review.


AN OVERVIEW FROM GREEN-FIELD PLANNING TO WIND FARMS IN OPERATION – FAR, FAR AWAY – PERMITS, APPROVALS, LICENSES, WIND REPORTS AND YIELD FORECASTS


To be eligible for a construction permit, the future wind farm must comply with all legal requirements. Particularly important in this context is the Act on the Prevention of Harmful Effects on the Environment Caused by Air Pollution (Bundes-Immissionsschutzgesetz), which also imposes secondary specialist requirements drawn from forestry law, nature conservation, construction law and other regulations.


In addition to the above, various technical aspects are crucial for the success of a future wind farm project...


• Is the foundation soil suitable for ensuring turbine stability?


• Do the wind conditions prevailing at the site promise high energy yields?


• Validated expert reports are needed to identify all possible risks


IN BLACK AND WHITE – EPC AGREEMENT, DELIVERY AND SERVICING CONTRACT


Who will pay for any additional costs and losses in energy production caused by unscheduled work for the construction of a heavy-duty access road? Is the purchaser entitled to claim compensation against the manufacturer if the turbine fails to reach its maximum capacity? Which services and replacement parts are covered by the service contract? These questions are examples demonstrating that contracts may include numerous pitfalls, which should be uncovered prior to contract conclusion to avoid critical issues having to be settled in court.


SEE THE WAY THE WIND IS BLOWING – SERVICE REPORTS, REPOWERING AND THE RISK INVOLVED IN THE EXTENSION OF THE WIND FARM Thorough review of the operational data and reports is imperative for assessing the performance of an existing wind farm and uncovering weaknesses in wind farm management or wind-farm control.


Another risk concerns repowering and the erection of further turbines in the immediate vicinity: the erection of further turbines and the higher turbulence associated therewith will cause the energy yields of existing turbines to go down while their operating loads go up – quite often beyond the design limits.


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