Solar Power Purchase Agreement Law 101

Transcription

1 All-Energy &8 October Solar Power Purchase Agreement Law 101 Presentation by Jane Wild

2 What we cover today? 1. Key Features of a PPA 2. Regulatory overview of retail energy law 3. Different models - Nature of relationships under a PPA 4. Common legal issues in the PPA Document Today s presentation will provide insights to the key contractual and regulatory issues underlying Solar PPA arrangements. 2

3 Key Features of a PPA PPA is a financial arrangement where the Customer buys the services and output rather than the system Developer owns, operates and maintains the PV System on a Customer s property Customer purchases the output from the PV System for a predetermined period Customer rights or obligations to purchase PV system at end of term or where certain events occur e.g. sale of premises Benefits for the Customer include: No high up-front capital costs, predicable energy costs System performance risk remains with Developer Can be cash positive from commissioning Can be off-balance sheet 3

4 Regulatory overview of retail energy law SALE OF ELECTRICITY Developers under a PPA model are engaged in selling electricity Traditionally the States & Territories were each responsible for regulating their individual retail energy market Australia s electricity law is NOT uniform AER regulates retail energy markets in ACT, SA, TAS, NSW, QLD NT, WA & VIC are still governed by state Developers need a retail authorisation (licence) or exemption to sell electricity to PPA customers Exemptions are appropriate where the energy supplied under the PPA is not the sole supply and customer maintains relationship with existing retailer 4

5 AER and individual exemptions If selling activity does not fall within any of the deemed or registerable retail class exemptions, you need to apply for a retail individual exemption Must be supplementary source of electricity to customer, not the primary supplier of electricity Application needs to address: Why you are seeking an individual exemption, and why you believe that an exemption (rather than a retailer authorisation) is appropriate to your circumstances. Experience in energy industry, business model, jurisdictions, pricing structure, related companies, type of customer, size of system, term of contract, termination and ownership at end of term Providing false or misleading information in an application for the grant or variation of an individual exemption is a serious offence under the Criminal Code Act 1995 (Cth). Maximum penalty 12 months imprisonment. 5

6 Nature of relationships under a PPA Consideration must be given to nature of the relationships and how to document the arrangement to best protect your rights Developer who procures installation and retains ownership of the solar panels Property owner who permits an installation on their land Customer(s) who are the end user(s) of the solar energy. Rights for neighbouring buildings to receive light or air across the roof. Rights for existing tenants in the building, who have equipment on the roof (air conditioning, telecoms) 6

7 Common legal issues Access rights Is the customer the owner of premises, co-owner of premises or tenant? Customer Developer Owner Customer/ Owner Developer PPA to include: If multiple owners consider all being party to PPA Obligations and prohibition the customer notify of intended sale, acknowledgment in contract for sale Details of what will happen upon sale, pre-pay and transfer, early termination and removal, transfer with no removal 7

8 Common legal issues Lease vs Licence? Lease Property right - amounting to an interest in land, protection as tenant under property law Licence Right based in contract - personal permission to enter and use the property for some stipulated purpose, no protection under property law Registrable exclusive possession Not-registrable - may or may not have exclusive possession Enforce rights against third parties May have its licence revoked by the grantor at any time, cannot enforce against third parties 8

9 Some issues with leases Property law is also not uniform in Australia An impediment to a lease is the requirement to adequately describe the leased premises. Each state jurisdiction is different with some jurisdictions having deemed subdivision requirements Landlords/owners and granting exclusive possession of an area under a lease 9

10 Other common legal issues in the PPA Document Title and PPSR Important that the PV System is not treated as a fixture and keeps within the realm of (PPSR) Personal Property Security Register System must remain a chattel and the personal property of the developer; Customer has no proprietary or other ownership right or interest in the System. Registration of the equipment in the PPSR recommended Boiler plate set of clauses that will protect you in this regard 10

11 Other common legal issues in the PPA Document Planning approval/building licences Planning/installation approval depending on jurisdiction may be an exempt (under 10 kw) or complying development (10 to 100kW), this depends on the type of property, classification etc. Building and specialist licencing requirements differ from state to state. 11

12 Other common legal issues in the PPA Document Renewable energy certificates STCs for up to 100 KW PPA to include who owns credits and for customer to execute any document to enable accreditation and registration of PV System, to create and transfer credits End of term/sale of property Buy the PV System (usually after a period e.g 5 years) - The purchase price can either be negotiated near the end of the PPA term or established within the terms of the PPA Extend contract Offer system upgrade? Renewal may make more sense to customer given no requirement for capital outlay at the outset Removal PV System If this is an option, make sure the PPA covers who will pay for the cost of removal 12

13 The Battery Revolution is promising guarantee reliability during peak hours Aussies continue to pay higher than average charges for electricity they buy Capital costs will continue to decline Consideration of storage will ultimately be essential to a bankable PPA Solar is shining with the potential to become the most competitive primary source and net source of energy in Australia. 13

14 Questions & Answers Jane Wild Partner T E jane.wild@dibbsbarker.com Jeff Baker Partner T E jeff.baker@dibbsbarker.com DibbsBarker DibbsBarker is a commercial law firm with 300 partners and staff located in offices in Brisbane, Canberra and Sydney. The firm focuses on six key industries Agribusiness, Energy & Infrastructure, Financial Services, Insurance, Life Sciences & Healthcare and Property. DibbsBarker s areas of legal expertise include Competition & Consumer Law, Corporate & Commercial, Dispute Resolution & Litigation, Employee & Industrial Relations, Financial Services, Insurance, Intellectual Property & Technology, Property & Projects and Restructuring & Insolvency. 14