TLT LLP

"UK's Rooftops to become power stations" DECC strategy

The Legal Landscape

Matt Grimwood & Pete Skeen

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• Project lifecycle of community renewable energy projects

• DECC's Strategy April 2014

• Barriers (and solutions)

• Unlocking rooftop

• The future

Background

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Typical Project Cycle for a Community Rooftop Solar Project

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• Estimated 250,000 hectares of south facing roofs in the UK

• Clear way for various community buildings from churches,

schools…

• Cut red tape and sweep away barriers

DECC's Strategy April 2014

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• Developer / building owner relationship (not own capital projects)

• Tenanted buildings:

• Tenants come and go

• Who has "rights to the roof"?

• Who is the PPA Counterparty?

• Financial covenant strength

Potential Barriers – Building ownership and occupation

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Potential Barriers – What is benefit to Landlord?

• Owner / occupier

• Attracting new tenants

• Green credentials

• Tenant driven proposition ?

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• Single connection to grid for import and export?

• Reliance on Landlord's grid connection

• Robust contractual obligations on Landlord re maintenance of

connection

• Consent from DNO?

• Step in rights?

Potential Barriers – Grid Connection

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• Ability to terminate PPA

• Does project company have the right to reconfigure as an export

only project (export bypass)?

• Potential need for own grid connection

• Impact on FiT accreditation

Potential Barriers – Building owner insolvency

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• Building charged

• Inappropriate application of CML guidance for domestic solar to

commercial installations:

"a lender seeking to enforce its security against a private residence

would be entitled to require PV project to be removed if PV impacts on

marketability … "

• Engagement with:

• DECC

• CML

• BBA / BSA

Potential Barriers – Lender consent

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• From 15 April 2015 no permission required for PV equipment on roof of a

commercial building up to 1 MW (previously 50kW)

• Prior approval in relation to design or external appearance including impact of

glare

• Written description if proposed development and plan to be included

• Local Authority right to refuse if development does not comply with order or

insufficient information

• 21 day notice period

• Take account of representations

• Development cannot commence until:

• Written approval; or

• 56 days from submission of application; or

• LPA confirm no approval required

Unlocking Rooftop - Planning

"Permitted development rights extended" – is it as simple as the press

coverage might suggest?

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• Preservation of FiT if installation relocated

• Applies to "[other than] stand-alone" PV installations greater than 50KW

• NO requirement for installation to remain same size BUT:

• If greater – treated as extension

• If smaller – same / lower tariff

• No transfer until 4 years after legislation is passed

• Planning and grid connection acceptance not required in advance of move

BUT permission / other consents may still be required

• Proposed Regulations later this year

Unlocking Rooftop - Relocation

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Solar Rooftop – The future?

• Lease -v- Licence?

• User friendly / balanced documentation

• Debt financing appetite (on a portfolio basis)

• Private equity interest

• Continued stakeholder engagement

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Project finance – contract structure

Lender

Intercreditor

Agreement

Share

charge

Facility

agreement

Engineering

procurement contract

Dire

ct a

gre

em

ents

Grid connection

agreement

Grid connection offer

Power purchase

agreement

Lease

Management services

agreement

Third party

reports

Shareholder

loan

Shareholder

Borrower

Third party

reports

Grid connection

agreement

Third party

reports

Grid connection offer

Grid connection

agreement

Third party

reports

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Dire

ct a

gre

em

ents

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Shareholder

Dire

ct a

gre

em

ents

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Address to

Lender or

reliance letter

Borrower

Shareholder

Dire

ct a

gre

em

ents

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Lender Borrower

Shareholder

Dire

ct a

gre

em

ents

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Shareholder

loan

Lender Borrower

Shareholder

Dire

ct a

gre

em

en

ts

Engineering

procurement contract

Management services

agreement

Lease

Power purchase

agreement

Grid connection offer

Grid connection

agreement

Third party

reports

Lender's

technical

advisor

Security

Address to

Lender or

reliance letter

Management services

agreement

Engineering

procurement contract

Engineering

procurement contract

Management services

agreement

Operations and

maintenance

agreement

Engineering

procurement contract

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Overarching lender concerns

• A funder will need recourse to all of the assets and rights needed to

construct and operate the project

• The lender only gets repaid is if the project succeeds:

• Lender / developer different appetite to risk

• Detailed due diligence process

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Thank you