On 1 November, Svitlana Teush, Сounsel on energy, construction and infrastructure matters at Redcliffe Partners, delivered a speech at the II Legal Energy Forum organised by Yuridicheskaya Practika.
Svitlana spoke on the legal aspects of project financing in the field of renewable energy. She outlined the importance of maintaining stability of the feed-in tariff, and other components of the legal framework as essential during financial modelling of the projected cash flows to be generated by renewable energy projects, and which investors can rely upon. She also emphasised the need for higher requirements and criteria that feasibility studies and design projects should meet to be eligible for project financing. The issues relating to risk allocation and management in project finance deals were also considered (e.g., involvement of project sponsors, shareholders, insurance, project management, security structuring, lenders’ direct contracts with project participants allowing for step-in rights, etc.).
Svitlana also addressed certain factors and contingencies which may affect the projected cash flow in light of the ongoing electricity market reforms. These include: new amendments to the form of the power purchase agreement, reorganisation of the off-taker (State Enterprise “Energorynok”) and of the regulator, introduction of producers’ responsibility for imbalances, etc. Scenarios after the expiry of the “feed-in tariff” in 2030 were also considered, including possible introduction of the more market-based instruments (e.g., auctions, CfDs, etc.) On a related subject, Svitlana also highlighted the need for ensuring compliance with law throughout all project stages, and highlighted common legal issues identified during legal due diligence, including those surrounding land allocation, design and construction procedures, plant supply and mounting, as well as grid connection. To conclude, Svitlana referred in her speech to several case studies, including Redcliffe Partners’ legal support of EBRD and Landesbank Berlin in the project financing of wind and small hydro power projects.