The realisation of offshore wind park projects in Germany - political environment, legal framework and bankability implications

Description

According to the German government’s new energy concept that was recently introduced, renewable energies shall replace fossil and nuclear energy sources step-by-step. The offshore wind energy sector plays a key role in this new energy strategy, and shall contribute the major share of renewable energy to the future German energy mix. The purpose of this study is to examine and evaluate the applicable conditions that have to be considered by project developers and investors when realising an offshore wind park project in Germany. Firstly, it analyses the political environment for the offshore wind energy sector in Germany. Secondly, it gives an overview of the most relevant German legal statutes determining, inter alia, the establishment of wind energy priority areas, the applicable German feed-in tariff scheme, and the necessary approval process for offshore wind parks to be erected in the German exclusive economic zone. Thirdly, those potential bankability issues and financing challenges are discussed that an offshore wind park project planner might be exposed to when trying to secure a debt financing for such a sophisticated and capital-intensive project. Auszug aus dem Text Text Sample: Chapter 4.1.1.3, Protection of investors’ confidence: As indicated above, the RE-Act (EEG) gives energy generated from renewable sources a preferential treatment compared to energy produced from conventional sources. A wise OWP operator or investor should therefore ask the question whether the German feed-in system is in line with existing EU regulation (e.g. the prohibition of state aid (Beihilfeverbot) and/or the principle of free movement of goods (Warenverkehrsfreiheit)). The answer is: Yes. The European Court of Justice decided that the German feed-in model to support the development of renewable energy does not violate applicable European law, which gives OWP investors the comfort that the content of the German RE-Act (EEG) cannot be questioned from a European law perspective. However, once the investment has been made, an OWP operator could still face the theoretical risk that the national legislator in Germany may subsequently adjust or amend the applicable feed-in system and that the resulting new regulation would have a negative effect on the economics of his project (the most obvious example would be the potential risk of a reduction of the applicable feed-in tariffs). In practice, such a risk is rather remote. German legal experts agree that OWP investors should be protected by the German legal system from subsequent adverse changes of the RE-Act (EEG) and can usually rely on the legal environment which was applicable when making their investment decision. Furthermore, the German legislator is very much aware of the fact that such a tremendous legal and/or financial risk would barely be acceptable for potential investors and accordingly would constrain the targeted strong expansion of the German renewable energy sector. Hence, OWP investors in Germany can rely on a very stable and supporting legal environment (protection of investors’ confidence (Vertrauensschutz)) and should have enough legal certainty to invest in the German renewable energy sector and the offshore wind energy segment in particular. 4.1.1.4, Evaluation of German RE-Act (EEG): In his work, Mendonca has analysed different renewable energy support schemes worldwide as well as varying feed-in laws, and deduced general lessons and requirements for the effective implementation of a feed-in law. The main aspects are to set up a simple, flexible and transparent feed-in system, to guarantee grid connection and a fixed feed-in tariff which is high enough to ensure a profitable operation, to differentiate between different types of renewable energies, and finally to assure public support and acceptance. Indeed, the German RE-Act (EEG) considers all the aforementioned requirements for an effective feed-in law and thus provides investors in renewable energy projects in Germany an environment with high investment security and planning reliability. Furthermore, the German public has always supported the development of alternative and ‘green’ energies in the past and will do so even more after the nuclear accident at the Fukushima power plant in Japan. If well-designed and implemented, a feed-in model like the German RE-Act (EEG) has proven to be the most effective and successful instrument to support and accelerate the development of renewable energies. A positive development of renewable energies can usually be achieved much faster and cheaper compared to alternative models like the UK quota model. The German feed-in law is one of the most successful in the world. Similar feed-in systems have been introduced subsequently in many other countries in Europe, but also in countries outside Europe like India or China. Biographische Informationen Steffen Blomberg, LL.M, was born in Chemnitz, Germany, in 1979. He received a finance degree from the Humboldt University of Berlin, in 2005. Subsequently, he started working for KfW IPEX-Bank GmbH, a German banking institution that provides international export and project financing solutions to companies, mainly focussing on industries such as power & renewables, oil & gas and transportation. While studying for a part-time master of laws degree at the Johann Wolfgang Goethe University of Frankfurt am Main, from 2009 until 2011, the author focussed on current subjects like renewable energy finance and the offshore wind energy sector in particular. Those topics became even more important in Germany after the nuclear disaster at the power plant in Fukushima, in 2011, and the subsequent political turnaround of the German government’s energy strategy (faster phase-out of nuclear energy and main focus on renewable and especially offshore wind energy). The author wrote this study to give an overview of the main political, legal and financial aspects to be considered for the realisation of an offshore wind park project in Germany.