“There is no fully harmonised European law on renewable energies” says lawyer Holger Kraft

“Working as a lawyer in this sector is fascinating, if you like challenges”

Holger Kraft, Lawyer at CMS

MARCH 2016 - Dr. Holger Kraft is a lawyer who has specialised in infrastructure and renewable energy for 20 years. I talked to him about the European energy legislation and the impact of international conferences like the Conference of the Parties (COP) on the legal industry.

How would you define your job as a lawyer in renewable energy?

Working as a lawyer in this sector is fascinating, if you like challenges. The renewable energy sector is changing rapidly. This is true for the law and the technology: the subsidies regimes are under constant revision as new solar panels and wind turbines enter the market. As a lawyer you therefore have to adapt to changing legal and economic environments.

There are also a lot of parties involved in a renewable energy project: contractors and suppliers for building the plant, authorities who grant permits, investors and banks to finance. The challenge is to bring them all together so that no piece of the puzzle is missing.

In recent years I was advising a lot of investors during the various stages of a renewable energy project: from the acquisition of project rights to the development and negotiation of contracts until financial close (the final investment decision). My job is it to make sure that my clients understand the chances and risks of the projects they acquire or finance.

What are the three most important things to know about renewable energy law in Europe?

There is no renewable energy law as such in Europe. Each country has a different system for subsidies, permits, grid connection, and so on. Whereas construction contracts and financing contracts are more or less similar all over Europe, regulatory issues differ from country to country. There are of course European directives but they rather work in the background. There is no fully harmonised European law on renewable energies.

This means that for each project in Europe you have to closely examine the regulatory framework: How does the subsidy regime work? What are the risks involved? May it change in the future, maybe even with retroactive effect (for projects completed in the past)? For example in Spain, the government slashed subsidies that were granted in the past. This obviously creates uncertainty and makes investors nervous.  

But also in other countries, the law changes constantly. In Germany, the subsidy regime will evolve from a guaranteed feed-in tariff to an auctioning system. The basic idea is that people will bid for a project and the one who offers the lowest price will win it. The government therefore wants to create more competition in the renewable energy market. The days of an infant industry, protected from market forces, are over.

How does international conferences such as COP21 in Paris affect your work in renewable energy law and the industry?

The COP21, the 2015 United Nations Climate Change Conference, affects my work only indirectly. The Paris Agreement, which was concluded at the conference, does not envisage penalties or direct liabilities. Before anything can be implemented, at least 55 countries (that accounts for at approximately 55% of global emissions) must have ratified the Paris Agreement first.

However, international agreements on climate change do have an impact on legislators. Currently the German government is working on the renewable energies act for 2016 (the EEG). One of the key challenges is to determine the relevant target capacities in respect to solar, onshore and offshore wind. COP21 and other international meetings will hopefully influence these decisions.

How different are the renewable energy laws in each country in Europe?

Nearly every country has its own specific approach. EU law acts as an impulse for unification but progress has been rather slow. For example, the 'Guidelines on State aid for environmental protection and energy 2014-2020' is one of the recent EU impulses. These guidelines favour the auction system as mentioned before. Some of the most significant differences between renewable energy laws in European countries are the regulations regarding the subsidy regime: feed-in tariffs, guaranteed energy prices, certificates, or tax benefits are measures different governments use differently.

What is the most challenging aspect of your job?

The most challenging aspect certainly is to consider all aspects and interfaces of a project and to identify critical aspects at an early stage. As a renewable energy lawyer you have to be an all-rounder: you cannot be focused on one area of law only, you have to see the whole picture. Experience is important and asking the right questions is important as well. Helping projects spring to life can be quite challenging – but it is also very rewarding!