23 July 2010
The Hammars Hill wind project is one of a number of wind projects on Orkney in which bto’s renewable energy team has been delighted to be a lead adviser in the past few years.
Our renewables specialists combine banking and finance, construction, corporate, planning and real estate expertise, and have developed a strong track record in on-shore wind projects with a typical build cost of up to £10m. These are significant projects, the successful and timely delivery of which requires efficiency and strict adherence to timescales.
In all construction projects, delay is a key risk. In on-shore wind projects in the UK, this can be all the more so because securing turbine supply at all to some of the best sites, which are often remote and challenging, is difficult. Turbine suppliers will set a delivery date and stick to it. If the site is not ready on time, it could be months until the next delivery slot becomes available, as delivery dates are set by reference to schedules for delivery to other projects and with weather conditions in mind as regards both shipping and the erection work itself.
Significant wind projects such as these are usually bank funded on a project finance basis. This means that the bank will carry out extensive diligence on the contracts that underpin the project and its construction. The bank will also require a number of direct agreements in its favour from balance of plant and other contractors and professionals. Contractors and professionals should ask their clients whether they have had a comprehensive checklist of the bank’s requirements as regards timescales, the terms of the appointment, the scope of work, the amount of PI cover to be carried, the need for and terms of reliance letters and/or collateral warranties, the need for direct agreements and/or parent company guarantees and the parties to whom any reports must be addressed. It is only with a detailed understanding of these points that pricing and other key decisions can be made.
If you are involved in the early stages of a wind or other renewable energy project and would like to pick our brains, please call one of the solicitors in our team. In addition to wind, we have extensive experience in hydro, biomass, solar, CHP and anaerobic digestion schemes.