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Solar energy projects: what to pay attention to?

Solar energy projects: what to pay attention to?

Solar energy is taking off in the Netherlands. An important part of the available subsidy is allocated to solar energy projects. In addition, ever larger projects are being realised. In this article, I will list the most important legal points for attention in respect of these projects.

1. Location

Each project starts with a good location. If your solar energy installation is not built on your own land, you will have to come to good agreements with the land owner. With a right of superficies, you prevent the owner of the plot also becoming owner of the solar energy installation. It is important to select an independent right of superficies and not a lease-dependent right of superficies. This because a lease-dependent superficies ends when the lease ends. A lease-dependent superficies is therefore unsuitable collateral security for financiers. In the case of an independent right of superficies, the right of superficies remains in existence and this right can be sold on.

2. Integrated environmental permit

An integrated environmental permit is a permit for constructing a building and/or for performing business activities that may possibly cause nuisance for humans and the environment. For ground-oriented solar energy projects you require an integrated environmental permit. If the solar panels are placed on a roof, you usually do not need an integrated environmental permit.

3. SDE+ (Stimulation of Sustainable Energy Products)

The SDE+ subsidy pays for a number of years (for solar energy this is 15 years) the difference between the cost price of grey energy and that of sustainable energy. Without SDE+ subsidy, solar energy projects in the Netherlands are not yet cost-efficient.

Only solar energy installations connected to a bulk consumer connection (a connection to the electricity grid of more than 3 * 80 A) are eligible for this subsidy. For the Solar-PV category with a peak power output of ≥ 15 kWp and < 1 MWp, it applies that such an installation must be realised within 18 months after receipt of the subsidy. For the Solar-PV category with a peak power output of ≥ 1MWp, this is three years.

To be able to apply for the subsidy, you must have an integrated environmental permit and have come to agreements with the land owner. If you are applying for subsidy for more than 0.5 MW, you are also obliged to carry out a feasibility study and include this in your application.

4. EPC agreement

An Engineering Procurement and Construction agreement is entered into with the party who is going to realise the solar energy installation for you. This agreement records the work to be carried out and what will be delivered, the payment due for this, when each part of the purchase price is paid, the guarantees provided and how and when delivery is going to take place.

5. O&M agreement

The Operation and Maintenance agreement is entered into with the party who is going to operate and maintain the solar energy installation. This agreement records in detail the maintenance work to be carried out, how the installation will be monitored, secured and inspected, the period within which repairs will take place, the guaranteed availability and the payment due for the work.

6. Power Purchase Agreement

This is the agreement for the sale of the electricity. Usually such an agreement is entered into with an energy provider but there are also purchasers who purchase electricity ‘directly from the source’. For the production of sustainable energy, you will also receive Guarantees of Origin. You can also sell those independently from the electricity.

7. Grid connection

Your solar energy installation must be connected to the electricity grid. For a connection up to 10 MW, the grid manager must install the connection itself. The costs of such are regulated. You have the right to be connected to the nearest point on the 10 kV grid. Costs for the connection are calculated on the basis of a connection at that point; even if the connection capacity is not sufficient and a different connection point must be used. The grid manager must realise the connection within 18 weeks.

In case of large solar energy installations, a third party may install the connection provided this takes place in accordance with the requirements of the grid manager.

8. Insurances

It is important to obtain good advice on the insurances to be taken out. This must properly address the risks both during the realisation and the operation phases. For instance, you can insure yourself against the risk of damage or loss of the installation, but also against yield loss. In addition, as the owner or operator you are liable for damage to third parties caused by your installation. You must therefore have liability insurance.

9. Legal structure

Most solar energy projects are operated from a separate special purpose vehicle. The advantage is that the operation is then separated from other activities. It also simplifies project finance by a bank as other activities will not affect the project. Finally, the project can in that case also be sold (on) by means of a transfer of shares.

10. Financing

Often, an important part of a solar energy project is financed by loan capital. The financier will demand security rights on, among other things, the installation, the revenue of the Power Purchase Agreement and the SDE+ subsidy. This must be taken into account during the contract formation.

We have extensive experience with solar energy projects. We would be happy to make our expertise available to your project.

By Maarten Kole

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