The legal challenges facing the development of offshore windfarms largely fall into two categories, the first concerning whether the planning and connection regimes are adequate to deliver offshore wind capacity on the scale envisaged by the Scottish and UK governments.
The second is more project-specific and raises the question of whether the corporate structures put in place to deliver offshore windfarm projects are adequate to deliver generating capacity on the desired scale.
Obtaining planning consents for the development of windfarms and the construction of offshore transmission assets has been a cause of major delays for the development of onshore and offshore windfarms. However, the Scottish Government recognises the importance of developing windfarms, both on and offshore, and has addressed this issue frequently over recent months.
Offshore developments fall outwith the scope of traditional “planning law” and are currently governed by the Electricity Act 1989. However, the legal documentation for offshore windfarms continues to be developed and it is hoped that this will eventually clarify and speed up the consent process.
The decision by the Crown Estate to allow the exploration of potential offshore windfarm sites is a welcome step forward. It should be remembered, though, that each company awarded such rights still must submit a full consent application to the Scottish Government before any development can begin.
The connection of offshore windfarms to the onshore grid offers another challenge. First of all, there remains some doubt in the industry as to whether the proposed new legal regime for the construction of offshore transmission assets and the appointment of offshore transmission owners (OFTOs) will deliver connections for offshore renewable energy projects on the scale required.
Secondly, there is a recognition that the connection arrangements with the transmission system, in particular those set out in the GB Connection and Use of System Code, will need to ensure a faster connection of windfarm projects to the transmission system.
Furthermore, this must be tailored to the needs of offshore wind generators and, in particular, offshore windfarm developers. One proposed innovation that the electricity industry has been working on as part of the transmission access review is to offer flexible “connection products”. These could be developed to meet the specific connection needs of onshore and offshore windfarms in a more time-efficient manner.
It remains to be seen what effect, if any, the outcome of the Beauly-Denny inquiry will have on the planning and development process. However, it seems clear that, whatever the result, this will be a strong catalyst for change in the way that such proposals are considered, which must inevitably have an effect on the development of windfarms both on and offshore.
Offshore windfarms are complex and capital-intensive projects, and the more ambitious deepwater projects will be developed in a hostile environment. Like oil&gas ventures, these projects are often carried out by a consortium of companies bringing different financial and technical skills to the table rather than by a single project developer.
Each consortium will have its own unique needs and require a structure, whether corporate or partnership, that will ensure a fair allocation of risk between the parties; certainty of commitment, and the appropriate use of each party’s skills.
The chosen structure will also need to be able to guarantee that the obtaining of relevant consents and the construction, development and day-to-day operation of offshore windfarms will be carried out in an efficient and timely manner.
There is still room for innovation, flexibility and creative thinking to facilitate enhanced solutions.
Penelope Warne is practice group manager for energy projects and construction at CMS Cameron McKenna
