ENERGY LAW AND ACQUISITION OF OPERATIONAL RENEWABLE PROJECTS

Introduction

The acquisition of an operational renewable-energy project involves the purchase of an already commissioned solar, wind, hydro, battery-storage or other low-carbon generation facility. In the United Kingdom, such transactions are governed by a combination of energy regulation, company law, property law, planning law, environmental obligations, competition law, tax law and contractual principles.

An acquisition may occur through a share purchase, where the buyer acquires the project company or special-purpose vehicle (SPV), or an asset purchase, where specified generation equipment, land rights, contracts and other project assets are transferred. The distinction is important because a share acquisition normally preserves the project company's existing contractual relationships, while an asset acquisition may require individual assignments, novations or regulatory approvals.

Regulatory Due Diligence

A purchaser must determine whether the operational plant possesses all legally required licences, exemptions, planning permissions, grid rights and environmental authorisations. Particular attention should be given to:

Generation authorisation: electricity generation in Great Britain is regulated under the Electricity Act 1989, subject to applicable licensing and exemption arrangements.

Grid connection: the purchaser should examine the connection agreement, capacity rights, operational restrictions, curtailment provisions and outstanding grid liabilities.

Land rights: leases, easements, wayleaves and access rights must continue for the expected operational life of the project.

Revenue arrangements: renewable projects may derive income from power purchase agreements, the Renewables Obligation, Contracts for Difference or merchant electricity sales. The UK CfD remains a principal mechanism supporting low-carbon generation and takes the form of a private-law contract between the generator and the Low Carbon Contracts Company.

RO-accredited stations must continue satisfying eligibility and compliance conditions even though the scheme is closed to new generating capacity.

National Security and Competition Review

Renewable acquisitions can also trigger regulatory review. Under the National Security and Investment Act 2021, qualifying acquisitions involving significant electricity-generation entities may require mandatory notification. Government guidance expressly covers generation, storage and aggregation and includes specified capacity thresholds. Completion of a notifiable acquisition without required clearance may render the transaction void and expose the parties to penalties.

Large acquisitions may additionally require consideration of UK merger-control rules where jurisdictional thresholds are satisfied.

Contractual Risk Allocation

The share purchase agreement normally contains warranties concerning title, regulatory compliance, generation performance, grid arrangements, environmental liabilities, land rights, taxation and material contracts. Buyers commonly require indemnities for identified historical risks.

Operational projects require particular scrutiny because past breaches remain economically relevant after completion. Due diligence should therefore review turbine or panel performance, degradation, warranty claims, availability guarantees, PPA defaults, insurance and decommissioning obligations.

CASE LAW

Case Name/Citation

Monsolar IQ Ltd v Woden Park Ltd [2021] EWCA Civ 961

Facts

The dispute concerned land leased for a solar photovoltaic project. The project structure had been deliberately established through an SPV holding a package comprising the lease, planning permission and an electricity-grid connection offer, enabling the development rights to be sold.

Legal Issue

The Court considered the proper interpretation of rent-review provisions contained in the solar-farm lease.

Judgment

The Court of Appeal held that the contractual language produced an commercially irrational result and applied established contractual interpretation principles when determining the parties' rights.

Legal Principle/Ratio

Land documentation forming part of a renewable-project structure must be interpreted according to ordinary contractual principles, with close attention to the language and commercial context.

Significance

The case demonstrates why purchasers must examine project leases carefully. A defective rent formula or unusual land provision can materially affect the value of an operational renewable asset.

Case Name/Citation

Solar Century Holdings Ltd v Secretary of State for Energy and Climate Change [2016] EWCA Civ 117

Facts

Solar developers challenged the government's decision to close the Renewables Obligation earlier than previously anticipated for certain large solar projects.

Legal Issue

Whether investors had a legitimate expectation that renewable-support arrangements would remain unchanged.

Judgment

The Court of Appeal rejected the challenge and held that the government was legally entitled to alter the support regime.

Legal Principle/Ratio

Investors cannot automatically assume that renewable-energy policy or subsidy regimes will remain unchanged merely because earlier policy statements indicated continuity.

Significance

Acquirers must therefore assess regulatory-change risk rather than valuing an operational project solely on historic support assumptions.

Case Name/Citation

Ørsted West of Duddon Sands (UK) Ltd v HMRC [2026] UKSC 12

Facts

Companies owning and operating offshore wind farms disputed whether substantial survey and development expenditure qualified for capital allowances.

Legal Issue

Whether particular expenditure constituted capital expenditure on the provision of plant.

Judgment

The Supreme Court analysed the wind farm's generation assets and the statutory capital-allowance requirements.

Legal Principle/Ratio

The tax treatment of renewable infrastructure depends on the statutory characterisation of expenditure and the relationship between expenditure and the generating plant.

Significance

The decision highlights the importance of tax due diligence and asset classification when acquiring operational renewable portfolios.

Conclusion

Acquiring an operational renewable project is therefore not simply a corporate M&A transaction. Its value depends on continuing generation rights, grid access, land tenure, revenue support, planning compliance, environmental obligations, taxation and regulatory approvals. Effective legal due diligence should confirm that these rights survive the acquisition and identify liabilities that should be reflected through warranties, indemnities, conditions precedent or purchase-price adjustments.