The Portuguese government wants its first big offshore wind farm to help generate enough electricity to power more than 870,000 households.
Lisbon will initially offer licences for projects targeting 1GW of power through an auction planned this year for sites off the country’s windy Atlantic coast.
But the success of these wind farms — and how desirable the licences are — depends on the structure of the auctions and companies’ ability to put forward bids that comply with labyrinthine national and EU laws governing marine protection, permitting, land rights, and grid connections.
“We are, like anyone else, waiting for the final legal framework for the auctions,” says Afonso César Machado, market director for Portugal at Copenhagen Offshore Partners, one of the developers that plan to bid.
If chosen, COP’s project, valued at €8bn, would be Portugal’s first offshore wind project at commercial scale and should start generating power this decade.
COP, the offshore development arm of Copenhagen Infrastructure Partners, is an experienced bidder. It has installed a big offshore wind farm near Germany and is working on several other important North Sea projects. “We see what works well and what does not work well,” Machado says.
However, it is still a challenge in countries such as Portugal, where governments are establishing rules on where cables should be laid, whether developers should have the right to override environmental protections, and how to deal with landowners for the first time.
The key is finding local lawyers that have the ability to help, adds Machado. “These are very large infrastructure projects . . . way larger than what you do onshore. So it is not all law firms that have experience in these very large projects that take years to prepare and permit.”
Across Europe, governments are racing to attract renewable energy projects to answer an increasingly acute need for clean, cheap energy.
Installations of solar photovoltaic cells increased 47 per cent in 2022 compared to 2021, according to industry body SolarPower Europe. Fellow industry group WindEurope also reported a record number of projects in 2022 despite the sector being hampered by supply chain challenges. It says that it expects the EU to build on average 20GW of new wind farms each year between 2023 and 2027.
Portugal is among several European countries to have simplified permitting procedures in an effort to speed up deployment.
Even so, processing times are still painfully slow and often not designed for renewables projects. WindEurope says that 80GW of wind projects are currently stuck in permitting procedures across Europe.
“This is very problematic considering Europe is building wind energy at only half the pace required” for meeting the EU’s 2030 climate targets, the industry body says.
Germany is the country that has speeded up permitting the most after it became the first EU member state to apply new “overriding public interest” rules to renewables projects and allowed some to be exempted from environmental surveys. In the first half of this year, German authorities handed out 3.2GW of new permits, 80 per cent more than during the same period last year.
But, at the same time that governments are desperate to speed up the development of renewables, the EU is bringing in more regulation to manage energy markets and protect communities and the environment.
The same considerations apply in the UK despite its exit from the union.
Legal involvement at the start of these projects is therefore crucial, says Leilah Rawle, a partner specialising in energy and infrastructure at law firm CMS, who acted on the world’s largest offshore wind farm under construction at Dogger Bank off the English coast in the North Sea.
“It’s increasingly important because there is a continuing trend of legal challenges brought on grounds like failure to consider alternative locations for infrastructure . . . or failure to consider cumulative impacts of projects,” she explains. “So there are some basic building blocks that need to be considered at the start of any project to make sure that project is robust and can withstand any challenges that might be brought later on.”
Those building blocks include working with landowners to encourage them to allow developments to take place without having to resort to compulsory purchase, and co-ordinating with other projects in an area so that ground has to be broken only once to install cables connecting renewables to the grid.
Lawyers also need to be ready to deal with novel proposals, such as solar power installations on agricultural land, which requires permissions to use the land in more than one way, says Eva Vandest, head of public affairs at renewable energy company Amarenco: “We need to adapt the entire regulatory framework.”
Even offshore wind arrays can cause particular environmental headaches when it comes to judging whether they will have adverse impacts on protected habitats, according to Rawle.
Legal challenges on renewable projects can cause “huge uncertainty and additional cost” and months of delays, she points out. “Which, when we want to try and race to net zero, we want to try and avoid where we can.”
Gavin Watson, specialist in energy and sustainable finance at law firm Pillsbury Winthrop Shaw Pittman, says firms today are “too siloed” and need to be more entrepreneurial in order to deal with the energy transition. He urges law firms to take “a blank sheet of paper [and say] ‘how do we make this happen?’”.