Legal and Risk Management Issues in Contracting Renewable Energy Sources

Abstract

Considerable interest in renewable energy sources and significant increases in the cost of foreign oil have compelled various countries to search for low-cost energy sources and technologies, such as solar cells, wind turbines, biofuel sources, and geothermal technology, in order to achieve lower cost electricity generation and eliminate dependence on oil-producing countries. In Europe, particularly, recent decades have seen a surge in the growth of renewable energy, which has taken many market actors by surprise. This growth can be attributed to renewable energy support policies at both the national and European Union (EU) levels, along with significant cost reductions in renewable energy technologies, mainly in wind power, solar, photovoltaics, and biomass. In fact, all of the EU member states have favorable renewable energy policies. In Italy, specifically, renewable energy technology is supported by the current domestic laws. The effects of these efforts are already noticeable in all Italian regions, in which renewable energy use has increased, as it has in all EU member states. However, several critical issues have emerged in marketing, engagement strategies, and contracts; as a result, several civil litigations have been initiated when contractual performance was not guaranteed or when an accident or functional failure occurred. The authors, due to their experience in the role of a judge’s expert in Italian civil proceedings, were appointed to assess and to estimate the claims arising from the failure of energy plants the failure of renewable power plants to perform or for the nonexact execution of obligations from liability in tort. In this paper, the authors present the cases of a solid biomass power plant and onshore wind and solar photovoltaic systems for which clients filed claims related to failures or disregarded performance in comparison with the contractual aims. Back-analysis of each case enables us to analyze the principal and critical aspects of each contract and to define the principal strategies to sign a solid contract in light of current legislation and market offerings. After the case studies, the authors suggest a set of guidelines for forensic engineers and investors with regard to renewable energy sources.