Main Corporate Trends Driving the Energy Practice
By Raposo Bernardo’s Energy Department
Posted: 3rd January 2013 09:54
The classical energies continue their normal growth rate, with a lot of regulatory work and some important transactions. But it was the renewable sector, since about 2005, who gave rise to an irreversible boom in the energy market, leading to energy practice spin off as well as the creation of large specific departments in this area. The renewable energy experienced a fantastic period between 2005 and 2009. But the truth is that is a technology that requires impressive investments with a very slow ROI. Generally speaking, this funding was only possible in three ways:
- Bank financing, especially following the model of project finance;
- Private Equity;
- Subsidies granted by States through privileged tariffs.
Nowadays, with the financial crisis in Europe more intense from 2010-2011 the renewable energy market suffered an incredible setback, virtually stagnating. Only great players, belonging to global business groups with strong financial muscle are allowed to develop their projects. Banks began to feel difficulties in extending credit. Private equity in Europe is rare, and European countries have a serious debt problem. But other parts of the world began to develop plans to be active agents in the renewable energy sector. This is the case in Canada, India, Brazil, Australia, Chile, Uruguay, Angola and Mozambique, among others, along with a handful of exceptions in Europe that are more immune to the crisis, such as Poland. In these countries the energy projects continue to grow at a good pace.
We have assisted to an increase in regulatory and/or litigation work which is seriously affecting the market. This happens due to a very significant change in the regulatory framework in European countries both in 2011 as well as now in 2012.
Virtually all countries that had a policy to support renewable energy legislation have changed to eliminate privileged rates. This is the case of Spain, Portugal, Italy or Ireland, which practically ended their national strategies of supporting renewable energies, causing the temporary stop of hundreds projects or even making them definitively unfeasible, because they are unsustainable economically given the new tariffs policy.
Globally, the energy sector will keep gaining dimension and strategic importance, economical as political, demanding solid expertise. Is in this sense energy has climbed up the legal market’s agenda in recent years. It is now a bigger priority between firms with strong track record and installed capacity, aiming leading positions, as ours.
For Raposo Bernardo, this priority will run regardless of the difficulties in the areas renewable projects are experienced in Europe. The firm is very active in renewable energy projects outside Europe, as in Africa, Latin America and North America, but also in Eastern Europe, especially Poland. Moreover, we have increased activity in oil & gas and energy and in the most classic energies. Thus, evaluating by global results, the path can only be to invest.
Curiously it is not true an increase in competition in this area, and we could be led to think in more firms looking to position themselves as energy players. The explanation was already given, as it is an area where the investment is huge and requires long-term to remain at a good level according to clients demand (blue chip /multinational powerful companies).
Geographically, we are assisting to the biggest increase in energy work in some countries in Africa (Angola, Mozambique, Ghana, Namibia, South Africa, etc.), many countries in Latin America (Brazil, Mexico, Uruguay, Peru, Chile, etc), Canada, Australia and India.
These countries and areas of the world that have not suffered much the impact of the financial crisis and beyond bank financing, provided by a financial system with capacity, also count on the support of States that are developing to increase the energy renewable. Also, in many cases these countries are copying the pioneering experiences of countries like Spain, USA, Portugal, UK, etc.
Last, it is important to refer to the relevant legislation in the area of renewable energy that can influence the legal work, have always to do with tariffs and support of States in this sector. In countries that are going through a deep crisis, legislation amending the support through tariffs has been published. Countries that are currently supporting the sector have also published their laws, so it is not expected that any new legislation could be mean more work.
Of course, you can always come across any country in the world with a policy of support for renewable energy, and this may cause some players moving to develop projects in these territories, which will also lead to the creation of more legal work for departments’ energy law firms working on energy projects in a global perspective.
Nelson Raposo Bernardo is the global managing partner of Raposo Bernardo and heads the firm’s Corporate and Energy Departments. He is strongly experienced and reputed in legislating, being co-author of the present Portuguese Securities Code and led several legislative reform committees, in several countries, in banking, financial, real estate and construction areas. He has published books and articles on corporate law, banking and contract law, and participated as a speaker seminars and conferences in Portugal and abroad.
He holds a degree in Law from the Law School of the University of Lisbon, a Masters in Juridical Sciences (Corporate Law) from the same School, where is he is also presently working on his doctorate in Corporate Law. Assistant Professor of Corporate and Commercial Law at Law School of the University of Lisbon (1991-2006) and in Entrepreneurship and Family Enterprise Start-Up and Management courses at INDEG/ISCTE (Audax) (2005-present), one of the most reputed business school in Portugal. He is chairman of boards of general meetings of several companies and associations.
Nelson Raposo Bernardo can be contacted by phone on +351 21 312 1330or alternatively via email at email@example.com