48 England & Wales
in their loan agreements would , for example , expressly permit the various uses which the battery is intended to serve or could serve in the future . This runs somewhat contrary to the traditional project finance model where tight controls are placed on the project company . However , the development of optimisation agreements towards a relatively standardised form provides some comfort to lenders contributing to the growing involvement of commercial banks in this space . Broadly , these agreements constitute the offtake agreement for the project under which the optimisation provider manages the battery storage system to maximise its economic value using different services through advanced software algorithms ( typically including a minimum product payment guaranteed to the developer each year calculated on a $ per MW basis ).
62 Foreign Investment and International Obligations
6.1 Are there any special requirements or limitations on foreign investors investing in renewable energy projects ?
The National Security and Investment Act 2021 ( NSIA ) is the UK ’ s primary means of scrutinising investment in certain coreareas of the UK economy , including in relation to the energy sector and renewable energy projects . Whilst the NSIA applies equally to domestic as well as foreign investors , it is anticipated that transactions involving entities based in foreign countries of particular concern will be subject to greater scrutiny . The NSIA establishes a mandatory notification regime that requires certain transactions to be notified to the government for the purposes of a national security assessment . The government has the power to block or impose conditions on a transaction in order to protect national security .
In the renewable energy sector , the mandatory notification regime applies if various ‘ trigger events ’ are met ( such as the acquisition of a greater than 25 % stake ) in respect of a qualifying entity that holds generating capacity of over 100MW in any individual asset or cumulative 1GW of generating or aggregation capacity .
6.2 Are there any currency exchange restrictions or restrictions on the transfer of funds derived from investment in renewable energy projects ?
No exchange control restrictions affect inward or outward investment ( direct or portfolio ), the repatriation of income or capital , the holding of currency accounts , or the settlement of currency-trading transactions .
6.3 Are there any employment limitations or requirements which may impact on foreign investment in renewable energy projects ?
No sectors of the economy are restricted to UK nationals or require majority equity holdings or other specified holdings by UK nationals . In practice , foreign companies can obtain work permits for foreign employees by demonstrating that their skill level or experience cannot be found among UK nationals .
6.4 Are there any limitations or requirements related to equipment and materials which may impact on foreign investment in renewable energy projects ?
In respect of imports from outside the UK , there may be an obligation to comply with import licensing requirements and customs tariffs .
Aside from general restrictions applicable to materials that are harmful to health and safety and the environment , there are no other legal restrictions that apply to equipment or materials required to construct or operate renewable energy projects .
72 Competition and Antitrust
7.1 Which governmental authority or regulator is responsible for the regulation of competition and antitrust in the renewable energy sector ?
The relevant authorities are :
■ the UK Competition and Markets Authority ( CMA ); and
■ Ofgem .
Under the Enterprise and Regulatory Reform Act 2013 , both the CMA and Ofgem have concurrent powers to apply competition law in the renewable energy sector .
7.2 What power or authority does the relevant governmental authority or regulator have to prohibit or take action in relation to anti-competitive practices ?
The CMA and Ofgem have a broad range of powers in respect of actual or suspected anti-competitive behaviour . These include the ability to :
■ conduct market studies and , if appropriate , make a market investigation reference under which the CMA conducts an in-depth investigation into any feature , or combination of features , of a market in the UK ;
■ investigate suspected infringements ( including by conducting ‘ dawn raids ’);
■ give specific directions to end anti-competitive behaviour ;
■ impose financial penalties of up to 10 % of an undertaking ’ s annual group worldwide turnover ; and
■ apply to the court for an order to disqualify an individual from acting as a director for up to 15 years .
In addition , the CMA has the power under the Enterprise Act 2002 to prosecute for criminal cartel offences ( which covers agreements relating to price-fixing , market / customer sharing , output limitation or bid-rigging ).
7.3 What are the key criteria applied by the relevant governmental authority or regulator to determine whether a practice is anti-competitive ?
UK competition law prohibits anti-competitive agreements and conduct that amounts to an abuse of a dominant position .
Anti-competitive agreements Agreements and concerted practices that , by object or effect , appreciably prevent , restrict or distort competition are prohibited . This captures formal written agreements as well as informal oral agreements and even tacit understandings between businesses .
Some agreements , such as price-fixing or market-sharing cartels , are considered anti-competitive by nature , regardless of their actual effect . Other arrangements , such as exclusive purchasing or supply obligations , will only be prohibited where there is an actual anti-competitive effect . An exemption is available in certain circumstances where it can be demonstrated that the anti-competitive effects of a particular agreement or conduct are outweighed by the pro-competitive benefits for consumers .
© Published and reproduced with kind permission by Global Legal Group Ltd , London
Renewable Energy 2024