FEATURE / Renewable Energy committed projects versus USD157 billion of planned deals .
THE TWO ROADS DIVERGING But as encouraging as these statistics and estimates might be ( if only with the view of saving our planet !), the ground level perspective reveals multitude of issues . Commercially , the market is glowing red-hot with hyper-competition , seemingly forcing developers to accept lower and lower returns against a potentially deteriorating risk profile .
It is no secret that almost all GCC states are either implementing or seriously considering a restructuring of their energy generation and distribution regimes , resulting in brand new offtaker corporate vehicles or substantially rebalanced purchasers of power whose aggregate credit profile is well below their historic predecessors . Coupled with increasing reluctance by governments to stand by the commitments of such offtakers , we are dealing with long term concession-based power projects which may arguably be underpinned by sensible commercial rational , but are also laden with legal risks .
Moreover , procurers are revisiting their historic precedent deal profiles and asking questions around the risk allocation regimes contained in other states . While such an approach , on a holistic level , is healthy , the exercise might be less productive when specific , procurer friendly positions are cherry picked from neighbouring jurisdiction models without appreciation for other ( procurer unfriendly ) positions which such jurisdiction models contain . The net effect being the deterioration of the overall risk profile of a deal as against its historic precedents . It is also a self-feeding animal , as more legal risk is successfully pushed by procurers on to the developers and its financiers , so the appetite grows for ongoing risk allocation reforms , resulting in even more developer unfriendly positions in the subsequent set of deals .
So what , you may ask ? After all , theoath-me . com • the Oath 15