ProjectsPlus 2020
Milbank's Magazine for Energy & Infrastructure Projects
This issue of ProjectsPlus covers renewable energy and sustainability, electromobility in Europe and global demand for battery metals. Our authors also weigh prospects for toll roads and wind farms in Latin America and LNG in Asia. We explore public-private partnerships for new infrastructure in the Middle East and for district energy at Midwestern universities. And we delve into the hot topic of whether the impacts of COVID-19 constitute force majeure events or an excuse for contractual non-performance, comparing US law and English law.
Scroll down for the latest articles.
A New Dawn for the Sustainable Economy and Electromobility in Europe
By John Dewar and Suzanne Szczetnikowicz
A shift towards low emission mobility has been an area of particular focus and investment for governments, local authorities and industries alike. The key elements for encouraging this shift include improving the efficiency of the transport system, facilitating the shift towards low-emission, alternative energy for transport, and encouraging the uptake of zero-emission vehicles.
Northvolt was established back in 2016 with “the mission to build the world's greenest battery to enable the European transition to renewable energy.” Led by former senior executives from Tesla and TODA-BASF, Northvolt closed its initial funding round of[C1] $12M in January of the following year, and in October announced the construction of its gigafactory, Northvolt Ett, in Skellefteå, Sweden alongside a demonstration factory and research facility, Northvolt Labs.
New University Partnerships for Energy and Water – “Earning Some Green” by Going Green
By Allan Marks
In the face of shrinking state financial support, aging infrastructure, and projected declines in enrolment, universities are turning to public-private partnerships (P3s) and trying creative ways to unlock the value embedded in their existing utility systems and enlisting private partners to make their physical operations and energy use more sustainable and efficient.
One recent manifestation of this P3 trend, which is modelled after the P3 partnerships successfully implemented by the University of Iowa and The Ohio State University, is the University of Idaho’s concession with a private company to take over the university’s centralized district energy system. The new concession shows how budget-strapped universities and colleges can optimize critical utility systems and access significant funds without incurring new debt or losing control of capital improvement programs.
Colombia’s Infrastructure Program a Model for LatAm
By Carolina Walther-Meade and Jaime Ramirez
Colombia has attracted diverse sources of private capital for its 4G toll road program and is now forging ahead with its new 5G transportation infrastructure program. Milbank has served as international counsel to either the borrower or the financing sources in nearly half of the 4G concessions that have closed so far. Colombia’s program is a model of success for the region.
The Renewable Energy Sector Fights for Survival in Mexico
By Miguel Duran
Regulatory activity has intensified throughout 2020, leading to an avalanche of legal challenges brought by affected industry participants, as well as by NGOs troubled by the effects of Mexico’s energy policies on the environment.
Although the renewable energy sector has so far been able to prevent an immediate direct impact from these regulatory actions, there is no clear end in sight.
Energy and Infrastructure Market Trends and Outlook
By John Dewar, Munib Hussain, Bader Thabti and Tom Rhys Jones
The COVID-19 pandemic and the current depressed state of oil prices has accelerated the momentum of the Middle East’s ongoing energy transition and increased the region’s focus on attracting infrastructure investments. In the run-up to 2025, the region could potentially invest US$180B in renewable energy and the wider energy transition and add up to 57GW of solar and wind capacity. These developments occur alongside increased grid integration, the advent of robotics and artificial intelligence as key elements of the region’s new “smart cities,” the development of green hydrogen, and the development of battery storage projects.
Saudi Vision 2030: Privatization Processes and Successes
By John Dewar, Olivia Anderson and Adam Chang
In 2016, the Kingdom of Saudi Arabia’s (KSA) Crown Prince announced a new strategic roadmap for KSA’s economic, social, and structural transformation, “Vision 2030,” which set in motion a large-scale privatization programme of state-owned-assets. The KSA’s Vision of privatization will have momentous legal implications—from the development of a legal and regulatory basis for privatization transactions to the establishment of new mechanisms that protect both the interests of government and the autonomy of private entities.
The Growth Story for LNG in Asia
By James Orme and Rob Thompson
Liquified natural gas (LNG) is increasingly considered as a key fuel source for power generation. Notwithstanding the COVID-19 pandemic, governments are promoting significant projects for the import and consumption of LNG, and LNG producers and financiers are looking to take advantage of new markets in fast-growing Asian economies.
Multiple factors driving this demand include government commitments to add power generation capacity to meet forecasted growth, and a broad public, economic and political support to drive investment toward renewable or cleaner energy sources.
Sustainability Q&A
By Allan Marks
Sustainability has been a critical focus for companies and investors alike, especially in the wake of the pandemic. Sustainable funds or other investment vehicles that market an awareness of environmental, social and corporate governance (ESG) issues have experienced record inflows of capital in 2020. This trend is notable against the backdrop of the global recession and market volatility.
In the longer run, investments in companies and products that are sustainable may be both more resilient and more successful in attracting risk capital. There is increased pressure on companies to reduce their financial losses, however, it is expected that investors and consumers will reward companies that commit to sustainability in the years to come.
Battery Metals Energize the Mining Sector, Fueling Resiliency
By Alexander Borisoff and Séverine Losembe
Although the shutdown of the world’s economies at the end of the first quarter had an immediate impact on the mining sector, most metal prices have since returned to pre-pandemic levels and some have risen to to their highest levels in more than two years. The outlook is equally optimistic for the battery metals market, which is driven by the demand for batteries in electric vehicles (EV), energy storage and electronic devices.
There are predictions that traditional renewable energy investors will seek to diversify their portfolios to include battery metals, which will ultimately be used in renewable projects. This shift has already begun, with private equity funds and institutional investors that are not typically focused on the mining industry increasingly seeking opportunities in battery metal projects by way of royalty or stream investments.
COVID-19, Force Majeure and the Impossibility of Performance: US and UK Perspectives
By Tom Canning, Jacqueline Chan, William Charles, Aled Davies, Allan Marks, Daniel Perry, Jed Schwartz, Nicholas Smith, Justen Fleming, Brenton Culpepper, Dan Hooks, Vasiliki Katsarou and Joseph Richmond
In managing the volatility caused by the COVID-19 pandemic, industries grapple with complex challenges, from manufacturing shutdowns, interrupted supply chains and quarantines, to dislocated labor markets and restrictions on trade and movement, including the practical shutdown, or near shutdown, of substantial portions of the world economy.
Pandemic-induced economic uncertainty has led many companies, lenders and investors to seek guidance on force majeure provisions, which seek to protect parties to a contract from being held to performance obligations that they cannot fulfil due to events outside of their own control and expectation. In the context of both the United States and the United Kingdom, questions of whether COVID-19 or the governmental response to it fall within the scope of a force majeure clause depends on a variety of factors, including the events listed in a contract’s force majeure clause.
FIRESIDE CHAT: Karen Wong Reflects on Her Career as a Renewable Energy Pioneer
By Allan Marks and Karen Wong
Global Project, Energy and Infrastructure Finance partner Karen Wong, who is retiring after a distinguished career as one of the world's leading project finance lawyers, sat down with partner Allan Marks to discuss how the renewable energy sector and the practice of law has evolved, and how to deepen professional relationships both with clients and as mentors to younger lawyers.
Excerpted from a longer audio interview. Edited for content and brevity.
Renewable Energy Past and Future: The Lawyer’s Role – “Be the Change You Wish to See” – Listen to the full podcast episode with Milbank partners Allan Marks and Karen Wong
