pegasus legal pty ltd - queensland€¦ · pegasus legal – who we are pegasus legal pty ltd is a...

Pegasus Legal Pty Ltd

Level 11, 65 York Street, Sydney NSW 2000

Level 19, Waterfront Place, 1 Eagle St, Brisbane QLD 4000

www.pegasus-legal.com

ABN 65 165 925 324

SYDNEY | BRISBANE

Hon Dr Steven Miles MP

Minister for Environment and Heritage Protection

and the Great Barrier Reef

via Office of Climate Change

Department of Environment and Heritage Protection

Sent via email only: [email protected]

1 September 2016

Dear Minister Miles

Submission on discussion paper: Advancing Climate Action in Queensland

Thank you very much for instigating a debate on Advancing Climate Action in Queensland. It is very

timely: not only because of the increasingly dramatic impact that climate change has around the

world and in Australia, but also because climate action presents a great opportunity – now and here

– to build a new and forward-looking industry in Queensland.

Pegasus Legal – who we are

Pegasus Legal Pty Ltd is a boutique legal practice serving discerning clients in the energy and

infrastructure sectors out of its Brisbane and Sydney offices. In Brisbane, the undersigned, Director

Gerald Arends, focuses exclusively on advising the renewable energy industry in Australia and

overseas.

Gerald Arends is an industry leader in the renewable energy sector within a particular focus in the

utility-scale and commercial-scale solar industries. He has worked in the solar industry for nearly

10 years, both within the industry and as a practising lawyer. He worked on projects in more than

20 countries, most recently in Australia, Japan, the Philippines, Thailand and South Africa.

Gerald also teaches Renewable Energy law within the LL.M. programme at the University of

Queensland.

The attached experience statements give an indication of the breadth and depth of experience

available within Pegasus Legal.

Pegasus Legal supports a number of community organisations (including Community Solar Sunshine

Coast, Energetic Communities, Clenergy TeamArrow and CLEAN Cowra).

Pegasus Legal – why this submission is important to us

We have seen the development cycle of renewable energy industries in many countries around the

world. Mostly driven by subsidies such a feed-in tariffs, renewable obligation certificates,

government power purchase agreements and RECs, the industries go through short and inefficient

boom and painful bust cycles.

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mailto:[email protected]





ABN 65 165 925 324

SYDNEY | BRISBANE

Pegasus Legal believes that the challenge and opportunity for the Queensland government is to build

a sustainable renewable energy industry. As such, we advocate to remove subsidies for renewable

energy (which in the case of the RET is of course an issue not for the Queensland state government),

but to create a truly level playing field with conventional power generation. This will require the

removal of subsidies for conventional power generation and mining, and the honest pricing of energy

produced from fossil fuels. We also advocate that certain legal issues that plague project

development in the renewable energy be addressed by legislative reform.

Our in-depth experience is limited to renewable energy and we would therefore like to limit our

response to the discussion paper to issues relating to the renewable energy industry.

1. Creation of Level Playing Field with Fossil Fuels

1.1. We urge the Queensland government to remove direct and indirect subsidies for fossil fuel

generation. Subsidies in a broader sense include support for the construction of

infrastructure that facilitates production and transportation (pipelines, rail, ports) of fossil

fuels. While much attention has been given to the allegedly high cost of renewable energy,

insufficient accounting has been undertaken for the cost of energy produced from fossil

fuels.

1.2. We urge the Queensland government to investigate to what extent the cost of construction

of the existing distribution and transmission networks has been passed on to conventional

power generators. The NER now stipulate a “first in best dressed” principle, where new

power generators (mostly renewable energy generators) must cover the cost of network

connection and network enhancements. A detailed investigation should be undertaken to

what extent energy sold by conventional power generators contains such cost. If the cost

has not been passed on to the conventional power generators, mechanisms should be

introduced to equalise this advantage of conventional power.

1.3. We urge the Queensland government to ensure that the mining of coal and production of

other fossil fuels carries with it the life-cycle cost of coal/fuel production. It is important

that decommissioning and rehabilitation liabilities are fully and fairly accounted for and that

the producers of fossil fuels are not technically trading insolvent by virtue of

misrepresenting the true cost of decommissioning an rehabilitation.

2. Targeting the Right Sector

We urge the Queensland government to consider promoting the commercial-scale sector of

renewable energy rather than the residential and the utility-scale sector. The commercial-scale

sector promises both longevity for the industry and cost-efficiency.

2.1. The residential sector of renewable energy (solar, batteries) is exposed to very high

transaction costs in deployment and can attract claims of providing regressive forms of

taxation.

2.2. The utility-scale sector of renewable energy will only create a limited number of projects,

but not a sustained industry. The Queensland electricity market is too small to provide a

large number of opportunities for utility-scale deployment without immediately distorting

the NEM prices that it ultimately relies on.

2.3. The commercial-scale sector of renewable energy (solar, battery, CHP, trigen etc.) offers

an opportunity to harness the modularity of many renewable energy technologies and their






ABN 65 165 925 324

SYDNEY | BRISBANE

embedded deployment near the point of use. Commercial-scale applications should also

have, based on the installed capacity, a lower transaction cost than residential installations.

Given the modularity of many renewable energy technologies, there is only a limited benefit

of economies of scale for utility-scale solar when compared with commercial-scale

installations.

3. Specific Legislative Support

Commercial-scale and utility-scale renewable energy installations are frequently third-party

funded. Third-party funding requires a legal set-up that allows the third-party funder certainty

of the viability of the project (mostly the site) and that it may earn revenue over a period

sufficiently long to allow it to recover its capital investment and earn an acceptable rate of return.

The proposals for legislative reform address primarily the legal environment for third-party

funded projects.

Renewable energy installations that are owned and financed by a party should ideally be secured

with a site lease (assuming that freehold is not available). A properly registered site lease with

first priority will ensure that a mortgagee’s power of sale will always have to be exercised subject

to the site lease. The creation of the site lease faces significant hurdles and cost such as the

production of a survey plan. The registration with first ranking priority (ahead of any mortgage)

requires the unlikely cooperation of the lenders of the building owner. In consequence, many

renewable energy installations rely on access licences only.

3.1. We urge the Queensland government to promote legislation that allows site leases for

renewable energy installations to be an overriding interest over mortgages and other

interests affecting a property. This would require an amendment to section 66 of the Land

Title Act 1994 (Qld). While this might seem radical at first, we would note that restrictions

on the use of property are common in planning schemes and a number of local government

bodies around the world now mandate rooftop solar installations and/or green roofs to put

otherwise under-utilised space to a better societal use.

3.2. We urge the Queensland government to promote legislation that clarifies that renewable

energy assets installed on or within premises do not form part of the building and thereby

the land (i.e. counter the principle of superficies solo cedit). This will allow third-party

owners of renewable energy assets that cannot rely on a site lease to maintain separate

ownership of those assets.

3.3. We urge the Queensland government to promote legislation that allows body corporates to

engage energy service providers for a significantly longer period of time than other services

providers. We have been involved in a property development where regulation 63 of the

Body Corporate and Community Management (Small Schemes Module) Regulation 2008

prevented the deployment of renewable energy as the maximum term of 1 year for an

(energy) service contract did not allow a sufficient recovery of investment. We appreciate

that other Modules allow for longer periods, but we believe a separate treatment for energy

services will assist.

3.4. We urge the Queensland government to promote legislation that qualifies its participation

in the National Energy Customer Framework and the application of the National Energy

Retail Law. We believe that the requirement for an individual exemption for electricity

sellers under power purchase agreements as it is contained in section 88 of the National

Energy Retail Law creates a significant administrative and compliance hurdle that is not

warranted for those sellers that have only a single customer. In particular, a number of






ABN 65 165 925 324

SYDNEY | BRISBANE

community groups are promoting schemes based on power purchase agreements and would

be well served with a simpler regulatory setup.

3.5. We urge the Queensland government to require network service providers to not prohibit

within the terms of their standard connection agreements the installation of “behind-the-

meter” generation assets. Where the “behind-the-meter” renewable energy asset is

engineered for “zero export”, the network service providers should only have a right (acting

reasonably) to approve the protection systems to be deployed.

We would be very pleased to offer the Queensland government further assistance in the development

of its policies and any legislation promoting Climate Action in Queensland.

Yours sincerely

Gerald Arends Director

Pegasus Legal Pty Ltd M: 0468 841 854 E: [email protected]


mailto:[email protected]

SOLAR


PEGASUS LEGALEnergy & Infrastructure

AUSTRALIA Advised juwi Renewable Energy on the development,

procurement and financing of a 12 MWpeak solar photovoltaic/6 MW battery storage offgrid project at the remote DeGrussa copper gold mine.

Advised Solea on the development, procurement and financing of a 7 MWpeak solar photovoltaic project at the greenfield Nova nickel mine.

Advised Kinelli on the development of the 3 MWpeak Goondiwindi solar photovoltaic project.

Advised RATCH Australia Corporation on the procurement of engineering, procurement and construction and of operation and maintenance services for the 30 MWpeak Collinsville solar PV project.

Advised BeauSol Funds Management on the project development, procurement and financing of the proposed Port Hedland 8 MWpeak solar photovoltaic/ 6 MWh diurnal shift battery project.

Advised Abengoa Solar on its participation in the ACT Large-Scale Solar Auction with a 20 MWpeak facility.

Advised Sustainable Energy Corporation on project development and template PPA terms for use in commercial-scale on-grid roof-top solar photovoltaic project.

Advised Overland Sun Farming Company on project development and land acquisition strategy across all NEM states and territories for utility-scale on-grid solar photovoltaic project.

Advised Solea on its supply of tracking subsystems to BP Solar for the proposed 12 MWpeak Greenough Solar River Farm and the proposed 140 MWpeak Moree Solar Flagship Project.

PHOTOVOLTAIC | DEGRADATION | COMPONENT WARRANTY | PERFORMANCE RATIO | BATTERY | PV MODULE | DEGRADATION | INVERTER | TRACKER | PPA | BEHIND-THE-METER

EXPERIENCE STATEMENT

POWER

Top: DeGrussa Solar Project (Australia), photo courtesy of juwi Renewable EnergyAbove: Graph provided courtesy of juwi Renewable Energy.

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PHILIPPINES Advised Equis Funds Group as lead sponsor on the

procurement of onshore construction services, offshore supply and operation and maintenance services for:

• 30 MWpeak near Ormoc City (Leyte Province); • 20 MWpeak near Currimao (Ilocos Norto Province); • 10 MWpeak near Kibawe (Bukidnon Province); and • 132 MWpeak near Cadiz City (Negros

Occidental Province).

JAPAN

Advised Nippon Renewable Energy on the procurement of engineering, procurement and construction services and of operation and maintenance services for:

• 2 x 1.2 MWpeak near Kunisaki (Oita Prefecture); • 3.5 MWpeak near Kurisu (Fukushima Prefecture);• 17 MWpeak near Sannan (Hyogo Prefecture);• 30 MWpeak near Yamada (Aomori Prefecture); and• 13 MWpeak near Kunimi (Fukushima Prefecture).

Advised Nippon Renewable Energy on the proposed acquisition of solar photovoltaic projects of:

• 8 MWpeak in the Mie Prefecture; and • 35 MWpeak in the Fukushima Prefectures.

THAILAND Advised Soleq (part of the Equis Funds Group) as lead

sponsor on the procurement of onshore construction services, offshore supply and operation and maintenance services for:

• 4 x 10 MWpeak in the Kamphangphet Province; • 2 x 10 MWpeak in the Tak Province;• 1 x 10 MWpeak in the Sukhothai Province; and • 2 x 7 MWpeak and 1 x 5 MWpeak in the Ubon

Ratchathani Province.

MALAYSIA Advised Equis Funds Group on the proposed

acquisition of construction-ready solar photovoltaic projects involving a:

• 5 MWpeak tracking ground mounted; and • 4 MWpeak roof-top facility.

QATAR Advised Solea on a consortium bid for a 10 MWpeak solar

project.


Cadiz Solar Project (Philippines), photo courtesy of Helios Solar Energy Corporation


UZBEKISTAN Advised Solea on its bid for a 100 MWpeak solar project

near Samarkand.

GERMANY Advised Solea on project development, provision of

engineering, procurement and construction services and of operation and maintenance services, corporate reorganisation and sell-off of a 6 MWpeak project in Osterhofen-Wisselsing (Germany) with an unusual 17 km MT line crossing roads, rivers and a high-speed train line.

Advised Solea on the acquisition of the project vehicle, the refinancing and the provision of engineering, procurement and construction and of operation and maintenance services for a 4 MWpeak project in Teisendorf (Germany) during the GFC.

Advised Durosol on the development of a pipeline of 25 commercial-scale solar roof-top opportunities (including a 750 kWpeak project in Griebo, 850 kWpeak project in Euper and 1.2 MWpeak in Ballenstedt).

SOUTH AFRICA Advised as part of the South African Independent

Power Purchase Programme:

• Building Energy on the 75 MWAC Kathu solar photovoltaic project;

• Momentous Energy on the 5 MWAC RustMo1 solar photovoltaic project;

• Nedbank on the 5 MWAC Swartland solar photovoltaic project;

• Exxaro on the proposed 10 MWAC Letsatsi solar photovoltaic project;

• Exxaro on the proposed 30 MWAC Lephalale solar photovoltaic projects;

• Solar Capital on the proposed 95 MWAC De Aar solar photovoltaic project.

UNITED KINGDOM Advised Solea on the provision of engineering,

procurement and construction services and of operation and maintenance services for:

• 5 MW at Thompson House Equestrian Farm near Wigan (England);

• 5 MW at Woodhouse Fields Farm near Rocester (England).







CONTACT US

Swati Johri | Director +61 (0) 468 480 874 [email protected] Level 11, 65 York St, Sydney NSW 2000

Gerald Arends | Director +61 (0) 468 841 854 [email protected] Level 19, Waterfront Pl, 1 Eagle St, Brisbane QLD 4000


ITALY Advised Solea on the acquisition of the project

vehicles, completion of project development, EPC contracting and sell-off of the German holding company to an investor during the construction phase for a batched 3.6 MWpeak project with joined MT infrastructure arrangements in southern Italy.

BULGARIA

Advised Solea on the provision of engineering, procurement and construction services and the arrangement of German export credit finance for a batched of solar projects of a total of 9 MWpeak in Bulgaria.



Some of the projects listed above were advised on by members of our team in previous employment and not in the capacity of Pegasus Legal.


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