Sustain
Companies and governments focused on delivering net zero are increasing their investment in cities to make them more sustainable, and more adaptable to technologies of the future. There are three drivers that underpin the energy transition:
Digitalization
Innovations in storage and digitization are opening up new ways to mass deploy renewables, while the convergence of smart energy networks and digital solutions better allow for controlling energy demand and trade. This is also opening up new business models like ‘energy as- a-service’.
Decentralization
New energy sources are becoming cost competitive and distributed, and community-based energy models are gaining ground. Increased off-grid resources, such as rooftop solar photovoltaics, electric vehicles, battery storage and energy centers (e.g. onsite CHP) as well as the greater use of district / communal heating and cooling networks will lead us to a more decentralized energy future. Increasing grid constraints, large amounts of intermittent generation on the system, improving battery technologies, and lower costs have also created the right conditions for energy storage to play a key role in global energy markets.
Decarbonization
Renewables are at the center of the global energy transition and are now the fastest growing energy source. Renewables are cost competitive with fossil-fuel-sources of power in most markets. Smart, sustainable cities need to run on renewable power in order to attract investment from companies needing to reduce their scope 1 and 2 emissions and meet other ESG goals and regulatory requirements.
Purchasers and tenants of future spaces in cities will be ever more diligent and discerning around the carbon footprint and energy intensity of running their households or business premises, but also energy independence, security and cost. Having a reliable, low carbon, cost effective, local energy source that could be provided by an energy center, a local generation/storage or local energy network will be very attractive. Some businesses will also value the compatibility with their wider clean energy procurement strategy, such as corporate sleeved or virtual Power Purchase Agreements (PPAs). Regulators, planners, investors, insurers, and a host of other stakeholders will share these concerns and we expect to see them increasingly translate these into firmer requirements. The cities and buildings of the future best be ready.
Future-proofing
Stakeholders would be well advised to horizon-scan for legal updates which may require the uptake of clean, decentralized energy sources or distribution networks that differ to those originally planned for use in their projects. Introducing clean energy sources or networks in a project early, clearly articulating who bears responsibility for this should the need arise in future, and reserving some flexibility in the physical and legal environment, may place stakeholders a step ahead in managing their projects by avoiding or reducing any prohibitive costs needed to bring their project in line with changing laws that look to reduce carbon emissions and reach net-zero targets.
The Netherlands
By 2030, the Dutch government plans to draw 27% of the Netherlands’ energy from renewable sources. By 2050, it plans to achieve zero carbon emissions.
These are highly ambitious targets. However, the Netherlands has the public will and the policies to deliver them. Investors and developers can benefit from a generous nationwide subsidy scheme, good infrastructure and a positive business climate. And we are seeing the fruits of this environment with work on a variety of sustainable sources of energy:
Hydrogen
Dutch industry is working on a range of projects aimed at realizing the potential role this gas (the most abundant chemical in the universe) can play in the energy transition;
Wind Energy
Both off shore and on shore, will also play a key role in this energy revolution. The North Sea is a good home for wind turbines because of its relatively shallow waters, favorable wind climate, good ports and concentration of industrial energy consumers;
Solar
Solar is increasingly important and is a fast growing market, with the scale and number of projects growing;
Biomass
The nationwide subsidy scheme is still open to biomass developers, though the cancellation of the national nitrogen policy and ongoing debate about biomass has added some uncertainty. The nationwide subsidy scheme has been extended to more energy categories, including carbon capture storage.
The Netherlands is a tightly packed and densely populated country and finding usable land presents a number of issues. In rural areas, resistance to agricultural land being used for large scale energy developments; demands from residents and other stakeholders to share in revenue generated from solar parks; authorities trying to enforce financial participation on third parties in solar projects, through spatial planning or specific policies; and lack of sufficient suitable grid capacity in several parts of the Netherlands.
Making solar park or energy projects mixed use schemes and integrating them into the landscape are useful options to help overcome many of these obstacles. Indeed, for data centers, integrating their design into the landscape has become a key stone for their successful and timely development.
Given the Netherlands’ ambition for zero carbon by 2050, there are huge opportunities for anyone considering the investment and delivery of energy projects in the Netherlands. As multiple authorities are likely to be involved, consultation and working with all the relevant authorities right from the start on will be key to a successful development.
The US
While there’s no unified federal policy in the United States promoting clean energy and sustainable development, federal laws promote investment in clean and renewable energy technologies through multiple tax incentives and loan guaranty programs. This has led to 31 states now having either mandatory or voluntary renewable energy standards.
Individual cities often have their own sustainability policies driving investment in renewables and sustainable infrastructure. In particular, prioritizing distributed and utility scale clean energy projects, including solar, wind (onshore and offshore), battery energy storage and alternative fuels with an estimated market value of $64 billion.
The subsequent adoption of sustainable and clean energy technologies has led to the development of onsite renewable energy facilities and large-scale renewable energy procurements aimed at offsetting energy use over multiple aggregated sites across the country. These renewable energy procurements include traditional physical power purchase agreements as well as financially-settled hedges (known as contracts for differences or fixed-for-floating swaps). We also guide companies in purchases of renewable energy credits and carbon offsets to green their operations in the US and abroad.
Community solar is advanced by policies in 22 states and the District of Columbia. Rooftop and co-located solar installations for residential and commercial purposes, whether for behind-the-meter consumption or net metered usage, have been a steady trend in the US markets. Data centers, manufacturers, real estate developers and national retail outlets are actively engaged in the negotiation of energy purchases, site leases and other agreements to facilitate these arrangements.
Clean energy and sustainable development projects in the US benefit from varied federal, state and local policies and initiatives and are similarly subject to myriad federal, state and local requirements. Having advisors experienced in navigating the diverse legal and commercial considerations driving these projects is key to their success.
Our practice
Our corporate renewables practice has advised on more than 70GW of renewable energy projects globally and more than 2.5GW of generating capacity in the US in the last 12 months. We represent the developers of both distributed and utility-scale clean energy projects, including solar, wind (onshore and offshore), battery energy storage and alternative fuels, as well as investments by private equity and traditional lending institutions.
