Solar Arbitrations: A Year in Review

22 October 2019
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Key takeaways:
  • Countries are actively transitioning to a low-carbon future based on their 2015 Paris Agreement commitments, expressed in the form of Nationally Determined Contributions (“NDCs”), bringing far-reaching change to the regulatory frameworks surrounding electric energy.
  • Private investment is key to a successful transition to a low-carbon future; it is necessary for countries to meet the goals of the Paris Agreement and implement their NDC plans. Private investment seeks a stable investment environment, and investment treaties and agreements are designed to contribute to that stability. Recent arbitral awards against Spain demonstrate the tension between investment protection and countries’ rights to regulate in a fast-moving, uncertain future of systems transition.
  • For investors, careful investment structuring around investment treaties and legitimate expectations and protections offer a form of investment securitisation. The Spanish solar cases offer a body of precedent that provides the necessary roadmap for an investor’s securitisation strategy. For countries, regime design in the renewables sector requires careful consideration in order to successfully achieve electric energy transition and also to avoid expensive damages awards. The Spanish solar cases offer a body of precedent outlining the pitfalls and nature of measures to avoid in national policies and regulatory frameworks governing electric energy transition.