The power to protect your project

AUG 30, 2012 ‹ back to news & views

For the past decade, law firm R & R Urquhart LLP has been extensively involved in over 80 renewable energy projects across Scotland. With offices in Forres, Nairn and Inverness, the firm’s first involvement in the renewables sector came from work on the proposed wind farm at Barvas on the Isle of Lewis in 2002. Since then, the firm has seen the industry mature and diversify considerably.

The firm’s mixture of legal services including commercial, rural property, agricultural, crofting, environmental and planning law as well as capital taxation has provided a valuable platform to be able to serve estate and farming clients keen to explore the opportunities that renewables can bring to their businesses.

Colin Whittle, the firm’s senior partner commented: “A renewable energy project requires a multi-disciplinary approach of different areas of the law in order to advise clients as effectively as possible. Projects can present complex legal issues which need to be understood and resolved for the client. Although legal agreements are becoming in many ways more generic across the sector, each project will nevertheless have its own characteristics in terms of land tenure, commercial aspirations and fiscal requirements.”

Established in 1829, R & R Urquhart has had a long connection with landowning clients across the north of Scotland.

Renewable energy has presented an unprecedented opportunity for a number of its clients to diversify their estates and farms. In most cases this has been the development of on-shore wind ranging from large schemes governed by section 36 of the Electricity Act 1989 to single turbine projects. Hydro schemes have also featured in the firm’s work, and increasingly so following the introduction of the Feed In Tariff in 2010.

In addition R & R Urquhart has advised clients on biomass projects, a marine wave project, electricity transmission and wayleave issues, and is heavily involved in the development of the Whiteness site at Ardersier as a potential base for the offshore renewables industry.

Whereas the majority of wind farm and hydro contracts between landowners and developers have been in the format of an option agreement followed by a long lease, R & R Urquhart was one of the early proponents of encouraging clients to look at joint venture models as an alternative legal structure.

Recognising that long-term commercial leases could lead to adverse capital tax problems for landowners as well as potentially inefficient income streams, the firm has assisted clients in developing more tax efficient models to help protect their long term interests.

Colin noted: “It is quite understandable why the offer of a significant commercial rent from a wind farm developer might be attractive – even a lifeline – to some landowners, but structured incorrectly then the combination of income and inheritance taxes could be punitive. It is vitally important for landowning clients to recognise this risk, and increasingly we are seeing developers willing to enter into joint venture arrangements.”

Yet the development of renewables in the north of Scotland has not been without controversy. The region’s world renowned landscapes and natural heritage have often been pitted against renewable development proposals which have the potential to cause an adverse environmental impact.

In a number of cases, R & R Urquhart has been instructed by neighbouring landowners to schemes, communities, NGOs and salmon fishery boards to object to planning applications to protect their interests. The firm has represented clients in planning hearings and public inquiries, judicial reviews in the Court of Session and complaints to the European Commission.

Jamie Whittle, partner and part-time lecturer in environmental and renewable energy law at the University of Edinburgh Law School explained: “When a developer has carried out a robust Environmental Impact Assessment and has engaged with the local community and stakeholders in genuine consultation, you tend to find that a renewables project is designed in a way that is far more fitting with the land in question. In many cases we find that developers use the EIA process as a box-ticking exercise, with a scheme almost shoe-horned into a design that is incongruous. In the long run this can lead to delays in the planning system, legal challenge and cost to the developer.

“Meaningful dialogue with local communities in the Highlands requires subtlety and respect, and carried out wrongly can lead to significant resistance. These ingredients are essential if a project is to be successful and sustainable.”