International Arbitration of Renewable Energy Disputes

Decarbonisation of the energy industry is critical to achieving the deep and necessary cuts to emissions required to achieve the Paris Agreement climate change goals. However, the industry must balance increasing energy demand with the need to achieve sustainability of energy supply, the importance of which has recently been accentuated by disruption to supply chains caused by the Covid-19 pandemic and the Russia-Ukraine war. Traditional dependence on fossil-fuels will need to be replaced with new technologies that generate electricity in a low, or even no, carbon way. Renewable energy sources are central to the transition. The increase in renewable energy capacity globally and the complex and relatively untested nature of various renewable energy technologies and the contracts underlying the projects pursuant to which they are being developed, installed and operated, give rise to a wide range of potential disputes. International arbitration has long been the preferred dispute resolution forum for the energy sector and is well placed to be the preferred process for resolving the many and varied disputes that can arise in the lifetime of a renewables project. The second edition of this Special Report considers: the defining characteristics of renewables projects; the scope for disputes to arise in the implementation of these projects, including an expanded discussion of the particular elements of renewable energy projects that give rise to disputes between investors and states and commercial parties and a new explanation of some of the common contractual protections that can be used to address disputes risk; the suitability of arbitration to resolve these disputes, the key considerations for parties negotiating arbitration agreements, and how the arbitral procedure might be adapted to resolve disputes in the most efficient and effective way; and possible trends as regards future renewable energy disputes, including as a consequence of the recent spate of EU Member State withdrawals from the Energy Charter Treaty, and as the effects of various geopolitical events including the Russia-Ukraine war continue to be felt. Written for both a legal and non-legal audience, this Special Report is relevant to those interested in learning about the scope for disputes in the renewables sector, how they can be avoided, and how arbitration can best be deployed to prevent delay, resolve disputes which might otherwise jeopardise project completion and operation and help push the energy transition forward.