Insurance for renewable energy businesses can be complex. Our Renewable Energy Insurance specialists can help businesses navigate this ever-changing industry.
There are a number of important legal considerations to take when planning a renewable energy project, some of them present situations which can be insured via a legal Indemnity insurance policy. Recently, the team provided insurance programmes to give protection to two large projects. The case studies below examine some of the common issues on such projects, and how insurance can help provide solutions.
Case Study One - Battery Storage Site – UK
Battery storage will be an important area of growth for the UK energy sector, allowing unpredictable renewable energy to be stored to even out erratic supply. The UK has recently passed legislation allowing for the passage of large-scale schemes without referral through the Nationally Significant Infrastructure Project (NSIP) process. Q2 2021 saw a record breaking 3.7GW across 60 sites submitted to planning, mostly large-scale sites. The site in this case study was one such large site, pre-planning and subject to numerous risks.
Many sites are built on agricultural land. These can be old manorial title or ex-church land. A common claim on housing developments and wind farms, is that the foundations ‘trespasses’ into the mines and minerals which were usually reserved to these parties. This can entitle the claimant to 33% of the developer’s profit. This risk was recently underscored by the decision in ARC Aggregates Ltd v Branston Properties Ltd 
- Lack of rights/Access
Given the location of these sites, boundaries are inherently uncertain. Often sites use small unadopted roads with no known owner, or there are gaps between the title and adopted highway
- Historic rights
Sites are often sold out of large agricultural titles. These are often burdened by historic rights with no clear plans as to what part of the title is subject to them. A developer could spend time and money planning a site to find it cannot be built due to existing rights
- Judicial Review
Renewable energy projects can attract numerous objections, even on environmental grounds if it is felt they are disturbing animal habitat. A common recourse is a judicial review which can delay project and force resubmission of planning.
Important Points for Insurance
For this project, delivery was key, so it was important to ensure delay costs were included. In the event an injunction was granted, contracts would have to be renegotiated so an extra head of loss was created to deal with this point. Understanding the whole picture was crucial as, whilst the property has some value, most of the loss is profit based, so a standard policy would not have covered the requirements.
Taking into account all the associated risks, the final policy allowed the developer to proceed with confidence that they were financially insulated from these risks.
Case Study Two - Cabling risks – UK
With offshore windfarms coming to the fore again, ensuring the power they generate can make the grid can be a tricky process.
This project had a cable route which crossed multiple titles and was subject to numerous issues on each title. This policy has similar applications for telecommunications, gas/oil pipe and general energy infrastructure.
- Gaps in Title
The cable was due to pass through over 20 titles, but these titles often didn’t abut each other, which is common in agricultural titles. These were often hedges, streams or simply areas where the boundaries were poorly drawn. However, there is the risk an unknown third party owns the unregistered land. They could come forward during the works and prevent the cable at a crucial point, causing huge disruption, or potentially rendering the project unviable
- Historic Rights
Sites are often sold out of large agricultural titles. These are often burdened by historic rights with no clear plans as to what part of the title is subject to them. The cable crossed land with rights for others to lay cables. Interference with these rights could end up with the project suffering an injunction at court if it damaged the third party right sufficiently
- Third Party Claims
There are a myriad of third party rights which the cable could interfere with. Minerals, manorial, sporting rights, turbury rights, competing title claims and family disputes. Coverage was required for unknown rights due to the poor availability of information regarding the often unregistered land the cable would cross
Important Points for Insurance
We were able to ascertain that loss had no real diminution in property value, so a standard legal indemnity policy would not deal with the client’s concerns, and that the policy had to be designed to cover the various relocation costs of the cable.The final loss had to be the project value in the event the cable could not be located and the project had to be abandoned. Having considered the risks, we were able to provide a policy allowing the developer and its funder to proceed without worrying their capital could be lost, particularly to matters their lawyers would have been unable to assess
PIB Insurance Brokers has a large Legal Indemnity team who are skilled and have many years of experience, working closely with PIB’s Renewable Energy Practice, Construction team and Environmental Impairment Specialists.Together providing a seamless one stop solution for all pre-construction, construction and operational insurance requirements for renewable energy projects.
24.02.2022 - PIB0158