6 July 2021
Interview with Michał Motylewski, Managing Counsel, Dentons
This month, we sat down with Michał Motylewski, Managing Counsel at Dentons, to discuss Dentons’ role as a law firm and its experience with the wind industry.
Can you tell our readers a little about your organisation?
Dentons is the world’s largest law firm, connecting top-tier talent to the world’s challenges and opportunities with 20,000 professionals including 12,000 lawyers, in more than 200 locations, across more than 80 countries. Dentons’ polycentric and purpose-driven approach, commitment to inclusion and diversity, and award-winning client service challenge the status quo to advance client interests.
In Europe, Dentons counts as the largest law firm too, with over 2,300 lawyers, tax advisors and consultants assisting clients from 34 locations in 21 countries. In the fast-changing, capital intensive, strictly regulated and highly competitive European energy sector, Dentons lawyers guide clients through the policies and regulations of the European Union and its Member States, while also offering authoritative insight into the very different realities of operating within non-EU countries and neighbouring regions.
We work with market players all across the value chain, including the wind industry, on the development, financing and operation of onshore and offshore wind projects, with in-depth understanding of the Europe-specific subsidy schemes and opportunities based on merchant risk. Being at the forefront of market developments, we provide strategic insights into economic and regulatory game changers affecting the structuring of deals and projects our clients engage in.
My specific role in the organisation is to focus on market game changers and key regulatory drivers that will shape the industry both in the nearest future and beyond the next decade. On behalf of Dentons, I contribute to various WindEurope Working Groups.
What are the most exciting developments you have seen in the wind industry?
In the European Union, the overall economic policy towards 2050 currently rests on a number of regulatory strategies, all based on scaling-up renewable energy generation and electrification of the economy. The declared goals are ambitious, with a clear understanding that both onshore and offshore wind installations, along with PV installations provide foundations for the future energy system and market design. The success of the Fit-for-55 strategy rests on upscaling onshore and offshore generation to unprecedented levels.
WindEurope estimates that by 2025 cumulative wind capacity in Europe will reach 54 GW in offshore wind and close to 264 GW in onshore installations, up from 14 GW and 164 GW respectively in 2020. In its future market design study, ENTSO-E estimates that by 2030 in the EU alone the total installed capacity of PV installations will reach almost 500 GW and more than 300 GW in onshore and offshore wind. This is an exciting growth outlook for the whole wind industry.
However, these ambitious targets are accompanied by increasing uncertainty on how exactly they can be met. It is an unprecedented challenge to society, and to both the European and national economies. Its complexity already puts decision-makers under a great deal of strain, both in Brussels and the Member States, to deliver the underlying frameworks in a timely manner.
Therefore, it is exciting to see the increased focus on policy developments that are indispensable to support stable growth in the industry. These include overall electrification of the economy, especially industry, transportation and heating and cooling, sector coupling and an accelerated rollout of solutions allowing demand and supply of renewable energy to be managed in a sustainable manner, with evident focus on green hydrogen.
Currently, stakeholders await the publication of the European Commission’s proposal to update the overall regulatory framework, with the aim of making us all fit-for-55 by 2030. The package will include a revision of the market setup, cross-border cooperation measures, and greater integration of renewables within energy systems, finding a place for green hydrogen, reducing the administrative burden placed on new investments and promoting power purchase agreements (PPA), one of the key commercial tools contributing to deals being reached.
Dentons is engaged in assessing the proposed amendments and provides supporting feedback to WindEurope and its clients on the implications of this upcoming reform. With a very strong network of energy lawyers within Europe, Dentons is perhaps uniquely placed to advise on the complex implications of reinventing the European economy to meet the climate change challenge. Dentons’ legacy firms were pioneers in advising international clients on the largest and most complex transactions in the CEE jurisdictions during the post-Cold War emergence of their capitalist economies and further following the enlargement of the EU in the 21st century. Combined with the comprehensive involvement in the dynamic and complex environment of established western markets, this perspective is extremely useful to draw conclusions on both short-term and long-term implications of the European Green Deal.
What changes would you like to see in the wind industry?
The wind industry is well developed and I believe it is very capable of finding all the solutions required to build up its own capacity to match the increased demand for new projects and to reach the scaling up targets. Thanks to the activity of WindEurope’s Working Groups, which Dentons contributes to, the industry is well represented at the European level and captures key regulatory developments.
One of the key changes I expect to come about in a relatively short period of time is the updated organisation and duration of the permit-granting process. The Second Renewable Energy Directive (RED II) mandates EU Member States to set up single contact points to handle the administrative permitting required to build, repower and operate renewable generation facilities. The efficiency of this reform will likely vary across jurisdictions. I see a great role for the wind industry in facilitating this development by sharing best practices across regions. The Commission already proposes extending that approach to offshore wind, introducing permitting one-stop shops in a coordinated manner per sea basin. This will require increased cross-border governmental cooperation but is necessary to ensure a stable outlook for the most capital intense projects.
To aid future market development, I would advocate for greater recognition of the wind industry’s potential to engage directly in delivering new market solutions, such as hybrid technology projects, sector-coupling use cases and its capacity to drive more sophisticated digitalisation of networks and assets. This requires greater flexibility on the part of regulators and network operators, understanding that they need to admit to the markets a multitude of fit-for-purpose solutions, often different from the standardised approach those stakeholders prefer to take.
At Dentons, we meet these challenges with our clients and identify outside-the-box approaches to existing regulations. A good example would be the waiver procedure in the EU’s Network Code – Requirements for Generators, which dates back to 2016. The Code was not amended to match some of the concepts adopted in the 2019 European energy market reform and should be applied to allow for the alleviation of such deficiencies without interrupting the development of real-life projects. Regulatory authorities need to be more decisive in using the available tools to fit new market solutions within the legal framework, reducing the regulatory risk for both wind project developers and network operators, who apply the Network Codes.
Readiness to embrace these types of challenges comes with in-depth understanding of the risk factors and project drivers. I always find it most encouraging when the wind industry engages in transparent capacity building cooperation with the authorities. These exercises reduce the burden on both sides, allowing for a smoother growth of the sector. I believe this will become even more important with the rapid development of more diverse energy systems over the next decade.
Going forward, what role do you see your organisation playing in the future development of wind energy?
Dentons is recognised as a market leading advisor to the wind industry in many jurisdictions. We combine tested standards, practices and model documentation with comprehensive understanding of the business preferences and challenges the wind industry faces. This allowed us in the past to aid many market developments by sharing experience across jurisdictions, aiding clients in achieving more familiar risk profiles in transactions and mitigating market specific issues. We assist governments in developing new policies on emerging markets, such as wind auction programs.
Beyond pure project advice, I see the role of the Dentons Energy Team in providing strategic impact assessment advice and structuring ground-breaking projects that become model solutions for the industry. From complex concepts like hybrid offshore systems and their integration with regular TSO managed onshore networks and bidding zones, to instruments securing financial stability of the intense investment required to meet the 2030 and 2050 targets.
To that end, Dentons’ Brussels and Warsaw teams combined forces to provide a first-of-its-kind assessment of the financial stability clause in RED II, aiding financial institutions in shaping their risk assessment policy towards financings of wind projects benefiting from European subsidy schemes. It is a novel regulatory instrument and approach to long-term financial viability of investment in the EU energy sector. We have found that its value is not entirely recognised across the industry and I strongly encourage WindEurope Members to learn more about it.
Integration of renewable hydrogen with new and repowered wind projects will become another important area to which Dentons lawyers will contribute, demonstrating robust economic perspectives and high skills in understanding complex technical aspects characteristic of technology- and sector-coupling projects.
How has WindEurope membership benefited your organisation?
WindEurope serves as a great hub for the wind industry, allowing coordination of individual efforts and bringing together experts of different specialities. It is a key platform in Europe for identifying essential struggles of project developers, addressing regulatory and commercial challenges and aiding the wind industry in finding new opportunities and the right balance of risk in order to progress with project development, financing and ultimately operation.
I highly value the activity of WindEurope’s Working Groups. They provide thorough oversight of market developments, including monitoring the progress of the Commission’s work, which is of utmost importance for business planning in Europe. This gives the wind industry a strong stakeholder voice in the public debate on the future of Europe’s energy sector and allows Dentons lawyers to contribute most efficiently to matters of key concern to the wind industry. Seeing how future market developments will depend on sharing best practices among the different regions of Europe, and on increased cross-border and regional cooperation, I find myself well-positioned to play an active role in these events through WindEurope.
For a specialised regulatory lawyer like myself, WindEurope also provides the perfect platform for testing new concepts against real life problems, bringing legal advice closer to the business reality of the wind industry to our mutual benefit.
If we look ten years ahead, what do you hope to have achieved?
Today, a number of challenges for scaling up wind generation need addressing, which affect investors’ appetites for developing new projects and the availability of attractive financing. Regulatory stability, efficient permitting and project development frameworks, as well as predictability of revenue will remain of central importance in the business of WindEurope Members.
The EU’s current regulatory reform needs to go beyond indicative targets and guidelines in order to make the upscaling of wind generation a reality. I look forward to resolving these challenges in the near future. In ten years, I would like to lose count of the dozens of GW and projects WindEurope and Dentons will have helped bring to fruition.
For further information or queries, don’t hesitate to get in touch with Michał Motylewski at [email protected]
Make sure to also check out the 2021 edition of Dentons’ Guide to Investing in renewable energy projects in Europe.
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