Thu, Oct 20, 2022

Ireland’s Growing Solar Energy Sector: Counterparty Due Diligence can Minimize Risk and Optimize Returns

This article was co-authored by Conall Bolger of the Irish Solar Energy Association (ISEA) and Tom Laub, a Manager in Kroll’s Compliance, Risk and Diligence division.

The Irish solar industry is at an inflection point and 2022 has seen several developments that point to a marked acceleration of the industry throughout this decade.

The Irish government has more than doubled its 2030 solar target from a range of 1.5GW-2.5GW to 5.5GW. 1.5GW of solar cleared in the utility scale auctions under the Renewable Electricity Support Scheme, which was more than three quarters of the capacity awarded in that auction. In addition, residential customers can now be compensated for solar electricity that they generate themselves and export to the national grid.

In addition to the policy drivers, the market has experienced energy security challenges and there is a strong impetus to scale up the volume of domestically produced renewable energy. Ireland has amongst the highest power prices in Europe which means strong savings for residential and commercial renewable self-consumers.

Many companies are reviewing their options for building up a position in the market. Ireland has seen investor interest not only from more established European players, but also from a variety of markets across the world.

With these increased growth opportunities, the market for Irish solar transactions has been a lively one. The renewables growth trajectory for Ireland has seen a variety of international companies entering the market, ranging from large scale utilities to asset management firms and specialist players across the energy value chain.

With a proliferation of potential investors, there is value in undertaking careful due diligence of counter parties in a transaction. For an international investor acquiring an asset, it can be important to know what it is you are getting. For a domestic player, mechanisms to manage counterparty risk are helpful.

Ireland operates a business-friendly regime for international investors. To uphold this reputation, it is important that transactions follow best practice principles. The old contract law principle is caveat emptor (buyer beware), so finding cost effective ways to help mitigate that risk are always worth considering. Carrying out due diligence and compliance checks into counter parties can play a key role in reducing the risks of business disruption, regulatory issues and reputational damage to the industry. Thorough research into existing and potential investors, business partners, vendors and other counter parties could help businesses in the solar energy sector avoid any of these pitfalls.

With interest and investment in Ireland’s solar sector growing quickly, due diligence and risk mitigation will play a key role in its success and optimization.

Conall Bolger is the CEO of the Irish Solar Energy Association. He has significant markets, commercial and policy experience, having worked across the energy value chain: from community and behind the meter projects to larger scale onshore and offshore wind development. He founded, led, and developed Cornwall Insight’s Irish operations. His international renewables experience includes Poland, Canada, and the UK.

ISEA was established in 2013 to advance a policy and regulatory landscape promoting solar as a leading renewable energy technology that will decarbonize Ireland's electricity system and contribute to a successful and strong clean economy.

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