Renewable Energy and the rise of Commercial Disputes

Sheroze Nadeem
Sheroze Nadeem

Published: January 18th, 2023

7 min read

As we have all seen in recent years, there is a level of uncertainty across all industries and some industries are inevitably more impacted than others including those involved with manufacturing or shipping. We have all seen issues impacting us both in our personal and professional lives. With the influx of fuel pricing throughout the pandemic, and more recently because of the war in Ukraine, we have noted that this has once again triggered energy and fuel prices for all.

Many industries are actively moving towards renewable energy resources in a bid to reduce their carbon footprint, as well as a more cost-efficient method in the long run without the need to be reliant upon what has transpired to be an unstable market, due to global issues beyond their control.

Like any other industry, this area is equally risky with disputes in relation to renewables projects likely to arise from technology used. These projects involve the introduction of either entirely new technology, or pre-existing technology which is assembled or used in a new or more challenging operating environment. The risk of failure in such circumstances is evidently higher than in those projects where well-established technologies are used in 'tried and tested' operating environments. Renewables projects also suffer the same problems that have long affected 'traditional' construction and engineering projects, including problems with foundational works. The pace of technological change in the sector, driven by pressure to build new projects and have them operational as soon as possible, means that there is often less time for anticipating or 'ironing out' of these problems and therefore, it is crucial to understand your position as early as possible.

The very nature of disputes that typically arise on renewables projects is like that on more 'traditional' construction and engineering projects, these include disputes about delay, variations, defects, and performance shortfalls. However, the renewables sector does not have the same level of trade practice, legal authority, precedents, and standardised contracts that other sectors do at this stage. Whilst this may lead to the avoidance and resolution of these disputes to be slightly more difficult, our Construction Litigation team can advise on the matters clearly, in a jargon free manner, informing you of common practice, commercial factors and the legalities.

Construction clients and developers alike should act now to mitigate dispute risk which could otherwise result in significant delay, costs escalation, or damage to ongoing commercial relationships and revenue losses. From the outset, this involves providing detailed thought to the challenges posed by the project and our team can assist by reviewing the environment in which the project is being delivered and reviewing the contract(s) accordingly. It is crucial that parties include in their contractual relationship a valid, effective, and fit for purpose dispute resolution provision, so that disputes can be resolved efficiently and cost-effectively if they do arise.

Early legal input from our Commercial litigation team who have already seen how disputes can 'play out' on these types of projects, will clearly be vital.

For further information please contact Sheroze Nadeem

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