Future energy

Future Energy Fireside Conversations 

 Maria 

When we talk about future Energy, this is acting for developers, investors, acquirers, those who are involved in Future Energy, by which we mean those largely involved in renewable projects, so renewable energy generation. And we've been very fortunate at TLT to have a very long standing history in the work that we do in this space going back over 28 years. 

So what this is about is acting for clients who are building renewable technology, solar, wind, EV charging infrastructure and some sort of new technologies which are coming on stream as well and supporting those clients through the entire project cycle. So once a project has its land rights planning moving, then on to that build phase, overcoming any regulatory challenges and then very much into your world, Tom, of supporting those clients in relation to investment, M&A and ultimately getting them financed and built. And the whole objective here is to get as much renewable energy onto the UK’s grid as we possibly can. Linking to the UK’s aspirations in relation to getting to net zero. 

But being at the cutting edge of what we do, understanding our clients market in the way that they do has just put us in that position of being side by side, trusted advisor and growing the team as we as we have done. 

 Tom 

Absolutely. And you mentioned the growth of the team there. 

The sector certainly has grown throughout the years, continues to grow and people will recognise from what you've been talking about already the different types of technology, the kinds of mentions of the technology in the sector generally just to even in public discourse as well as here at TLT. 

And so why do you think that at the moment that is such a focus both society wide and at TLT, this future energy sector? 

Maria ‍

It's a great question, particularly in the last decade or so there's been such an increased focus in relation to ESG. What do we mean by ESG? It’s environmental social governance. And this is about everybody playing a part in relation to doing the right thing. 

So environmental, we look at sustainability, lots of organisations, including what we're doing ourselves, just making sure that we're all trying to make that small difference.

And the, the big impact of that can be absolutely significant when we look at social factors, what we're doing in relation to communities and on our doorstep. 

And again, some great initiatives around that. 

So a lot of what we do in future energy is directly relevant to that ESG agenda. We've still got the UK's targets to hit net zero by 2050. And of course, time is time is ticking. 

In slightly closer vision, we've got Clean Power 2030, which is the Government's ambition to set out certain targets and achievements where renewable generation are absolutely at the forefront. 

But as you know, Tom, the last year has been really interesting. In our world, the biggest constraint for renewable energy has been the UK's grid. And of course what we've seen in the last year is the biggest reform that I think we've ever seen in relation to grid, which is now just putting a slightly sort of different priority and perspective on what's next for our clients.

So and maybe a maybe a question for you, Tom, that corporate M&A activity, we've got lots of projects now for clients which are at the ready to build stage. What are you now seeing in the team in relation to that investor appetite and those sort of corporate transactions? 

 Tom 

Yeah, absolutely. 

I mean the ready to build stage that you mentioned of projects, that's absolutely the most common type of projects that we in corporate see come across our desks. 

The point at which they're sold, typically you'll be sold at that stage. 

If a developer has done the kind of groundwork, got the project rights secured for that project and they're selling it, whether it's a full equity sale, part equity sale, a form of joint venture to get some capital in to really fund that construction and get that project to operational stage.

And you know, touching on market trends in that sense, investor confidence has just even in the six years that I've been working in the sector really grown and you can see that as well in terms of you get your institutional investors, typical investors. 

You'll see in the sector, we've seen other players come into the market, whether that's through power purchase, because as you mentioned, ESG that's top of the boardroom agenda. You'll see people wanting to purchase their power that they're using in their business every day from renewable sources. You're also seeing those non institutional players come into the market in an equity sense. 

And that's really demonstrating the increased confidence, not just, as I say, from institutional investors, but from players in the market generally that have this at the top of their boardroom agenda to get their hands on those projects. 

And as you'll know very well, getting your hands on projects in the sector given how much the market has increased isn't always easy. 

What’s that driven from a corporate perspective. We're seeing a lot of appetite for joint ventures. Typically, how that will work is you'll have your developer party to that joint venture, the ones that are doing the more on the ground work with the project, securing a grid connection, offer the land rights with your team, the planning permission. 

And then you'll have an investor come in who is still very much an institutional investor, knows the sector like the back of their hand, invests in these projects as their kind of ongoing business. 

But they'll be there from a capital perspective to really help inject capital into that project to develop it, as I say, from ready to build to operational through construction. 

And it's been really interesting, as I say, seeing how that kind of appetite has changed. People want to get their hands on these projects. So they're coming into the projects at an earlier stage, taking more development risk, which is something that you would have seen in your team. 

Maria

Absolutely. 

And again, just taking that a step further, how do you see sort of the next few years evolving in relation to future energy? 

Tom

Well, I think it's only going to get busier for sure. That's absolutely what we are seeing. You mentioned grid reform earlier. So hopefully that's going to from a corporate M&A investment perspective, I think that's going to provide a bit more certainty once we're through that process. 

Naturally over the last, you know 12 to 18 months as we've been going through a very large regulatory reform form process that provides some uncertainty and inevitably in M&A investment certainty is the key really for those investors. And so hopefully what we're going to be seeing with that process is more security around when you're going to be able to connect your project, more certainty around that. 

We're seeing larger projects being developed and come to market. We were discussing, you know, the larger DCO project. So that's projects that have a development consent order different to your usual planning permission. Because there's such large projects, we're seeing a lot more of those come through and be developed, which is great to see. 

Again, you know, single projects, but much larger. So there's going to be a much bigger generation capacity there, which of course you'll be seeing come through at an earlier stage on the land rights development.

Maria  

Absolutely. And you make a great point there in relation to DCOs. 

And of course, something we're really proud of over the over the past year or so is our strategic recruitment. And as you know, we recruited a team of 32 lawyers who specialised in DCOs.

It's an area where you need absolute first class market reputation, that strength, that depth, that scale of expertise. 

And of course, Tom, it's an area where both you and I, albeit at different times, started our started our careers. So I was very fortunate when I was a trainee at the firm some 28 years ago to be involved in some of those very, very early projects. So at the time renewables was very new, very niche, but got the opportunity to get involved in the financing and development of those sort of early, early wind farms. 

 Tom

It's really interesting because you mentioned, you know, being involved in some of the kind of first early stage projects at the start of your career. 

And even though my career in this sector has only been six years and it certainly wasn't niche when I started in your team that six years ago during my first seat with you, it's still a contextually in comparison now how much the sector's grown in six years. It is just amazing to see even in as I say that short kind of six year period. 

And we mentioned earlier about the, the, the topical nature of the energy sector, it's discussed a lot public discourses a lot around energy net zero, etcetera. And so you have that kind of understanding going in based on you know just general in society and politics is discussed a lot. 

But coming in and seeing that work on the ground in the real estate team, of course I went on to do my corporate future energy seat. I spent some time in commercial as well doing power purchase of renewable energy. 

So seeing the different stages of the life cycle of those projects and as you touch on being able to get into the the sector and the technical level, just from a different perspective, you know, you're not just putting the words on a paper as a lawyer. 

And really one of the reasons that our clients, our long standing clients come back to us is because what we at TLT can offer in terms of that next steps of instruction, the commercial focus, the technical expertise.