Many Caribbean countries have some of the highest energy costs in the world. This is despite the fact that these countries are best positioned to become 100% renewable. In this article, we discuss how entrepreneurs can use renewable energy law strategies to make this a reality. With the implementation of a fully renewable electricity grid, citizens could potentially lower their electric costs as well as the countries could minimize their carbon footprint.
Types of Renewable Energy for the Caribbean
Sunshine, coastal winds, running tides, and rivers are pretty reliable in the Caribbean. This offers these island countries the chance to harness solar, wind, and hydro energy. But that’s not all because renewable energy benefits also include:
- Economic development and job creation in the areas of manufacturing and installing solar panels, wind turbines, and hydro turbines,
- Minimizing the dependence on imported fuels,
- Reducing air pollution, and
- Creating a renewable energy law governance structure.
Financing Caribbean Renewable Energy Projects
I understand you’re probably wondering where the money to finance these renewable energy projects is going to come from. All good ideas need funding. Well, there are a few places the money can come from in both the private and governmental sectors.
The 5 Most Overlooked Step in Energy Law Funding
In the private sector, as strange as it might sound, having a ton of your own money is not as important as you may think. Hear me out, the most important factor in raising money is having a strong and experienced team. This is often the most difficult task to accomplish, however. Once you have an experienced renewable energy team in law, finance, and construction, then banks will certainly welcome your meetings.
The team will have the ability to be taken seriously and:
- Have a feasibility study for the renewable energy project 100% financed by international agencies such as the U.S. Trade and Development Agency,
- Hire a Mandatory Lead Arranger (MLA) to find funding from a syndicate of banks, and
- Have professionals such as lawyers and accountants delay their fees until the project is completed,
- Create a Special Purpose Vehicle, and
- Have the proper contracts in place
Once the feasibility study is completed, the study will show that the renewable energy project is possible and safe to build. Then the MLA can use the feasibility study to raise funding from both private banks as well as government entities such as the USAID, World Bank, and more. It is important to have a sound legal strategy and the correct contracts to finance, build, and operate this project.
The Best Renewable Energy Law Strategy you need to create an Energy Project
When a large-scale project is built, a legal entity called the Special Purpose Entity (SPV) will own the energy project. The SPV is responsible for holding the funds to build the project; constructing the solar, wind, or hydro project; and operating the project once it is completed.
All parties sign a contract with the SPV. These contracts include:
- Equity Agreements for the shareholders of the project;
- Financial Agreements,
- Construction Agreements,
- Operating Agreement,
- Supplies Agreement,
- Concession Agreement,
- Power Purchase Agreement, and potentially many more.
As the world continues to move toward renewable energy, the Caribbean can lead the way. With some of the world’s highest energy costs, transitioning to renewable energy can provide incredible cost savings for the island nations. With strong teamwork, proper financing, and a sound legal strategy, this can be accomplished and bring tremendous and transformative benefits.
For more Caribbean related legal education, please visit our Americas section.