COVID-19 Legal Update - Energy and Renewables Sector

09 April 2020

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The renewables sector is feeling the impact as COVID-19 begins to cause huge global disruption to supply chains. The renewables sector is heavily reliant on global supply chains for raw materials and components, as well as an available workforce to physically build, operate and maintain the power plants and sites.

The Minister for the Economy, Diane Dodds, extended special thanks to workers and employers in the energy sector, describing them as “part of the unseen frontline” of the coronavirus crisis.Although as yet we have no definitive list of “essential businesses”, there is little doubt that the energy generation sector will be on that list (if and when it materialises). It is worth remembering that on 24 March following school closures, the Department for Education included on its “key worker” list (for the purposes of still being able to send the children of key workers to school) worker in the utilities sector “for oil, gas, electricity and water (including sewage) and primary industry supplies to continue.”

The Utility Regulator of Northern Ireland (UREGNI) reinforced this “key worker” concept for those working in the energy sector in a letter to licence holders published on 16 April. It is the regulator’s view that the coronavirus job retention scheme was not intended to include the energy sector and is only intended for companies “severely affected” by the COVID-19 pandemic, “rather than those who have had to scale back certain activities and are seeking to cover the costs of those employees”.In the UREGNI’s view, if employers in the sector wish to furlough staff, they must keep clear records of their rationale, and should be aware that the UREGNI will take the fact of furlough into consideration in the discharge of its regulatory functions. You can read the regulator’s letter in full here.

The position remains therefore, that the energy sector, its businesses and a great proportion of its workforce will be required to work throughout this crisis, in what will be increasingly challenging circumstances. Those businesses will of course have to give regard to the government guidance on social-distancing and take all steps reasonably practicable to protect the health and safety of its workers.For specific legal advice on any of these matters, please contact our employment or health and safety teams.

We have prepared a concise Legal Update on how force majeure and frustration applies to the COVID-19 pandemic, and highlights other contractual hints and tips that both customers and suppliers should be aware of. You can find this article in our COVID-19 Legal Update hub alongside other topical updates.

Renewables is also a sector packed with tight contractual deadlines and liquidated damages for delay. Customers and suppliers are keen to understand their liabilities under their contracts should COVID-19 cause delay, and to work collaboratively to find solutions. Contractual provisions relating to Material Adverse Change, force majeure, cross-default, non-payment, liquidated damages and financial covenants come under scrutiny.

As yet there are no local or national measures designed to specifically assist the renewable energy sector, the National Government and local executive have provided a package of measures to support all types of businesses that have suffered disruption due to COVID-19 including; business support grant schemes of £10K and £25K respectively, interruption loan schemes, rates support, deferring income tax payments and deferring VAT payments. The Minister for Economy announced on 2 April 2020 that since the Small Business Grant Scheme went live on 27th March 2020, over £100 million has been paid out to small businesses across Northern Ireland and a further £170m in grants to be paid out to eligible businesses in the coming days. For further guidance on the support schemes available, please visit our COVID-19 Legal Update hub.

We remain committed and ready to assist businesses during these unprecedented times and would encourage that you get in touch with one of our COVID-19 team members or your usual Carson McDowell contact with any concerns or queries.

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