{"id":281838,"date":"2024-05-24T17:53:47","date_gmt":"2024-05-24T15:53:47","guid":{"rendered":"https:\/\/dailyjus.com\/?p=281838"},"modified":"2024-05-22T17:53:58","modified_gmt":"2024-05-22T15:53:58","slug":"reasonable-return-framework-for-res-in-the-current-context","status":"publish","type":"post","link":"https:\/\/dailyjus.com\/index.php\/2024\/05\/24\/reasonable-return-framework-for-res-in-the-current-context\/","title":{"rendered":"Reasonable Return Framework for RES in the Current Context"},"content":{"rendered":"\n
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This article was featured in our 2023 Energy Arbitration Report, which is part of a series of industry-focused arbitration reports<\/strong><\/a> edited by Jus Connect<\/a><\/strong> and Jus Mundi<\/strong><\/a>.<\/strong> <\/p>\n\n\n\n

This issue explores the energy industry, encompassing information on electricity & renewables, based on data available on Jus Mundi<\/a> and Jus Connect <\/a>as of September 2023<\/strong>. Discover updated insights into energy arbitration and exclusive statistics & rankings, as well as in-depth global and regional perspectives on energy projects, disputes, & arbitration from leading lawyers, arbitrators, experts, arbitral institutions, and in-house counsel. <\/p>\n\n\n\n

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THE AUTHORS:<\/strong>
Richard Caldwell<\/strong><\/a>, Principal & Practice Leader: International Arbitration at The Brattle Group<\/a><\/strong>
Dr. Fernando Ba\u00f1ez<\/strong>, Associate at The Brattle Group<\/a><\/strong><\/p>\n\n\n\n

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In the last 10 years, many investor-State arbitrations have involved renewable energy sources (RES) \u2013 including claims brought under the Energy Charter Treaty<\/a> (ECT)<\/a> and various bilateral investment treaties related to regulatory changes in countries such as Spain<\/a>, Italy<\/a>, the Czech Republic<\/a>, Romania<\/a>, Japan<\/a>, and Bulgaria<\/a>. These arbitrations typically concern reductions in the financial incentives provided to promote RES investments that would otherwise not have been viable, raising issues around a sovereign State\u2019s right to regulate. The at-issue regulatory measures commonly commenced in the early 2010s, in the aftermath of the 2008 Financial Crisis and Great Recession.<\/p>\n\n\n\n

This series of RES arbitrations has seen a variety of outcomes, including substantial financial awards to investors. For example, between 2018 and 2020, three different ICSID tribunals awarded more than \u20ac290 million in damages to Nextera Energy<\/a>, \u20ac112 to Antin<\/a>, and \u20ac77 million to Watkins <\/a> Holdings S.\u00e0.r.l. and others<\/a>.<\/p>\n\n\n\n

Several awards have found particular regulatory changes to be incompatible with the ECT (e.g<\/em>., Antin v. Kingdom of Spain<\/a> award; the Watkins <\/a>\u00a0Holdings Sarl and others v Kingdom of Spain<\/a> award; or the Masdar Solar <\/a>\u00a0& Win Cooperatief UA v Kingdom of Spain<\/a> award). Others have permitted sovereign states to alter financial support to RES as long as investors were able to earn a reasonable return (e.g.<\/em>, Nextera Energy Global Holdings BV and Nextera Energy Spain Holdings BV v Kingdom of Spain<\/a> award; the RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.\u00e0.r.l. v. Kingdom of Spain<\/a> award \u2013 \u201cRREEF Award\u201d; or the PV Investors v. The Kingdom of Spain<\/a> award \u2013 \u201cPV Investors Award\u201d).<\/p>\n\n\n\n

Energy markets have once again seen regulatory measures, raising the related concerns about the ability of RES investors to earn reasonable returns. We identify four recent market developments:<\/p>\n\n\n\n