Caution advised with undetected profit pools in multi-operator wind farms
Better safe than sorry
Where wind farms with multiple operators feed wind power into the distribution grid via a joint sub-station (grid connection point), the German Renewable Energy Act (EEG) stipulates that feed-in revenue must be distributed – often inappropriately and in an over-simplified manner.
In practice, this requires participating companies to agree internally on the distribution of other income and expenses and to submit to regulations on, for example, how to deal with system failures.
Where pooling agreements of this kind are concerned, what is often overlooked is the question of whether and, if so, under what requirements these agreements are deemed to be profit pools within the meaning of Section 292(1), no. 1 of the German Stock Corporation Act (Aktiengesetz – AktG).
These can have far-reaching consequences. If a profit pool within the meaning of Section 292(1), no. 1 AktG exists, pooling agreements can only be concluded in line with certain formal requirements, otherwise the agreements are voidable. Once actually implemented, such voidable agreements can be terminated at any time with future effect even if the minimum term of the pooling agreement has formed the basis for the transaction.
In his [German-language] article for “Der Konzern”, Tibor Fedke analyses what legal issues need to be addressed when structuring these agreements and gives practical advice on what structural alternatives can be used to minimize legal risks.
For further questions:
Tibor Fedke: email@example.com
You can find the article in the following journal: Der Konzern 2015, pp. 53-57 (www.der-konzern.de).
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The Amended Renewable Energy Sources Act 2014 (EEG 2014)