chevron-down Created with Sketch Beta.

Law Practice Today

October 2023

Renewable Energy Practice from a Utility Lawyer's Perspective

William David Holthaus Jr.


  • Renewable energy use continues to grow, making the sector an attractive career choice.
  • Build-transfer, develop-transfer and other energy-specific transactions and contracts require significant legal work.
  • Renewable energy projects also require attorneys in many other practices, including construction, real estate, tax, labor and employment, and more.
Renewable Energy Practice from a Utility Lawyer's Perspective

Jump to:

There are many reasons to seek a career in the renewable energy space. It's a rewarding career, particularly as weather is becoming more extreme and many are eager to support a transition to cleaner energy. The U.S. and other countries are investing heavily in wind, solar, and other renewable energy projects. Renewable energy, which can be produced domestically, is generally more secure than importing oil and gas from other countries, where prices can be disrupted by geopolitical factors. Customer demand (both residential and commercial) for renewable energy continues to grow. Likewise, business owners and shareholders are increasingly applying non-financial ESG factors as part of their process to identify investment opportunities. The business case to invest in renewables grew even stronger in August 2022 with the passage of the Inflation Reduction Act, which extends and expands federal tax incentives to invest in renewable energy. Further, wind and solar resources are the most affordable energy available to replace aging coal plants, in part because there are no fuel costs associated with wind and solar power (in other words, unlike coal or natural gas, wind and sunlight are free). In response, many utility companies are trying to increase their renewable generation fleet. Even oil and gas giants are moving into renewable energy generation.

Renewable energy projects necessitate legal service to ensure that companies' investments will yield a successful, productive asset in a timely manner. To this end, lawyers are needed to negotiate construction and procurement contracts, real estate transactions, merger and acquisition agreements, and numerous other ancillary agreements. As part of this effort, lawyers navigate the rules that govern obtaining tax credits, and mitigate the risk that tariffs will be assessed on imported solar panels or that imports will be withheld by the U.S. Customs and Border Protection. Lawyers are also needed to manage construction risk, supply chain risk, and labor issues. 

My Transition into Renewable Energy

I work in the legal department at an electric and natural gas utility company with an ambitious goal to achieve net-zero carbon emissions by 2045. A large fraction of my work focuses on providing legal service to my company's renewable energy projects. When I graduated from law school, I would not have guessed that I would find myself in this field. My goal had been to practice construction law, and I directed my career into the construction practice group at a large, regional law firm. After spending several years in that practice, I developed an itch for an in-house role. Upon reading a job posting seeking an attorney to draft construction contracts for a utility company, I applied and was lucky enough to get the job. After a few years of drafting construction and other contracts, I was asked to get involved in negotiating an EPC agreement for the construction of a small solar power plant that was self-developed by my employer. Once I had experience with one solar project, I was then asked to negotiate build-transfer agreements for the acquisition of larger, utility-scale solar projects.

A Utility's Approach to Developing Renewable Energy Projects

As customer demand for renewable energy continues to grow, many electric utilities are seeking to replace aging fossil-fuel plants with wind and solar plants. My employer is in the process of transitioning its electricity generation fleet, which historically has relied mostly on coal-fired power plants, into a heavy mix of wind, solar, battery storage and other low-carbon generation projects. Just as it took decades to build the fossil-fuel powerplants that energized most of the U.S. grid during the 20th century, the transition to renewable generation will take decades for several reasons. Currently, a single wind or solar power plant typically produces a fraction of the electricity than can be produced from a fossil-fuel power plant (even one that is decades old). Typical on-shore wind and solar generation plants have peak capacities of 400 megawatts or less. Conversely, many coal-fired power plants have peak capacities of 500 to 2,000 megawatts. Additionally, production from wind and solar generation plants is weather-dependent and less consistent than coal-fired power plants such that wind and solar plants yield less energy relative to their nameplate capacity as compared to coal. For example, a 300 MW solar plant would be expected to yield less than half the energy of a 600 MW coal fired power plant due to the solar plant's intermittency (no sunlight at night). For these reasons, a larger number of renewable projects are needed to counter-balance this lower capacity and production. Additionally, utility-scale solar projects, which often span over 1,000 acres of land, take several years to move from initial concept to commercial operation. Finally, the transition to renewable generation requires the addition of large and complex transmission infrastructure that spans multiple state and county jurisdictions.

To acquire large, utility-scale renewable projects (e.g., over 100 megawatts in capacity), utility companies will often contract with renewable energy developers to build and sell a solar or wind power plant. These contracts are often a hybrid between a merger and acquisition agreement and a construction agreement. The developer usually creates a single-purpose LLC or special purpose vehicle that is often referred to as the "project company". The project company will hold title to all project assets (chiefly permits and land rights such as leases and easements). The project company will enter into several contracts for the acquisition of solar panels, wind turbines, inverters and other equipment, along with a construction contract for the assembly of the parts and procurement of other materials (this is often called the balance of plant or balance of systems agreement). The utility company will then buy the developer's project company. Utility companies can buy the project company shortly before or after the completion of the project. This approach is referred to as a build-transfer transaction (and the associated contract is called a build-transfer agreement or BTA). Utilities can also buy the project company just before construction commences and this transaction is referred to as a develop-transfer transaction. Build-transfer and develop-transfer agreements are part of a broader class of "offtake agreements," which are agreements between the buyer and seller. Offtake agreements also include power purchase agreements, which is a different style of transaction where only the energy (and not the power plant) is sold to the buyer.

The balance of plant or balance of systems agreement.

The balance of plant or balance of systems agreement.

William Holthaus

A typical sequence of events for build-transfer and develop-transfer agreements.

A typical sequence of events for build-transfer and develop-transfer agreements.

William Holthaus

In addition to build-transfer and develop-transfer acquisitions, utilities can also self-develop their renewable projects. Under a self-develop transaction, the utility will buy its own land, acquire permits itself, possibly even acquire solar panels, wind turbines, and other equipment, and hire a contractor to assemble and commission the plant (sometimes the contractors will also acquire all of the equipment).

Legal Challenges with Renewable Projects

The increase in demand for renewable energy has led to a very competitive market for acquiring the key components of renewable projects, such as solar panels, wind turbines, and inverters. This in turn has led to volatile pricing and long delivery times. Additionally, solar panels manufactured in certain parts of Southeast Asia (which dominates the supply of solar panels) may be subject to anti-dumping and countervailing duties, the amount of which can be difficult to predict in advance, as well as other tariffs. Additionally, under the Uyghur Forced Labor Prevention Act, the U.S. Customs and Border Patrol (USCB") has latitude to prevent the importation of equipment suspected to be made using forced labor in China. Getting imported products through the USCBP can result in months of delays while the supplier works to produce documentation sufficient to prove that the equipment was not produced with forced labor. These market conditions can lead to challenging negotiations over contract terms regarding allocation of supply chain risk. Further, for most rate-regulated utilities, any new renewable project of significant size (e.g., one megawatt in capacity or larger) must be approved by the state's public utility commission prior to beginning construction.  Finally, the IRS rules that govern obtaining tax credits are relatively new and there's little precedent to aid in their interpretation. Obtaining federal tax credits necessitates that the buyer and seller (or owner and contractor or owner and supplier) negotiate numerous terms regarding the allocation of risk for a failure to obtain the desired tax credits. 

Other Avenues to Practice Law in Renewable Energy

Utility companies, not surprisingly, are not the only employers of attorneys focusing on renewable energy projects. Renewable energy developers also hire in-house attorneys to negotiate power purchase agreements and BTAs, as well as contracts with contractors and equipment suppliers. Many renewable energy developers also hire real estate attorneys to acquire the land rights needed for the renewable projects. Likewise, some law firms (particularly the large AM 100 firms) have energy groups that provide a full array of legal services for renewable projects, including project finance, international trade and tariffs, mergers and acquisitions, construction, and real estate.