Wayne Atkinson and Kit Hobbs from Collas Crill examine the long-mooted opportunities for the development of alternative sources of energy in Guernsey and their potential impacts and strength of continuing innovation in the jurisdiction.
Alternative sources of energy are now firmly on the agenda of businesses, governments and individuals the world over. While public opinion is split over the issue, the call to address the energy impact on the planet grows ever stronger.
Although for the past few decades it has been the renewable industry itself that has been less than "sustainable" - with the cost of implementing and maintaining renewable energy infrastructure having been prohibitively high - it is becoming clear to many that the industry is a worthy and expanding investment prospect.
Emerging technology needs support from government and business, as well as a base for research and development. To assist with developments in the science of alternative energy, Guernsey is uniquely placed to cater for all stages of the implementation of this new technology.
The World Energy Outlook 2012, by the International Energy Agency, notes that renewables could overtake coal as the world's primary source of power generation by the year 2035 so it is clear that significant investment will be made in this field over the coming decades. In this regard Guernsey is a jurisdiction that is uniquely placed to capitalise on and structure such investments.
The Bailiwick of Guernsey's geographical positioning makes it ideally suited as a place both to test and implement renewable energy technology. The Bailiwick comprises the larger islands of Guernsey, Alderney and Sark, as well as some smaller islands. It has among the largest tidal ranges in the world and studies have indicated the local waters may prove ideally suited to this technology.
The islands' waters also seem well suited to the development of offshore wind production and this is also being investigated by the Renewable Energy Team established by the local government, the States of Guernsey. Additionally, the islands' lower latitude compared with the rest of the UK makes domestic solar production a viable proposition.
There is much current expertise in the various fields connected to renewable energy across the Channel Islands, particularly in the Bailiwick of Guernsey. A notable leader with respect to tidal power is Alderney Renewable Energy Limited, known as ARE, which is developing a turbine array to capture energy in the coastal waters off Alderney.
It also aims to develop its export markets for energy, having worked with international partners and the governments of both the UK and France, to enable it to transmit generated electricity onward to the South of England along an electricity inter-connector cable known as the FAB Link (for France-Alderney- Britain).
But it is Guernsey's corporate and finance expertise and legislative infrastructure that truly make it the perfect "one-stop shop" to finance, structure and run renewable energy projects both locally and around the world.
As a leading offshore finance centre, Guernsey has expertise at every level. Its corporate service providers are able to cheaply and easily set up and administer renewable start-ups. The island's companies legislation makes the establishment of joint ventures and differing classes of shares for investors relatively simple. Guernsey also offers the possibility of cell companies (innovated by Guernsey in 1997) to allow businesses to easily segregate the risks of differing technologies and projects.
For successful start-ups looking to take the next step and generate additional funds, the jurisdiction provides excellent access to capital markets via Guernsey's listing capabilities on the London Stock Exchange (Main Market), AIM, Euronext, Frankfurt, Toronto and other stock exchanges providing a clear route forward.
Many major investors are familiar with investment into Guernsey and Guernsey is home to a number of significant investors in renewable technologies. These have taken the form of both clean-technologyfocused funds with a specific mandate to fund a variety of such projects and also more traditional private equity funds which have chosen to make specific investments in isolated renewable projects.
Examples of Guernsey funds with a focus on "clean technologies" include both a closed-ended fund launched by Crescent Capital, a Turkish manager with a focus on clean energy, and infrastructure funds, with a targeted NAV by end of 2012 of €200 million. By way of example of other projects falling into the wider definition of "clean technology" moving through Guernsey, Virgen Forestry Extracts Fund Limited has invested into projects for the sustainable production of a valuable oil produced by a rare South East Asian tree species.
Local service providers and lawyers have, as a result of the islands' investment history, been familiar with the needs of investments in significant infrastructure and generating projects in general and, increasingly, this expertise is being turned to, and developed to meet more specific needs of, the clean technology industries.
As with service providers, the island's wealth of non-executive directors includes many with broad experience in all industries and often specific energy and cleantech industry experience, enabling boards of both start-ups and clean-technology investment funds to benefit from past experience.
As with all new technologies, intellectual property is significant to this new field. Guernsey has reformed its intellectual property laws over recent years to establish the island as a leading offshore jurisdiction for the development and exploitation of intellectual property rights.
Whilst Guernsey's ground-breaking image rights legislation has understandably been the focus of much attention, new legislation has also been put in place in respect of a number of other types of intellectual property. This includes trademarks, copyright, database and performers' rights but also, of potential significance to renewable generation and clean technology more broadly, registered and unregistered design rights, semi-conductor topographies and plant breeders' rights (potentially of use to the biomass industry) as well as patents and biotechnological rights. There is also the capability to register, manage and protect intellectual property assets comprehensively within the island in tax-neutral vehicles (including cellular holding vehicles).
Another area of Guernsey expertise of relevance to those seeking to develop major renewable energy projects is captive insurance. Guernsey has decades of presence and experience in this field, and is the world's fourth-largest captive domicile. It is expected that the use of captives may assist with the long-term management of, for example, decommissioning projects at the end of their working lives. Captives are likely to prove useful to renewable-focused companies as they allow insurance where the established insurance market does not yet offer competitive policies due to significant future uncertainties (such as in scenarios related to relatively new technologies).
As a result of the relevance of many aspects of Guernsey's offering to renewable energy businesses, local authorities have recognised this as a potential growth area for the island and are looking to develop it from all sides.
The States of Guernsey have introduced primary legislation and the island's Renewable Energy Team is at an advanced stage with secondary legislation, primarily dealing with licensing aspects. The Team has also conducted a regional environmental assessment for tidal projects which is now being extended to cover wind power. The team is also talking to several UK universities, encouraging research projects and forming closer ties in order to broaden the pool of available knowledge and relevant skills in the areas of wind, tidal and wave power.
On the finance and corporate services side, Guernsey Finance, the Bailiwick's financial services industry promotional body, has pulled together a clean technology working party to focus on developing Guernsey's offering to both renewable projects and investors. It is hoped that, by drawing together expertise from all the fields mentioned above, the island will be able to service all aspects of renewable projects from cradle to grave and thereby become a global hub for those looking to establish themselves in the clean-technology marketplace.
Experience has shown the island that its growth and successes have invariably come from developing useable effective legislation and demonstrating a wealth of expertise in a particular field. It is to be hoped clean technology will be the latest example of this.
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