The global renewables industry is growing rapidly, driven by government incentives, increased investor appetite and the urgent need to decarbonise.
As of October 2024, the UK had a substantial number of renewable energy projects across various stages of development. In the latest Contracts for Difference (CfD) auction held in September 2024, a record 131 clean energy projects were awarded contracts.
With demand for land and infrastructure at an all-time high, renewable energy projects face increasing complexity, uncertainty, risk and potential delays. The ability to act swiftly and decisively in a changing market is more important than ever.
Renewable energy projects present distinct title and planning risks that require specialist attention. At Thomas Carroll, we work alongside solicitors and their clients, such as developers and energy companies, to help mitigate title risks associated with renewable energy projects, providing a financial safety net and facilitating successful project completion.
Whether the renewable energy project is an onshore or offshore wind farm, solar farm, energy storage unit or EV charging station, some form of title protection is likely required to facilitate the project.
Legal indemnity insurance protects property owners, developers and lenders from financial losses due to various legal issues associated with land and property. Legal indemnity insurance for renewable energy projects is particularly valuable due to the complex legal landscape surrounding land use and environmental regulations.
Legal indemnities can cover a range of potential risks, including:
- Restrictive covenants
- Lack of access rights
- Laying of services/equipment
- Mines, minerals, and manorial rights
- Breaches of planning
- Possessory title
- Adverse possession
- Judicial review
- Lack of searches
- Defective lease
What Does Legal Indemnity Insurance Cover?
As renewable energy continues to shape our future, the insurance sector is evolving and adapting. By leveraging our insurer relationships, we work with insurers to provide bespoke cover, ensuring that losses for this type of project are properly covered.
In addition to standard losses, such as damages, compensation, settlement costs, loss in market value and professional fees, additional cover can also include operational losses such as:
- Loss of profit/business interruption (income or revenue) can be included to cover any loss of profit the project may suffer due to a claim under a policy, preventing the site from operating.
- Delay costs associated with the suspension of work resulting from an order or claim.
- Relocation costs for relocating renewable infrastructure in the event of an injunction or order.
- Rental liability and outgoings of tenants for any liability they must continue paying rent where a claim occurs, and they cannot legally occupy or operate the site.
- Abortive CAPEX for capital investment and costs related to installing renewable infrastructure at the property, rendered redundant and/or abortive as a result of an order or claim.
- Statutory undertaker’s losses for service providers should services need to be adopted as part of the project.
How Thomas Carroll Has Supported Clients in Renewable Energy Projects
Below are some of the legal indemnity products we have secured for our clients, helping them achieve their goals and progress with their renewable energy projects.
Securing Land Rights
Renewable energy projects often require specific land rights, particularly in rural or remote locations where legal issues, such as unclear titles, rights of access and boundary disputes, can complicate development. We have supported our clients by providing indemnity policies to protect against:
- Title defects – a client approached us with gaps and ambiguities in the title of a proposed renewable energy project site. The legal indemnity policy we sourced protected the client against claims that could impact their ownership or access.
- Access and easements – our client’s solar farm required guaranteed access to transmission lines, roads and other infrastructure. The legal indemnity policy we secured safeguarded access rights, even when certain rights were not properly registered.
- Access to neighbouring land is often essential, and we understand that access issues can be frustrating for developers of renewable energy projects, potentially causing construction delays until the matter is resolved.
- Boundary issues – the precise location of our client’s solar farm boundaries was not guaranteed by the Land Registry. Indemnity insurance was arranged to protect against the possibility that the land boundaries were incorrect, or that the client was not acquiring an interest in all the land, or the solar farm was constructed on land outside the boundaries. Legal indemnity insurance provides financial protection while any dispute is resolved.
These protections give developers and investors confidence in their property rights, ensuring they can proceed with construction and operation without the risk of unexpected claims.
Mines and Minerals
The existence of underlying mineral rights, rights held by third parties to extract minerals beneath the land, can pose significant challenges to a project. Protected minerals might not be visible but could still lead to legal disputes. Mines and minerals legal indemnity policies help mitigate the risks associated with subsurface mineral rights.
Our client approached us seeking cover for mineral rights over land being used for enabling works on an offshore wind farm. Along the cable route, there were numerous mines and minerals exceptions, along with an admitted claim for the mineral rights.
Most insurers declined to provide cover. However, after extensive collaboration with one of our insurers, working closely with the project team and the neighbouring wind farm, we were able to provide cover for our client on a bespoke Material Event Agreed Conduct basis. The project has proven to be a massive success for the client.
Decommissioning
There may be a requirement to provide a decommissioning bond at the planning stage or when entering into a lease. Additionally, there could be a need to restore the land to its original state at the end of the project’s life cycle.
We recently assisted a client at the end of their project’s life cycle, where the easements did not include any decommissioning provisions. The removal of cables and ducting would have been disruptive and costly but leaving the materials in place would have constituted a trespass. We provided the client with an absence of easement policy to resolve the issue across multiple landowners’ titles.
Restrictive Covenants
Many sites suitable for renewable energy projects may have historical restrictive covenants, limiting the types of structures or activities permitted. Our client held an old covenant that restricted land use to agricultural purposes only. Obtaining a legal indemnity policy was crucial for our client’s renewable energy projects, providing protection against enforcement actions by parties that could prevent or delay development.
Indemnity insurance protects developers against potential financial losses if a third party claims that the project breaches an existing covenant. This protection not only ensures the feasibility of the project but also provides investors with confidence that any risk associated with covenant enforcement is effectively mitigated.
The Benefits of Legal Indemnity Insurance for Renewable Energy Projects
Underinsurance is a major issue across UK sectors, including renewable energy. Rebuild Cost Assessment’s latest infographic has revealed that 79% of commercial properties in the UK are underinsured, with a total shortfall of £340 billion. Renewable energy assets facing complex legal and regulatory risks are likely affected, making adequate legal indemnity insurance essential.
Legal indemnity insurance offers numerous benefits to renewable energy stakeholders, including:
- Enhanced lender confidence – banks and financiers often require assurance that risks are covered before investing. Legal indemnity insurance provides the peace of mind necessary to secure financing.
- Facilitated project timelines – by resolving or mitigating legal risks, legal indemnity insurance helps projects progress without delays caused by disputes or unexpected legal claims.
- Increased project value – by protecting a project from legal setbacks, indemnity insurance can make renewable assets more attractive to investors and potential buyers.
- Streamlined due diligence – legal indemnity policies can simplify the due diligence process, enabling quicker evaluation of land and property issues, especially on complex sites.
Why Choose Legal Indemnity Insurance with Thomas Carroll?
The legal indemnity team at Thomas Carroll holds both legal and insurance qualifications. We represent a number of companies in the renewable energy sector, and by truly understanding our clients’ objectives, we have gained extensive hands-on experience in obtaining and providing bespoke legal indemnity products tailored to meet the unique needs of renewable energy project clients.
Get in Touch with Our Renewable Energy Team
As the renewable energy sector continues to expand, ensuring your project is protected with the right legal indemnity insurance is more important than ever.
To learn more about the benefits of working with a specialist legal indemnity broker like Thomas Carroll, take a look at our article on the value of choosing a legal indemnity broker.
If you are involved in a renewable energy project and would like to discuss how we can support you, please don’t hesitate to contact our Renewable Energy team.
Contact our Risk Advisor, Natasha Blewitt on 07484 002145 or email natasha.blewitt@thomas-carroll.co.uk to discuss your specific needs and how we can provide bespoke legal indemnity insurance solutions to ensure the success of your next renewable energy project.
