The increasing technical, financial and regulatory complexity of energy projects in Spain has made joint venture agreements, or JVAs, an essential contractual tool for structuring cooperation between project sponsors, investors, developers and operators.
In the energy sector, joint venture agreements allow the parties to allocate risks, coordinate investment commitments and establish control mechanisms over assets that typically involve lengthy development, construction and operation phases, as well as significant capital expenditure.
Legal structure of a joint venture in energy projects
In Spain, energy joint ventures are typically structured through a special purpose vehicle, or SPV, incorporated to hold the permits, contracts and assets relating to the project.
The joint venture agreement functions as a shareholders’ agreement between the shareholders and complements the SPV’s articles of association. It is designed to regulate key aspects of the corporate relationship that cannot usually be addressed with the same level of detail in the company’s constitutional documents.
Key issues when negotiating an energy JVA
The negotiation of a joint venture agreement for an energy project requires a thorough assessment of the project’s development stage, the shareholders’ profiles, the financing structure and the regulatory, technical and commercial risks associated with the investment.
Although each project has its own specific features, certain legal and commercial issues are particularly relevant in this type of agreement.
Corporate governance and decision-making
The allocation of control is a central issue in any energy joint venture. The agreement should clearly define the composition of the management body, the shareholders’ rights to appoint directors or board members, and the strategic matters subject to qualified majorities or unanimous approval.
In energy projects, strategic decisions such as the approval of the annual budget, the arrangement of financing, the amendment of material contracts, the acquisition or transfer of relevant assets, or changes to the business plan often require the consent of all shareholders or of specific categories of investors.
Financing commitments
The development of energy projects usually requires successive capital contributions until the commercial operation date, commonly referred to as COD. For this reason, the joint venture agreement must precisely regulate the shareholders’ financing obligations, the mechanisms for making capital contributions and the consequences of default.
The agreement should address whether funding will be provided through equity contributions, shareholder loans, external financing or a combination of these instruments. It should also define the timing of contributions, approval procedures for additional funding, and the consequences of a shareholder failing to meet its financial commitments.
Typical default remedies include dilution of the defaulting shareholders interest, suspension of certain political or economic rights, substitute funding by the non-defaulting shareholders and, in certain cases, compulsory transfer mechanisms over the defaulting shareholder’s shares or quota.
Transfer of shares or interests
Shareholder stability is often a priority in energy projects, particularly during the development and construction phases. A change in the ownership structure may affect financing, regulatory permits, contractual commitments or the technical capacity of the project company.
As a result, energy JVAs commonly include restrictions on the free transferability of shares or interests, rights of first refusal, tag-along and drag-along rights, as well as lock-up periods limiting divestment during certain stages of the project.
These clauses are particularly relevant for investors seeking a future exit, developers and industrial shareholders who need to ensure that the project remains under the control of suitable shareholders with the necessary financial capacity.
Deadlock and dispute resolution
Where shareholders hold veto rights, deadlock situations may arise, potentially jeopardising the viability and value of the energy project.
It is therefore advisable to include specific deadlock resolution mechanisms in the joint venture agreement. These may include escalation procedures, negotiation between senior representatives, mediation, arbitration or mandatory exit mechanisms between the shareholders.
A clear dispute resolution framework helps avoid corporate paralysis and preserves the value of the energy asset. In cross-border energy projects, particular attention should also be paid to the governing law, the dispute resolution forum and the enforceability of arbitral awards or court judgments.
Why the JVA is key to the legal certainty of an energy Project
A well-structured joint venture agreement does more than regulate the relationship between the shareholders: it also strengthens the project’s legal certainty for lenders, investors, potential purchasers and other third parties.
Lenders, institutional investors and potential purchasers will usually review the corporate structure, control rights, transfer restrictions, financing obligations and default mechanisms before committing to the project or acquiring an interest in it.
For this reason, a clear and consistent JVA, properly aligned with the corporate and financing documentation, can facilitate project finance, the entry of new investors or the future sale of the project.
In international energy projects, it is also essential to coordinate the joint venture agreement with other contractual documents, such as investment agreements, development services agreements, financing agreements, power purchase agreements, EPC contracts, operation and maintenance agreements and regulatory documentation.
Conclusion
A properly structured joint venture agreement for energy projects is an essential tool to ensure legal certainty and sound governance in this type of investment.
The detailed regulation of the shareholders’ economic and political rights, financing commitments, transfer of shares or interests, and dispute resolution mechanisms is decisive for the efficient execution of the project and for the protection of the parties involved.
In a sector characterised by high technical, regulatory and financial complexity, the negotiation of a joint venture agreement should be approached strategically. The parties should anticipate potential risks, define clear rules for each stage of the energy project and ensure that the JVA is consistent with the project’s commercial, financial and regulatory framework.
Frequently Asked Questions
A joint venture agreement for an energy project governs the cooperation between two or more shareholders in the development, financing, construction, operation or investment in an energy asset. It usually complements the articles of association of a special purpose vehicle and establishes the rules on governance, financing, share transfers and dispute resolution.
A JVA is important because it aligns the interests of sponsors, investors and developers, allocates risks and creates a stable legal framework for the execution of the project. In complex energy projects, clear contractual regulation can help avoid deadlocks, shareholder disputes and financing difficulties.
An energy joint venture agreement should clearly regulate key matters such as the composition of the management body, reserved matters, financing commitments, transfer restrictions, information rights, non-compete obligations, exit mechanisms and procedures for resolving deadlocks between the shareholders.
An SPV, or special purpose vehicle, is a company incorporated specifically to develop, own or operate a particular project. In energy projects, it usually holds the project’s permits, contracts and assets, allowing risks to be ring-fenced and the participation of the different shareholders to be clearly structured.
The JVA may provide different consequences for a shareholder that fails to meet its financing obligations. These may include dilution of its shareholding, suspension of political or economic rights, substitute funding by the other shareholders or even a compulsory transfer of its interest.
Deadlocks may be resolved through escalation procedures, negotiation, mediation, arbitration, buy-sell options, mandatory exit mechanisms or valuation-based transfer procedures. The appropriate solution should be adapted to the ownership structure and to the nature of the energy project.
We advise international investors, developers, sponsors and operators on energy projects in Spain, helping them anticipate risks, protect their position and structure legally robust investment vehicles.
If you require legal advice to structure an energy joint venture or to review a joint venture agreement for an energy project in Spain,
