The Development Phase of a Photovoltaic Project in Spain

The development phase of a photovoltaic project is the first phase within the implementation of such a project in Spain. The development of a feasible project with an adequate legal structure will be essential to guaranty the success of the operation. Photovoltaic projects are normally composed of three phases:

  • Phase I: Development of the photovoltaic project
  • Phase II: Construction of the photovoltaic project
  • Phase III: Commercialisation of the energy.

This article focuses on the development phase of the photovoltaic project (Phase I), of which we highlight two key aspects:

  • On the one hand, that the entity that will carry out this phase, the Promoter, will have a deep knowledge of the applicable current legislation
  • On the other hand, that the contract signed with investors is suitable for the fulfilment of this purpose.

Development Services within Photovoltaic Projects: the Contract

The main objective of the development phase of a photovoltaic project is for the Promoter to obtain all the permits, licenses and authorisations necessary for the photovoltaic plant to reach the so-called PLA (1) Status.

In order to achieve the PLA Status of a photovoltaic project, promoters must undertake and comply with a series of legal and administrative requirements that require negotiating skills and a broad knowledge of the regional and municipal legislation of the place in which the project will be located.

To this end, it is usual for investors in a project in its initial phase and the Promoter to negotiate and sign a contract setting out the main terms of this phase of development. Therefore, it is essential to delimit in a contract both the scope of the services and the price agreed for them. This contract will generate legal certainty for both parties.

Services

The main services the Promoter will provide can be summarised as:

  • Securing land rights
  • Requesting access points and network connections
  • Depositing endorsements
  • Developing environmental studies
  • Obtaining permits and licenses.

Price for Development Services

Usually, the price of development contracts for a photovoltaic plant is determined by a fixed price for each megawatt reached by the PLA Status.

There are two different ways of investing in a photovoltaic project:

  • At the beginning of the development phase, in which case there is a risk that the project will not reach the PLA Status, but in which the price per megawatt will be lower (the risk will mainly depend on the experience of the promoter)
  • Once the project has reached the PLA Status, when risk is lower, but the price per megawatt will be higher.

Conclusion

The development phase of a photovoltaic project is of most importance, as it will determine the feasibility of the project’s implementation. It becomes therefore essential, mainly for investors, to choose an experienced promoter who masters the applicable legislation and its main requirements.

Likewise, it is vital that the contract signed by the Promoter and the investors specifies the functions and services to be carried out, the contract price and the agreed deadlines.

For all the above and to prevent future problems, good legal advice is essential in this development stage of the project.

(1) PLA, acrónimo de Permits, Licenses and Authorisations.

This article is not considered as legal advice

Irene Terrazas

A licensed attorney with a Law degree and a double Master's degree, Irene Terrazas specialises in public procurement, business law and company law. Working languages: Spanish, English and French. For any query Contact Irene Terrazas