PROJECTS

Renewable Energy Arbitrations Against the Kingdom of Spain

The problem

The Kingdom of Spain was in investment treaty arbitrations with Mathias Kruck y Otros/DSG and Soles Badajoz, two photovoltaic (PV) generators. The two applicants invested under the terms of a 2007 special regime which guaranteed payments to new renewable generators. The applicants believed the energy sector reforms that the Kingdom subsequently pursued in 2012 amounted to expropriation as they resulted in reduced payments to producers of electricity from PV energy sources. The sector reforms were introduced in response to a sector wide crisis, resulting in part from significant over-supply (energy demand between 2005 – 2012 increased by 2 percent while supply grew by 39 percent).

How we helped

Castalia provided advisory services to Union Temporal de Empreses (UTE) that had been awarded the role of expert witness to the Kingdom of Spain. We showed that the behavior of the Kingdom of Spain constituted standard, predictable and legitimate market reform. We considered case studies of Chile, Indonesia, Brazil, the Philippines and California as benchmarks. In each of those countries, legitimate and necessary sector reforms, often carried out in order to address a systemic crisis, resulted in some changes to what sector participants believed were their entitlements stemming from regulations. We concluded that the reforms undertaken by the Kingdom of Spain, from the perspective of the legitimate expectations of investors, were in line with the principles of the original policy as well as international regulatory practice.

Impact

Castalia argued that investors could legitimately expect that in an electricity sector crisis, national authorities would take measures to stop the crisis and that this was what the Spanish regulator had done. An approach that regulators frequently take is to adjust tariffs or revenue using rate of return regulation, which the Spanish regulator had done. While our analysis contributed to the Kingdom’s case, the arbitrators found that the reforms were a breach of the investors’ rights and awarded compensation.

The client

Altran

Mac Group

Our team

Alex Sundakov

Alex Sundakov

Executive Director
Jaime Hurtado

Jaime Hurtado

Manager

How can we help you?

How can we help you?

WASHINGTON, DC
+1 (202) 466-6790
1747 Pennsylvania Avenue NW, Suite 1200
United States of America

SYDNEY
+61 (2) 9231 6862
Suite 19.01, Level 19, 227 Elizabeth Street
Australia

AUCKLAND
+64 (4) 913 2800
74D France Street, Newton South
New Zealand

WELLINGTON
+64 (4) 913 2800
Level 2, 88 The Terrace
New Zealand

PARIS
+33 (1) 73 44 26 97
6 Rue Duret
France

BOGOTÁ
+57 (1) 508 5794
Calle 81 #11-08, Piso 5, Oficina 5-127
Colombia

Thinking for a better world.

Castalia-logo-negative-2col
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© Copyright 2019 Castalia. All rights reserved.  Terms | Privacy | Credits | Sitemap

WASHINGTON, DC
+1 (202) 466-6790
1747 Pennsylvania Avenue NW, Suite 1200
United States of America

SYDNEY
+61 (2) 9231 6862
Suite 19.01, Level 19, 227 Elizabeth Street
Australia

AUCKLAND
+64 (4) 913 2800
74D France Street, Newton South
New Zealand

WELLINGTON
+64 (4) 913 2800
Level 2, 88 The Terrace
New Zealand

PARIS
+33 (1) 73 44 26 97
6 Rue Duret
France

BOGOTÁ
+57 (1) 508 5794
Calle 81 #11-08, Piso 5, Oficina 5-127
Colombia

Thinking for a better world.

Castalia-logo-negative-2col
PROJECTS          NEWS         CONTACT
© Copyright 2019 Castalia. All rights reserved.
Terms | Privacy | Credits | Sitemap