Belén Gallego 1:03
Good morning. Good afternoon, ladies and gentlemen, depending where you’re joining from today, I just wanted to let you know that you are in the right place here we’re going to talk about the impact, or COVID-19 crisis of the COVID-19 crisis on nubile energy worldwide to National Renewable Energy. The way that we’ve phrased it here. And this is billing as you go. I am from Ata Insights, the organizing company, and I’m based in Madrid and I’m, of course in my house in my home like most of you, I assume. And I’d like to invite you to share, introduce yourself using the chat. Make sure that you tag all panelists and all attendees so that we can all read it. And we will begin this session in two minutes. We’re only allowing more people to come into the room to join us today. So literally, I’m not joking when I say two minutes, I’m in two minutes, in fact, one minute now. So please use this time to just introduce yourselves and we will begin from Thank you.

Unknown Speaker 2:56
Wow. Well

Belén Gallego 2:57
welcome everyone I see like there is a very International, large international array of people here from many different places. Well, welcome, everyone, for some people is really, really early from some some people is, is quite late. So thank you very much for joining us. So this session is about the impact of COVID-19 on the renewable energy industry internationally. And this is also an important matter, because we’ve been doing a lot of work with every specific country and different countries have different laws, different emergency laws that have been passed. So different countries are in different situations. So if you happen to have an international portfolio of projects are you work in different countries right now, managing this COVID-19 crisis takes, you know, a lot of complexity. Luckily, we have here with us today for experts that are going to help you a little bit and then tell you a little bit how to get this huge thing done. And I’d like to ask them to introduce themselves. So I’d like to ask first, Charles, please, if you can. Introduce yourself shortly.

Unknown Speaker 4:03
Welcome everybody. My name is Charles Hecker, I’m a partner with a firm called control risks. We are an international specialist risk consultancy, and I’m dialing in today from London.

Belén Gallego 4:14
Thank you very much Charles. Caroline, could you please introduce yourself?

Unknown Speaker 4:18
Hi, everybody. My name is Caroline Melman. I also work at control verse with Charles and I, Mr. EMEA, COVID lead, so supporting clients across Europe, the Middle East and Africa.

Belén Gallego 4:28
Thank you very much, Ahmed, could you please introduce yourself?

Unknown Speaker 4:32
Thanks, Ben. Hi, everybody. My name is Ahmed Matthew. I’m a senior legal manager. It’s a male power. It’s a power energy company.

Unknown Speaker 4:40
Company, professional energy projects.

Belén Gallego 4:44
And what are you based on?

Unknown Speaker 4:46
Yes, I’m based in Dubai, UAE, Dubai.

Belén Gallego 4:48
And last but not least, Anna, please. Could you please introduce yourself?

Unknown Speaker 4:52
Hi, I’m a helper Landy, I’m the CO chief executive orders climate mitigation and I basically UK.

Belén Gallego 5:01
Thank you very much as you can see very international panel and also very international audience. So let’s get on with it. I’d like to ask actually Charles to prepare for your presentation. And actually, Caroline, in this case is showing the slides. They’re, you know, doing a little bit of a team thing here. And I just like to remind you, you know, was everything he says been, you know, getting ready, that essentially, we’re going to use the format that we usually use, which is presentation, you know, we’ll have three with the four speakers. And then we’ll take questions, you may use the q&a box at the bottom of your toolbar to send your questions and we’ll try to answer those by text as the webinar progresses. And also, at the very end, we’ll take questions live. And just a reminder, we are recording the session and both the recordings and the materials will be sent to you to your email, you know, in a few days. So Charles, if you’re ready, go for it.

Unknown Speaker 5:54
Absolutely. Thank you very, very much Berlin. First of all, let me just let me say thank you to Ata Insights. for inviting control risks to participate in today’s webinar, and I’d like to thank all of you for dialing in and participating. Caroline in Hamburg is going to drive the slides today. And I just thought for those of you who may be unfamiliar with control risks, I’ve included a few slides to familiarize you with the company. I won’t go through them in great detail now, other than to just stop here on a few basic descriptions. Carolyn, if you want to click forward for me,

Belén Gallego 6:32
as we can see to screen so let me just do something here. Caroline, I can see two screens. I’m not the only one. Can you see two screws? One, two, now? Perfect. Thank you. Okay.

Unknown Speaker 6:46
Excellent. So just to stop on a couple of descriptive slides of the company. You’ll get these slides later. And you can read more about control risks when you get the slides and the webinar is over. But just to let you know, we are getting Global specialist risk consultancy. We’re about 45 years old. We’re employee owned. We have, I believe the next slide says 39 offices around the world and about 3000 employees. And just to finish my introduction, I’m a partner in the political risk consultancy at control risks. And I work with more than 100 political risk analysts in our offices around the world. I’ve been with the firm for more than 20 years. And prior to the position I have now I was, among other things, the managing partner of our Moscow office, what you see on the screen right now in front of you is a copy of our risk map, which is our annual flagship forecasts of political and security risk. We’ve been doing that for more than 25 years. And you can imagine now that our map of geopolitical risk has now been completely overwhelmed by the COVID crisis and I hope to take you through Some of that actually, in just the next few minutes today, I’m glad to be starting as the first presenter, because I want to move with a fairly broad overview of how control risk sees the pandemic progressing. And then I’ll hand over to Caroline to take us a little bit further, Carolyn, if you want to move this forward just a little bit.

Unknown Speaker 8:26
Onto the next one, please. Thank you very much. What you should see in front of you now are four different scenarios that control risks has devised to describe how we feel the pandemic may develop. And these scenarios are valid, we think for about the next six to nine months or in other words, basically, towards the end of the current year. This is our second iteration of scenarios since the beginning of the outbreak. And this is basically our way of putting a bit of structure and a bit of a framework around a global phenomenon that really varies from country to country, or state to state, or particularly in the US, even from city to city. The scenarios that we feel are behind us, or the ones that are yet to materialize, you can see are grayed out. And and I hope you can still read them a little bit on your screens. If not, of course, you’ll be able to read them pretty clearly when we send around the deck and the recording. But most importantly, we’d like to point out that we believe we’re currently in a scenario that we call prolonged disruption. And the point to this scenario is that we think we’ve moved far beyond an acute crisis, and something that will likely last much much longer. And and of course, this is an unusual situation for companies to be in. A lot of companies can deal with acute crises, whether it’s a cyber attack, or an earthquake or a hurricane or some other external shock. But most companies are not accustomed to or equipped to deal with a crisis of this sort of duration. So as you look at the features of the current scenario, I just want to make a couple of points about the scenarios beyond that just clients have been asking us to develop scenarios for recovery. And that’s a great sign. And that shows that even at a time like this, it’s perfectly appropriate. While you’re engaged in triage, and current crisis management, you have to have one eye or maybe even both eyes on the future. So we have two visions of the future and one of them shows an uneven recovery. were developed markets most but maybe not all of them, bring the virus under control and gradually begin to recover. But the primary feature of this scenario really, is that developing countries developed developing markets remain immersed in crisis. And due to lack of state capacity, and the limitations to their healthcare systems, they fail to bring the outbreak under control. We also forecast a deterioration of the security situation in those markets. The fourth scenario that’s on the far right hand side of your screen, I hope it envisions a more consistent and uniform global recovery. And as you might imagine, that sees a fairly predictable set of indicators And by the way, it’s not entirely given that we will move smoothly from one of these scenarios sequentially to the next, and the next and the next. Now to track those developments, we monitor a series of triggers. Karen, if you could move forward one. Thank you. So we track triggers, some of which, you know, In brief, include the following. We look very, very carefully at government actions. And I’ll show you what that looks like in a moment. But we monitor these actions, particularly as they impact supply chain, but not exclusively. We monitor political stability, particularly in countries where the crisis has extreme political, economic, and social impacts. And we’re monitoring the flow of cases in China, outside of China, and again in developed and developing markets. In the world seems to be looking at China as a bellwether for pandemic managed management, and for pandemic recovery. So what’s happening in China is very meaningful to the rest of the world. Although Having said that, it’s important to say that nobody really knows what de escalation from the pandemic will look like. I mean, it’s safe to say I think that it will be slower than the escalation. I mean, basically, we had almost 90% of the world one way or another, go into one form or another over lockdown, and we had that happen in almost a month’s time. It is safe to say that coming out of lockdown will be much slower, and it will be highly fragmented. It’ll be different countries, different cities and in different regions and even in different sectors. And I know We’re going to talk about sector specific issues very, very soon. But what I want to do right now is just jump to the last slide from my part of the presentation and show you what we’re looking at when we track government actions. And you can see here summary of government actions for Southeast Asia for Australia, South Asia, Northeast Asia, and the Pacific. And you know, that whole chart when almost entirely to read very quickly, what we want to track going forward is the gradual relaxation of these government actions. And at some point, the red will turn to Amber, the amber will turn to green, and we want to be able to show business where things are moving and where they’re not. There will be a lot of mixed signals coming from politicians coming from business leaders and coming from government figures about when we can all go back to work. senses, that means understanding where your footprint falls on a chart like this. So we look forward one day to this turning green. Until then I’m going to turn over to Caroline, and let her take you through the rest of the presentation. I look forward to your questions. And thank you very, very much for your time.

Unknown Speaker 15:21
Okay, well, thank you, Charles. And definitely, I think it’s appropriate that it’s still red when we’re talking about crisis management. So shifting over to, to the second topic is really what businesses should be focusing on now. And what we’re seeing both globally happening, and then also what the best practices are, that you can be utilizing directly.

Unknown Speaker 15:44
So my background, as I mentioned before, is in crisis management and and also public health. And so we merged those two pieces when we’re thinking about COVID and supporting our clients. So I just wanted to jump into these slides here. So how Businesses are actually responding right now to COVID. And what this is, it’s actually very, it’s the best source I found so far it came out, not even a week ago, for what companies, the largest companies in the United States, but that can be considered more broadly as well, as practices globally, are actually focusing on now and what they’re doing above the surface. So if you see that graphic to the right hand side, it’s it’s actually supposed to be an iceberg. And so these policies that are being enacted, whether it’s furloughs, whether it’s bonuses or financial assistance, it really runs the gamut. And those are the actions that have been taken. And so I invite you to view this from your business’s perspective and sort of you even benchmark yourself to a degree to say what you’re doing comparison to others, maybe an idea that you didn’t have to support both the reputational benefits, the financial benefits and most importantly, the benefits to your people. So that’s everything That’s above the water. But really, we all know the saying that everything to do with an iceberg, there’s 90% below and this is all of the churning and discussions and decision making and very difficult things happening right now internally within businesses, which is I imagine the where you find where many of you find yourselves these days and sort of so figuring out what to do, how to say it and how to move forward. And so, what we see with with clients is essentially for large and best practices come out. And so the first is holistic scenario planning and forecasting. And when I say holistic, I mean across the entire business, so whether it includes every business is obviously set up differently, but whether it includes your functional and your operational teams, whether you have manufacturing and commercial sides, within the same company, but usually private Probably don’t speak to each other. This is the time when all of these pieces have to come together to look at that scenario planning and that can be best and worst and most likely scenarios and the language that they speak really should be the same because the last thing that you want is for the financial planners who are responsible for your you know, fiscal 2122 budget to be speaking a different language than your, your operational side who’s actually supposed to be getting the work done on the ground. So that is the the key point there. Number two is key prioritizing staff care. I know everyone says this, there’s a reason that everyone says this is because it’s hard, especially right now the phase that we’re in with this crisis is having to make very difficult decisions financially about the weather the business can can stay afloat and how how the scope of work can continue. You, but we really do urge clients to focus on their people because people are not only your most important asset, it’s your duty of care. And so not to forget that in the in the fog of war, I guess you could say. The third point is to give your CMT a break. So CMT crisis management team. Most probably every single company of every one of you who’s listening to this right now has a crisis management team stood up. So this is usually senior leadership from different areas of the business. It might be your senior leadership team, it might be the board, it might be a combination. But regardless, they’ve been running 24, seven for months. It is really time to take this opportunity to take a little step back and see and reassess. Just make sure that everyone is doing the roles that they should be doing. So one common thing that we see with crisis management teams, who, as I mentioned are on that strategic level. are starting to do very operational nitty gritty tactical pieces. And so now is the time to take a breath, take a step back and really refocus on that strategic decision making piece. Because the steps, the decisions that you make right now will impact your business and all of your stakeholders in the in the years and months to come. And so allow the people below you delegate that responsibility for that operational piece.

Unknown Speaker 20:30
In addition, it’s time to sort of start phasing out that first step, crisis management team. So it’s often the case that people just get overwhelmed and tired and so consider bringing in the alternates, phase them in, get them read up, and then call it a day. And then that third point of giving your crisis management team a break is very linked, that fourth point of coordinating your cross business recovery, because a He’s that CMT is are finding themselves grappling with right now his recovery. We’re seeing a lot of countries get over the peak, Italy and Spain have just gotten over the peak. We believe China’s obviously there and we’ll see more and more as the time continues. But having a recovery management team in place separate from your crisis management team really is a good business practice to both differentiate someone helping deal with the firefighting and somewhere doing future planning. And then also really allows you and gives you the platform to holistically look at what your future looks like how you are recovering what your resiliency is. And I know the word here for cross business. Similar to holistic, as I mentioned before, it’s very important to have everybody’s voice at that table. Whether they’re they’re directly over there multiple people represented by one head so you don’t have too many people talking it Other either ways, either way is good. And then I just want to leave you with this last slide, which is the next steps. So looking forward, this here can be the remit of that recovery management team that I’d mentioned before. But first what’s on, essentially everybody’s mind is returning to work. And the first thing to say there is that it won’t all happen right away. But when you do start changing towards that, it’s very important to monitor some of the triggers that Charles had mentioned before, and looking at what the government rules are, whether there’s restrictions on certain sectors or certain geographies, and also compliance and making sure that your company is really doing that in lockstep with the government regulations in your industries. The second point here is about changing threat environments. So the COVID crisis is spawning. And adding to a series of Secondary crises, often regarding security duration. And so be very aware. Most of us work in, in volatile countries, volatile economies, what have you. And be very aware of what’s happening in each country that you operate in. So that you can know you can be nimble and respond accordingly. And also be aware of that uneven recovery that Charles had also mentioned. And finally, just looking forward, your recovery team and also the focus areas that you will be having are not necessarily what you have right now. So for instance, perhaps legal has not been a massive part of your crisis management efforts. However, I would argue that having legal counsel at least in your head, identified who that is and where you would reach out to, in case of fraud of conflicts of interest in disputes, or enforced mature which I’ve met, we’ll be speaking to at length Just shortly is very important to, to really bring that all together as well as the standard operational and management functions that you have already.

Unknown Speaker 24:11
And the last thing I’ll just say is,

Unknown Speaker 24:14
many parts of the world are in a little bit farther back timeline, then then China and other countries, but most mostly China. And so take take a minute and just look at what lessons learned you can learn from either the other units of your business that work in China or in the Asia Pacific region, or with your peers to really see about what practices and what we found is that people are really willing to talk. So it’s it’s an interesting situation where businesses who oftentimes let’s let’s say in the in the past, didn’t want to share best practices. Now was a time that people are coming together. So ask, see what you can find out and then see how you can best use what’s already happened for people Who has been hit earlier than then maybe you have in your geography. So I will leave you with that. And thank you so much for your attention.

Belén Gallego 25:10
Thank you very much, Carolyn. Okay, I’d like you to please stop sharing. And as soon as, Okay, perfect. Why don’t you prepare for your presentation? There is a lot of people here that you’ve invited and they’ve been saying hello. So now this is where we get to hear you.

Unknown Speaker 25:27
Yes, thank you. I’m really looking forward to that presentation. I’m looking forward to two so let me just first share the presentation.

Belén Gallego 25:36
Just a reminder for everyone we are recording this session you will get access to the materials so you don’t have to worry about that. We’ll send you an email with the materials and perfect we can see it one of you go

Unknown Speaker 25:49
just come back to the first slide. Sorry.

Unknown Speaker 25:53
There you go. First of all, let me thank you again but and thank you very much for the invitation. Thank you very much Kelly and and chars for the wonderful person Actually that you have just made. Good morning. Good afternoon. Good evening, everyone, depending on where you are today. So, yeah, 2020 is actually was said to be recorded actually for renewables, I mean, but apparently COVID-19 had different plans for humanity and the sector. So without any further delays, I’ll get to the presentation. So my presentation is divided into into two parts. And the first one out, we’ll try to understand the impact of COVID-19 on the renewable energy projects under development then under construction, and operation. The second part is more legalistic, actually is going to be about the frost measure, whether developers or contractors could claim false measure as a result of COVID-19 and consequently, whether they could claim reliefs So, different phases of project development, construction operation, different phases, different issues and different actually problematic. So for the first one for a project actually under developments, these projects may be more exposed to the impacts COVID-19 difficulties include, for example, access to the site to assess risks, environmental risks, site risk, or some technical risks, expensive materials and equipments because of the containment measures because of the lockdown, and all action is bored or shut down. So there’s a massive pressure on supply in massive pressure on procuring equipment and materials. The assessment of risks actually by the landers and could be also can be tricky and challenging because lenders need to have visibility actually on the consequences that you have covered so they can price accordingly and price actually adequately and assess the risks. And from a logistical perspective, bringing all project parties together, together with their advisors, online at the same time to meet hard deadlines could be also very, very challenging actually understand. So, so all of these factors and other factors actually could result into higher tariffs and not a bankable project. So perfect. Now the construction thinks could be tricky for projects actually under constructions, because COVID-19 may result into delays in meeting constructions milestones under the and maybe defaults, I mean, could also cause them in defaults under the funding arrangements. This could have several consequences nasty consequences, I would say penalties, loss of incentives, defaults under the funds documents or even termination actually in some cases. So if there are delays, so if there are delays, what would happen, obviously the off takers and the developers and contractors alike, they may need they may need to sit together and to discuss what is the way forward so they can well off takers and developers they will try to pass maybe the liability and consequences actually of COVID-19 down to contractors. They could seek reliefs or they could try to reschedule I mean the project milestones when it comes to come spring Jumping into reaching the commercial operation dates, or any other important actually in my stores

Unknown Speaker 29:08
and all the other hands.

Unknown Speaker 29:11
And all the other hands, developers and lenders may also may also need to discuss the consequences actually of the delays on the funding arrangements. You know, there could be some defaults under the finance documents, there could be some restriction on utilizations that could be like a commitment period actually, that needs to be the full extension, I mean, under the funding arrangement. So all of these things actually need to be discussed as soon as possible, I think with funders, and here I mean, I would like to make an error Actually, it’s worth mentioning that some international financial institutions if not all international financial institutions, have had allocated multi billion packages of fast track financing to assist private sector companies and governments in the airforce to tackle the consequences of COVID-19.

Unknown Speaker 29:56
So

Unknown Speaker 30:03
So, what is the leverage actually, when it comes to finance documents? What is the leverage? I mean, so actually what is that? What is maybe mean the most important thing if needed, we need to take into account actually engaging into such discussion between the two the lenders and developers, the finance documents, I mean, the provision of the agreements that need to be very robust, and they need to be in line with the Best International practices and capable of accommodating capable of accommodating different set of evolving situations.

Unknown Speaker 30:32
So for projects under operation, the setting is a bit different.

Unknown Speaker 30:38
It is completely different. Because I mean, the objective salts here actually are different from the objective source during the construction phase or during the development phase.

Unknown Speaker 30:48
During the development phase, for example, I mean, there’s no

Unknown Speaker 30:52
at the development stage, we don’t have a legally binding commitment, but when it comes to constructions and operation, we do have some legally binding commitments with some sort of house. deadlines. So someone need really. So one action need to be very, very careful actually about the parties, they need to be very careful about what they already agreed upon in the documents. So when it comes to projects, and the operation, it’s worth mentioning that governments might attempt to reduce electricity supply generated by independent power producers by issuing some sort of regulations and orders, lows. Why is that possible? Well, of takers and governments might take advantage of two things. The first one is the electricity demands goes Bye, bye to the containment measures. I’ve been hearing I mean, I’ve been hearing different different news actually, over the words about some governments actually ordering the shutdown of flex on power plants. And, and today actually, I mean, I was reading about India and the demand, the demand actually TriCity in India has fallen by by something like 30 percent or something like in one day? I mean, I’m I’m not sure, actually To what extent this is really accurate. But

Unknown Speaker 32:06
all of these regulations

Unknown Speaker 32:09
or all of these regulations and rows and orders,

Unknown Speaker 32:16
are they lawfully implemented?

Unknown Speaker 32:19
What we say? I mean, would this actually constitute a change in law? Most likely, yes. If it ticks all the boxes of a change in law, and unlike all the other levels, actually, we need also to mention the fact that governments continue to implement new legislations and regulations. And in response to the consequences of COVID-19. Again, with this constituted change in law, probably yes, it affects the project. Now to end up with a positive notes, actually, for this slide. I mean, I would say from a purely operational standpoint, and a call and actually to what we hear from the market, and this is I guess, it answers one of the question actually, they can see like on the q&a lists, From a bureau operation standpoint, the market reports that apart from major maintenance operation can be remotely controlled, and employees continue to work from home. So the electricity is continued to be produced and distributed

Unknown Speaker 33:14
to the extent possible.

Unknown Speaker 33:18
Now, with all the impact of COVID-19 discussed so far, developers and contractors may consider whether they can claim a fox measure actually as a result of COVID-19 and Kramer leaves.

Unknown Speaker 33:33
Well, what is the fox measure?

Unknown Speaker 33:35
Generally speaking, a force majeure event is an event that is unexpected beyond the reasonable control of the contracting parties and prevented from performing its contractual obligation. So, under English rule, there is no general principle of fast measure, and the Agreement shall provide for a clear definition and clear scope of effects measure what would be a first measure by contrasts Some local laws in some civil jurisdictions provides for a definition of false measure. Especially that, for example, project documents like a concession agreement, like a power purchase agreements, like interconnection agreements, these agreements are usually subject and governed by local laws. So for example, it comes to North Africa, Central Africa, or actually West Africa is usually the local law that applies to PPA power purchase agreement, concession agreements, implementation agreements, interconnection agreement, Chile and so on. So, so I’ll come to that actually in a in a different slides. But whether whether whether this what happens if there is no force majeure provision, actually in the documents actually in the agreements? I’ll come to that in the different slides. So the first measure is a risk and is a risk that should be allocated to the parties to one of the parties to be shared among the parties. This need to be desired. Guests actually agreed to open in the documents where they could weather the COVID-19 outbreak consumer first measure events where the answer to this question largely depends on the provision of each contract. So say if, if a fox measure clothes clearly covers epidemic or pandemic than covered is of course Metro. And in the fox merger clause, for example, it covers the acts of governments and clearly spell out clearly specifies the acts of governments, then the containment measures and the border shut down, or force majeure events, then actually answering one of the questions here actually, in the q&a list, if the O n mo amin is actually operated cannot get into the sites that B can actually claim or secret leaves depends. I mean, if it is a false measure action to your documents, you have a chance to have a shot. So what about agreements subject to local laws? In civil, civil law jurisdictions, what I like under English law as I mentioned in the previous slide, there is no general principle of force majeure. COVID-19 might automatically be deemed a force majeure event under the local laws in selected civil law countries. Although the relevant agreements does not expressly covers epidemic or pandemic and agreements does not include force majeure clauses, because generally speaking, any events which will fulfill the three conditions, unforeseeable event and avoidable band and event that is beyond the control of the parties could be considered and could give. I mean, anyone who’s claiming its chance actually to stand before the court or actually arbitration tribunal later on, and claim a true false measure. So what needs to be checked when a developer or contractor invokes a force majeure in these situations, but the party seeking to claim false morale must show a direct connection between the outbreak COVID-19 and the impossibility to go form selected contractual obligations. What does that mean? It It means that you cannot just throw actually COVID-19 to anything that needs to be casual, that needs to be a direct link between the COVID-19 its consequences and the impossibility of undertaking contractual obligations. So, let’s say I mean, if you are actually already in delay action constructions, you cannot actually claim COVID-19 like randomly, you would need to demonstrate that COVID-19 is the cause of the delay for example, in in meeting your, your your construction actually objective in construction actually milestones. One should also check the rules for serving the first measure notice and the consent and the content actually obsession notices. One need to also check if the developer or the contractor is entitled to any compensation during a force majeure event. This is very standard. This is actually very, very classic. Usually either images usually, they’re images that we can find in contracts, where they are in civil Luxury addiction Archie comma luxury addiction is that once you have a false measure, you are entitled to some sort of compensation plus an extension of actually the timeline.

Unknown Speaker 38:12
If the developer contractor has an obligation, one also needs to check if the developers or the contractors have an obligation to mitigate, actually to mitigate them in the event and the first major consequences. The German weather insurances may cover any of this expected losses caused by the outbreak of COVID-19. And one need to check very, very carefully about the rules governing early termination of the project documents if false measure persist for a long period of time. Now, the book now the apocalyptic scenario actually for anyone who is claiming false measure is what happens if there is no Fox measure close or the faux metal clothes do not allow any reliefs? What other clauses Actually we should look at you could try the frustration of contracts purpose, the definition here you can try the material change clothes or you can heart You can also try the hardship closed. So one should look to, to any of these clauses actually if they are in your agreements, if you don’t have a force majeure wording or you’re the force majeure clause that you have in your existing documents, do not allow you actually for any release.

Unknown Speaker 39:26
Thank you very much, and I hope it wasn’t time.

Belén Gallego 39:30
Perfect. Thank you very much. I think there’s gonna be a lot of questions about for some of you our last webinar today Spanish it was the whole of wearable that can you stop sharing the screen please? So that we can allow Ana last but certainly not least, because she’s talking about money, everyone cares about money. So Anna, I like to invite you to unmute yourself and to share the screen. There’s already a few questions there for you, Ahmed. And also Caroline and Charles So feel free to keep answering, I can see that you guys have been answering. But what happens is usually, you know, we get more and more questions, so please feel free and then we’ll do some, hopefully also live. Okay, and I can see your PowerPoint already. So can you talk for me just to make sure we can

Unknown Speaker 40:17
hear you? Absolutely. First of all, thank you, Barry lane for inviting me to join this venerable panel. And I would like to say a word to the all the people who have joined because I think we have over 300 incredibly qualified people who have joined. And so first of all, thank you all for joining. And I’m sure your questions will be really interesting. And you may have things you want to add. So please feel free to add in the chat throughout the conversation and that this should be viewed as a conversation. So I really have I’m going to keep this extremely brief because I think we’re running towards the end of our time. And as such, I’ve kind of limited my presentation down just to three slides. So the first slide is really to build on what Charles and Caroline went in a much more sort of simplistic, high level way, but also in a much longer period. So what you see here is three curves on the y axis, and you can see my arrow, but the y axis here, you have impact along the x axis, you have duration. And, you know, I think, as discussed, you know, we have, is this a short, sharp, sharp shock? Probably not, because we will struggle to figure out how to get out of it. So, at the very minimum, we’re looking at a yellow curve, right? Whoops. And, you know, is that a longer sort of, so the first one is that of can we manage the peak infection, infection, find effective drugs and get back to business as usual, sort of by the summer or by the fall? The second scenario sort of says, okay, maybe we can we have to wait for a vaccine and certainly I’m in the UK I think many of you are as well, where they’re sort of warning us it’s at least six months, it could be a year before we’re really back to anything resembling a business usual. And then in order to be contrarian until think kind of push the envelope because I think often people talk about Black Swan events. But we actually know what Black Swans events are, we just raised them as extremely unlikely because we don’t like to think about them. I’m going to propose a third scenario, which is the blue scenario, which is that we actually never really go back to businesses. And what does that mean? That can mean a lot of different things. It could be both in terms of climate, where we just don’t get back to the same level of travel, we don’t get back because people fundamentally go, actually, I don’t need to be in the office. Businesses go I don’t need all that real estate because actually, like, you know, we were out of the office for a year. Why would we do that? Anyway, all I really care about is a few face to face meetings, my business development, right. And so we could see a funnel Mental transformation of how we do business. And I think the other thing that people are sort of quietly talking about, but not really talking about very loudly, which is this whole issue of the pollution and what that has and the impact of climate change. And we as artists feel that climate change is basically the biggest challenge that’s facing humankind. And, and I think many of you do, too, because you’re a renewable energy. But I would say in many ways, the corona virus may will be a training wheels for this other bigger crisis for which, you know, if we don’t get our arms around it, there may not be an exit. So now,

Unknown Speaker 43:44
you know, renewable energy from an investor perspective is fundamentally counter cyclical and explain what I mean by that. But it will also increasingly depend on government action. I’m going to go out and I should add, sorry for the first slide, we’re talking about Massive, massive uncertainty. Nobody really knows which scenario it is. I thought Charles Kelly did a fabulous job of showing you a whole bunch of triggers and indicators. You could go through that exercise yourself, you can probably ask them to share theirs. But nonetheless, we live in a very uncertain world and it feels much less certain result is a huge amount of volatility. And that volatility is very much affecting investors now coming into this renewable energy, where’s renewable energy sitting there? And we’ve had some great conversations about projects and their various stages, but I’m only going to look through the lens of investment. Okay. So first of all, any investor is going to look ago, right? Well, where are your revenues? Where’s the certainty around revenues? And as we all know, there’s really three places where you get revenues. There’s probably some more but I’m just going to simplify it three. The first one is a government backed PPA structure, whether it’s a conference contract for difference and options. tariff, you know, it could be a lot of different structures, but fundamentally, it’s government backed. It’s for anywhere from 15 to 20 something years. And it’s linked to inflation or it’s not linked to inflation, but it’s got some certainty around it. The second one is corporate ppas. And the third is merchant. Now, I’m going to go out on a limb and say that I fundamentally believe that renewable energy will become very dependent on government action, and government action will happen. I will also say to the 300 people on the phone, it won’t happen unless we put up our hands and say it needs to happen. So we all will have to exercise our voices to make sure that happens. But if we do I think government will feel an obligation or the EU has come out and said Coronavirus is going to take all these actions, but this doesn’t mean we’re not going to be looking at the green, the Green Deal and the European directive on climate change and furthermore, we’re going to make green action part of what we do on Coronavirus and I think Many other governments do the same. Now, if they don’t, there’s really a problem. And that problem comes from two parts. First of all, we’ve talked about the merchant market. But in general, the merchant market is going to experience increased volatility and increased issues, prices will go down, especially where it’s, you know, based on the marginal cost of just taking market as an example, look at Italy. The marginal cost there is really based on LNG, oily LNG, and the prices have dropped significantly, right? corporate ppas also have some issues, because as companies struggle, you know, the counterparty risk will go up. And there will be issues around whether or not those ppas is as good as you would think. And furthermore, corporates will probably be reluctant to lock into long term ppas. You know, already most PPA structures the corporate, if you find Well, it’s for 15 years, it’s extraordinary. They’re often five years or so and they could be shorter But governments will have every reason for renewable energy stimulus because the fundamentals are very attractive. It’s crisis resilient, energy and logistically independent. Energy independence is going to become increasingly important. And I think you’re seeing it having to worry about bringing in large ships of fuel, heavy lift, manage having, you know, queue staff, they’re worried about the volatility in the market. It’s also known correlated. It’s low volatility, what’s locked in, it’s green, it’s cheap, relatively. Now, I cannot talk about this without talking about oil. And again, I’m going to go out on a limb and say, Look, having a low oil price has significant appeal. And in normal circumstances, we would consider that a significant market stimulus. But for right now, it has significant downsides and I think what we can expect to see and again, this is becoming an alum. Significant consolidation. You know, there may be an opportunity for for nationalization. What do I mean by that? Well, if you go back and sort of go, Okay, let’s look at all the different energy markets in the world where there’s oil and gas assets, you’ll see that in many, many places, if you drew a UTC unit cost curve, you would see that a barrel of oil is just too expensive to pull out of the ground right now. And with the amount of production going up significantly, Saudi Arabia still pump in.

Unknown Speaker 48:33
Abu Dhabi still pumping actually increased both of them, you know, it creates a situation for those who have very large, significant sovereign wealth funds and want to be oil along to come in and potentially buy up assets that other people’s want to get shot up as they’re not able to extract their from the reserves. So, in this particular scenario, we have a world in which that volatility, that overproduction deepening our downtown, right? And the demand destruction, it’s coming from Corona is so profound that the low oil prices, no impact as a stimulus effectively, and people are able to talk to you about we’re going to run out of storage. And the third point is, you know, with significant amounts of coal coming off because many countries have committed to reduce the amount of coal production. It’s only if oil ends up being a substitute or fossil fuel backed energy generation ends up as a substitute for renewables, it’s only going to be a temporary substitute. And as you’ll know, renewables are continued to be relatively inexpensive and continue to come down the cost curve very quickly, doesn’t mean it won’t be a little bit of a hurry time where we may not seem so some situation where governments or energy companies that run energy systems, particularly when it’s centralized, into one entity does it turn to You know, gas generation, instead of, you know, kicking off our renewables option, but I don’t think it’s a long term situation that we don’t see countries do a U turn on their pros, because of the need for stimulus. So the investor perspective partly depends greatly on the investor situation. So we see pure play investors, where they sort of go straight ahead. Are they screening for quality? Absolutely. Does it depend on the amount of dry powder that they have? Absolutely. But they are still looking for new investments, but they’re screening very highly for quality. We’ve also seen situations where investors are diverse right. So they may have a lick or asset manager is diverse and they have a liquid portfolio and are less illiquid portfolio. And because people and they may be performing great in both, although, you know, the stock market is what it is, but their core of testers have losses in other places and they therefore have to live date, they’re part of their liquid portfolio. And it may turn out to be such a big deal that it becomes existential question for the asset manager. So, you know, the investor situation is really the the key, and then where people have existed, investments and those investments are impacted, obviously triage wherever necessary, you know, funding those investments to keep them going. And the communication and this is for those of you who are in a position of being an existing investment, you know, I urge you to communicate over communicate to your investors. And again, new investments are being made, but people are splitting very, very distinctly for quality. I think the fundamentals of renewable energy remain attractive as discussed the previous slide. They’re not a correlated asset with all this demand destruction. They’re still they’re still attractive, they’re still they’re quite low voltage. And this is really focused on the the assets where there is a government backed PPA structure. And we still expect to see a huge amount of significant movement from fossil fuels. If you were to take step back just two months ago, damn Amazon, and the biggest takeaway from Davos was, you know, the energy transition. And so there there is well over $12 trillion investment earmarked to move it away from fossil fuels into some form for newborn. And finally, for those events are and fossils. You know, those are increasingly challenging. Because validation is good. As I said, it’s on the cars. And it’s a, you know, we’re looking at a relatively low return environment unless you know, you’re sitting there on a huge heap of dry powder and you want to go Oh, well, let me stop there and open it up for question and also questions

Belén Gallego 52:57
from the other speakers. Thank you very much, Anna, if you can just stop sharing the screen so that we can see you guys all in the larger format. Yeah, perfect. Okay, we have a few questions and thank you so much for doing such a good job of you know, answering this. But I wanted to ask some of them live, if I may.

Unknown Speaker 53:16
So, okay,

Belén Gallego 53:18
one here says and I’ll open it up, but I think is more directed to you. Ahmed says it seems like it’s easy to draw correlation between COVID and business interruption. Does this mean that it is quite easy to claim for some of your what type of protections can there be for groups trying to avoid force majeure claims as a way for to get out of the responsibility? So you know, using those because you can, how direct does the link have to be for buildings to for people to claim force majeure?

Unknown Speaker 53:56
Yeah, well, thank you very much for the question. It’s, it’s a really good one. It’s not easy, it’s not easy issue to claim floss measure because then there must be a direct link, there must be a link, which makes the impossibility of undertaking a contractual obligations as in direct consequences of COVID-19 which means this needs to be discussed clearly among the parties. Because the one the party claiming false measure in need to demonstrate how how COVID-19 and its consequences or whether the government has taken any board or shut down actually actions or something, how does that impact the execution of its obligation like construction work, you know, the construction work and meeting deadlines. So, a lot of things, a lot of discussions, a lot of meetings because I mean, people actually come up like with a list of actions, this is like, this one I can do this is one I can this one I can do with this other one, I can’t. So this needs to be really I mean, well, very, very well discussed actually among the parties. So it’s not very, very easy one and you cannot just again, The business partner, I mean, the like the developer cannot just take, can I just claim actually COVID-19 actually to escape its obligations like that they cannot really claim actually COVID-19 to cover up on their, on the fact that they were already in delay, actually constructions, so this actually would not work.

Belén Gallego 55:17
So you need a lawyer? Okay, I just have a follow up question that we had in the last Spanish speaking, which I think is very relevant here. Someone was asking, Where does the buck stop meaning, like, as a developer, you know, I claim for a year so the rest goes with the PC, but then they claim for some of your you know, who will be stuck with most of the rescue most of the payments out? Where depends on the

Unknown Speaker 55:43
documents. So I mean, it depends on the documents, let’s make so let’s say the developer actually is going to be standing like in between the off taker in one part, and actually the EP section on the other part. So let’s say I mean, if the EPC actually is serving a force majeure notice then actually the developer will need first to confirm whether The first module notice in the first module claim actually claimed by the EPC contractor is local. And if you if you think I mean they think actually it’s lawful, then they can pass it down to the off takers, and vice versa. I mean, if the off taker most unlikely actually claim a force majeure event, then actually they can also mean passive down. So it’s all about actually. So it’s all about passing down responsibilities and risks. And that’s why it’s very, very, very, very important to have a PPA and EPC contractor which are like mirroring each other. I mean, we we call it like a back to back. So so it needs to be whatever is actually you signed off on the BPA that needs to be reflected in EPC contracts, and what whatever you negotiated and agreed on an EPC contract needs to be reflected in the PPA. So it needs to be actually back to back. If there is no back to back risk allocation, then there might exist actually some gaps. And that could actually lead to very nasty consequences, I would say.

Belén Gallego 56:58
Thank you very much. Let’s move on. There is a Charizard WWE World War One and World War Two question for Do you want to just say live like your short answer? And we can’t hear you just unmute your microphone, please.

Unknown Speaker 57:14
Thank you. Sorry about that. Uh, yes, I saw that question. And thank you for helping clarify that. So the question was, do we see the post COVID? Do we see a more global world or do we see a more nationalist and isolationist world? And I think that we were headed.

Belén Gallego 57:29
Jennifer is an optimist. Sorry. Jonathan is an optimist. But how about you?

Unknown Speaker 57:34
Well, I, you know, I take things the way I see them. And I think that even before this crisis, we saw a world that was moving closer to populism nationalism, protectionism, even before this crisis. And I wonder I think it’s a valid question, to ask whether we think that this will act as an accelerant to those trends. I think you’ve seen now just in a couple of isolated incidents, you’ve seen countries enact economic protection laws that are going to make international cooperation very difficult. And so I think this is something to monitor very, very carefully. We’ve seen certain anti democratic measures being taken around the world. We’ve seen a lot of borders go up where they didn’t exist before. And I wonder to what extent politics and economics are going to snap back to the way they were before this crisis. I think it’s something worth monitoring very carefully.

Belén Gallego 58:39
So unison not everyone is as optimistic as you are actually, Jonathan and I are having a back and forth about this like offline as well. Okay, so how question here. Someone asks Is there from Uzbekistan and they’re asking, renewable energy was becoming one of the hottest spots for investment in renewable but post pandemic investors will Most probably become more risk averse, meaning that market interest in data in Central Asia may drop. I’d like to hear your opinions was the future of renewable investment market in developing countries like Pakistan, where we are historically dependent on traditional sources of energy, and this probably wouldn’t have it one more time. So Anna, why don’t you start and then you guys can add,

Unknown Speaker 59:21
sir. Absolutely. I mean, I, I really hate to say it, because I would like to be able to say that there won’t be much of a slowdown, but I think there’s really going to be two factors. One is investor sentiment is going to skew to where risk is, you know, lower, or at least perceived to be lower. And I think the second thing is, and I’m not speaking specifically of us, Pakistan, but I am speaking specifically of many of the developing countries where health systems are, let’s say less rich and robust. And already, you know, in the richer countries there’s been significant issues with drugs. With the peak of Coronavirus when I think you know, my final scenario, which was like that doesn’t go back to normal. And I don’t know people looked at the news, but one part of it was that, you know, we are not going to end up not having COVID or some form of it, that we’re going to have continual reinfection because developing countries will probably struggle with the degree to which this virus just is so easy to transmit. You basically just breathe out people. And in a world where we, you know, Western countries are struggling to get masks struggling to wash hands, it’s hard to envision the developing countries will not have the same problem but with less resources. So I wish it were different, but I think yeah, it will be time and I think the key there will be two things one will be government stimulus and the other one will be international finance agencies, which will, to a certain degree, pick up the investment or continue to push With the best way to potentially cope with additional investment into developing countries.

Belén Gallego 1:01:05
Thank you very much. If you guys want to add something shortly, this is the moment because we’re gonna have to go. So Would anyone like to add something Carolina? Charles? No, whatever you are.

Unknown Speaker 1:01:14
No, no, I’m fine. Thank you. All right.

Belén Gallego 1:01:18
Well, thank you very much, guys. I really appreciate you guys sharing with us this, this knowledge, you know, and yeah, I mean, if we were in a conference, I would ask everyone to clap. We’re not so please clap. You know, in your own homes, Achmed, and Charles Anna and Caroline, thank you very much for your time. And thank you very much for all of the audience that are there. And hopefully see you next time.

Unknown Speaker 1:01:41
Thank you very much. Thank you all. Bye,

Unknown Speaker 1:01:44
everyone. Bye bye. Thank you, everyone. Bye bye.

Transcribed by https://otter.ai