Principal and leader of Brattle’s International Arbitration practice Richard Caldwell and Associate Dr. Fernando Bañez coauthored an article in Jus Connect’s 2023 Energy Arbitration Report considering several recent regulatory measures that explicitly aim to reduce consumer bills while maintaining a “reasonable return” for investors.

The authors identify four recent market developments that have raised the twin issues of regulatory measures and the ability of renewable energy sources (RES) investors to earn reasonable returns:

  • A steep decline in the cost of certain RES technologies
  • Policy commitments to progress towards net zero emissions, involving ambitious expansion of RES targets
  • Increased short-term volatility of energy and electricity prices, with a general upward price trend
  • Growing pressure on consumer bills through both increasing energy prices and the general cost of living crisis

The authors observe that the application of a reasonable return framework can involve significant interpretative issues, with the potential to introduce uncertainty to RES investments amid a landscape where investor-state arbitrations involving RES claims have increased in recent years. The authors conclude that increased uncertainty could increase the costs of RES investment necessary to address climate change.

The full article, “Reasonable Return Framework for RES in the Current Context,” can be found on pages 83-85 of the Energy Arbitration Report, which is available for download at the link below.

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