Energy & utilities

In spring 2014, the Danish Energy Agency opened the 7th Danish Licensing Round. On expiry of the deadline for submitting applications 20 October 2014 the Agency had received 25 applications.

The Danish part of the North Sea is a so-called mature area with a well-developed infrastructure and, according to reports from both the Danish Energy Agency and Oil Gas Denmark, large quantities of oil and gas still remain to be discovered in the Danish areas. The areas offered for licensing are located in the Central Grave, where the majority of Danish fields have so far been discovered, and in the areas further to the east where oil discoveries were previously made. 

The licensing rounds following the 7th round will be held at one-year intervals for oil and gas licences. The purpose of the annual licensing round is to create more predictability for the interested companies and to support the utilisation of the existing infrastructure in connection with the development of future oil and gas discoveries. The annual licensing round also supports the Danish Energy Agency's objective to reduce costs and to profit as much as possible from the Danish North Sea to the benefit of the interested companies and Denmark. 

We advise on e.g.: 

• License applications
• Negotiation and completion of joint operating agreements
• Assignment of licence shares (farm-in/farm-out)
• Special rules on oil and gas activities
• Agreements on transportation of crude oil and gas
• Negotiation and completion of distribution agreements
• Distribution, storage and trade of oil and gas
• CO2 EOR (enhanced oil recovery).

The adoption of a common European energy policy in March 2007 has led to increased focus on electricity supply from renewable energy, including wind turbines, in Denmark and abroad. At the same time, Danish municipalities are planning new areas where wind turbines may be erected. 

We advise on e.g.: 

• Purchase, sale and financing of wind turbine projects, both onshore and offshore
• Planning and environmental protection
• Rights over real estate
• Electricity sales agreements
• Drafting and interpreting contracts
• Regulatory affairs in connection with renewable energy projects
• Support to renewable energy
• Net settlement of autoproducers of renewable energy
• Municipal ownership of solar cells and wind turbines.

The liberalisation of the natural gas market has resulted in comprehensive and complicated regulation of the natural gas infrastructure: Transmission, distribution, LNG facilities and storage of natural gas. The regulation makes heavy demands on the players in the natural gas sector and their mutual relations leaving several questions of interpretation requiring legal expert knowledge.

In addition, new and improved framework conditions for the production and use of bio natural gas in Denmark have resulted in an increasing number of bio natural gas projects, and it is expected that the production of bio natural gas will increase in the years to come.

We advise on e.g.:

• The rules on access to transmission and distribution networks and storage, including price regulation
• Rules on unbundling and monitoring programmes
• Contract interpretation
• Regulation of the legal activities of municipal natural gas supply utilities
• Issues concerning the set-off rules of the Natural Gas Supply Act
• In-house rules within the natural gas area
• Licence issues
• Transactions and reorganisations
• Drafting or review of contracts concerning purchase, sale and transportation of biomass and degassed biomass
• Application for grants for the production of bio natural gas
• Start-up of bio natural gas projects

The liberalisation of the Danish electricity market has created many new players. The liberalisation has also resulted in a comprehensive and complicated set of rules making heavy demands on the management of the mutual relations between the players, and which makes it difficult to get an overview of the electricity market. Several political changes will come, and these changes will, among other things, result in increased integration of a Nordic and European electricity market.

We advise, among other things, on: 

• The rules on access to transmission and distribution networks, including price regulation of network and transmission utilities
• Rules on unbundling
• Contract interpretation
• Regulation of municipal electricity supply activities, including the set-off rules of the Electricity Supply Act.
• Licence issues
• Transactions and reorganisations.

The water supply sector is facing radical changes as a consequence of the Water Sector Act's general changes of the regulation, including demands for increased efficiency of water utilities and separation of municipalities' tasks from the operation of water supply and waste water disposal utilities. These and future changes as the result of an evaluation of the Water Sector Act will lead to both structural, market and economic changes. All players in the sector are forced to relate to these changes, both utilities and other companies and institutions.

Also the players will have to relate to the changed physical and regulatory frameworks. Waste water disposal utilities must to an increasing extent administer large volumes of water, climate changes, requirements for cooperation with private companies and authorities and handling of floods, etc.

Water plans and stricter environmental requirements make demands on companies' planning of operation and facilities and on initiatives to ensure supply based on these new conditions.

We advise on e.g.: 

• Planning of the operation and development of company strategies
• Reorganisation
• Divestment of supply utilities
• Cooperation agreements concerning draining of water and distribution of natural resources
• Liberalisation
• Regulatory affairs
• Operational issues, including implementation of development projects and communication and handling of disputes with customers. etc.
• Regulatory treatment
• Transactions
• Drafting and interpreting contracts and terms of delivery (regulations and payment regulations)
• Strategic advice.

The heat sector experiences increasing focus on economy and the possibilities of optimising operations. We therefore see an increasing formation of cooperation, joint operations and mergers in the sector.

As opposed to previously, there is focus on competition within the heat sector (between heating companies and vis-à-vis natural gas companies). In addition, individual heating solutions are to an increasing extent challenging the collective heat supply.

The waste sector is facing the implementation of a changed approach to waste disposal.

The Government's focus on exploitation of resources rather than waste disposal will be implemented in all municipalities and companies. It is expected that the municipal waste incineration plants will be faced with a requirement for conversion with a view to increasing market competition. The liberalisation of the incineration sector also focuses on ownership and capital structure; complex issues which companies and owners will have to relate to in the near future.

We advise on e.g.:

• Pricing
• Allocation of costs for waste incineration plants, including between waste, heat and electricity
• Heat planning, including development and authorities' consideration of project proposals
• The interpretation of the waste regulation and drafting of regulations and establishment of new waste schemes
• Drafting waste management plans and regulations
• Establishment and calls for tenders for waste management schemes
• The relations with customers and competitors, including contract formation and complaints
• Reorganisation, company conversion and establishment of cooperation.