Environmental Engineering Reference
In-Depth Information
only certain fact is that risk must be different from average risks of commercial
contracts, e.g. termination.
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3.7.3.3 Risk and the Desertec Concept
It is difficult to evaluate what the tribunals think about guarantees. The decision
concerning the “no find - no pay” clause does not apply to the Desertec Concept.
Besides the fact that the decision was annulled, the first tribunal already stated that
this is a typical clause in marine salvage. Marine salvage projects already bear a
great risk if the parties find something at all. The clause tries to ease the risk for the
ordering party. This clause transforms a service contract into a contract for work
and services. Consequently, it deals with the transfer of risk, but not with guarantee
related to the risk. Without a doubt, the mere fact that a subsidy or feed-in tariff
exists does not exclude the requirement of risk.
Other decisions offer a type of guideline which the parties to the project should
follow. First of all, there is the need for a competitive negotiation of PPAs,
subsidies or feed-in tariffs between the parties of the Desertec Concept. Therefore,
it is important that all parties negotiate in a transparent way to be able to illustrate
competitiveness. Secondly, PPAs, subsidies or feed-in tariffs cannot cover the
complete production costs of the energy. The main idea of them is to support the
company and not to pay all its bills. In the latter case, there would be no risk because
the state would always step in for the company. In addition, an investor also
underlines that PPAs, subsidies or feed-in tariffs are only important at the start of
the production. Otherwise there would be the risk that desert sun is not competitive
with other technologies. ICSID tribunals also did not view any of these supportive
measures as being contradictory to investment as long as these tools meet certain
requirements, e.g. not guaranteeing all investor costs. There is a great possibility
that ICSID tribunals are going to accept the supportive tools of the Desertec
Concept. This seems to support the idea that a project might need help at the
beginning, but not total coverage. To avoid problems with the requirement of
risk, the amount and percentage of total production costs concerning PPAs, subsi-
dies or feed-in tariffs should be transparent.
As mentioned above, the Desertec Concept faces a lot of different procedural
risks and project risks which are connected to its size and “prototype” status. Most
of these risks do not even relate to the issue of production costs and sale of services.
This also underlines the importance of certain guarantee tools concerning some
risks. Due to the great investment sum, it is “doubtful” whether the project can be
completely covered. There is a great chance that ICSID tribunals view the require-
ment of “risk” as met. However, the above-mentioned cases did not deal with the
Salini test, which leaves a residual risk, as risk did not form part of the notion of
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ICSID [2007] ARB/05/10—Award, 38-39 para 112; ICSID [2004] ARB/03/11—Award,
13 para 57.
