Written by Caroline Bush and Arthur Hopkinson, associated director and Senior Associate in the Planning and Environment Team, and Bouw- en Engineering Disputes Partner Daniel Cashmore at law firm Osborne Clarke, has this contributed blog De UK’s Waste Electrical and Electronic Equipment.
The solar industry is confronted with a series of legal obligations with regard to the removal of photovoltaic (PV) panels – and has difficulty struggling with these obligations in practice.
The costs for removing and throwing away PV panels as part of dismantling will probably have been considered from the start. However, if the panels have to be removed prior to dismantling – for example for recovery or due to defects – parties will often have no agreement on who must be responsible for the removal costs within the Supply Chain.
As part of their contract negotiations, the parties must consider how they award these costs to prevent confusion and potential disputes. This will also ensure compliance with the relevant legal framework: the UK’s Waste Electrical and Electronic Equipment (WEEEE) Regulations 2013.
WEEE GREATS
The WEEEE regulations have established a British legal framework that is derived from the law of the European Union. The regulations were introduced in January 2014 to replace an earlier series of legal requirements and to reduce the amount of waste of electrical and electronic equipment that must enter the landfill. This is achieved by stimulating the recovery and recycling of waste equipment
The regulations also lay the financial responsibility for the removal of waste equipment on the party in the supply chain that produced the waste.
An important consideration for understanding the implications of the WEEE regulations is which party will bear the cost obligations such as the “producer”. This can be the production and sales equipment under their brand, buying, rebranding and re-sold equipment to the British market, the commercial import of equipment in the UK, or non-British companies that deliver equipment directly to an end user in the UK through the distance sales.
The party that is mandatory as a producer must register with the relevant national environmental regulator or a compliance scheme from the producer and annual costs pay to those authorities to finance the costs of collecting, handling, recovering and discarding the waste equipment.
The WEEE regulations allow flexibility how the costs within the Supply Chain are allocated and allow the responsibility of the costs to be contractually agreed. However, the producer will always retain strict legal liability to comply with the regulations.
How does this affect the solar industry?
The WEEEE regulations may be known to many in the industry, because Zonne -PV panels have been on reach since the changed regulations were taken into effect in January 2014.
That is why those in the industry who classify as a producer will be subject to standard cost liability for throwing away solar panels (either at the end of their lives or when they are removed for repower or because they are defective).
Identifying the right party with legal liability for costs in the Supply Chain of the PV panel is important, not only to ensure that solar assets that are brought to the market as green and sustainable are removed in an environmentally friendly manner, but also because of the size of the costs involved in removing possibly a substantial number of panels.
Industrial problems with WEEE costs
Although the legal framework is clear to WEEE, there is significant confusion and disagreement in practice who in the Supply Chain must bear the responsibility of the costs under the regulations. There are a number of problems that are often found in this area.
Lack of clarity about who the producer is
There is often a lack of clarity about who the producer is for the solar panels. The party that is legally required under the WEEE regulations depends on how the solar developer buys the solar panels. Usually two scenarios are found in Supply Chains: direct purchasing of the panels by the developer of a VK or non-AK supplier, or indirect purchasing of the panels by the developer via a contractor of a British or non-British supplier.
Regardless of the legal framework, solar developers often accept responsibility for costs with the WEEEE regulations in both scenarios.
In the event that this position is disputed, however, there must be a detailed view of the specific purchase schemes and the Supply Chain structure to confirm the identity of the ‘producer’ whether it is the party responsible for the costs.
Non-UK-based suppliers refuse to accept the status of producers
A common response in the industry of non-UK suppliers is that they cannot be the producer of the panels and that the next party in the supply chain established in the UK should be the party that meet the WEEE regulations.
Although this can be the case in some cases, the position depends on whether the non-AK supplier sells the panels via “distance sale” and also whether the non-AK supplier sells directly to the end user of the panels or rather an intermediary.
If a concept means a distance sales, in gathering, concluding a panel purchase contract where the buyer and seller are not at the same place at the same time (for example via e -mail and telephone conversation).
Earlier this concept, with panel offer contracts that were personally signed, would have been less relevant to industry.
However, the emergence of the use of alternative signing software (such as Docusign) or concluding contracts via e-mail means that there is increasingly an argument that panels are sold directly to an end user in this way the ‘distance sales’ element and a non-British supplier are caught as a ‘producer’.
Where the panels are sold to an intermediary who sells the panels to an end user, the non-AK supplier will not be the ‘producer’ for the purposes of the regulations.
This scenario has not yet been tested by the courts, nor is there currently any government guidance, which leaves developers a scope to reduce the acceptance of cost responsibility wholesale of non-UK suppliers.
Lack of understanding of the regulations
There is also often a lack of understanding about what is needed by the WEEEE regulations. In general, contracting parties only seem to discuss the subject of the removal costs of Paneel at the time of removal.
Instead, the matching of a cost position is a matter that becomes relevant as soon as the panels are delivered to the British market by a producer.
At that time, the producer must register with a regulator and compliance scheme and must pay annual costs to these authorities to cover the removal costs of those panels in the future.
Due to a misunderstanding of the requirements and non-compliance by producers, there is a risk that the developer will be left to tackle the waste and get the removal costs.
Not clearly allocating the WEEE control costs
Notwithstanding these issues, the WEEE regulations enable the parties to agree contractually who should finance compliance with the producer with the regulations.
If the developer agrees to accept the costs of financing the compliance costs of a supplier, this must be agreed and clearly explained in the sales agreement for the panels.
The parties can choose to distinguish between the responsibility for the costs arising from the removal of defective panels in contrast to the dismantling of the solar farm at the end of his life.
Without a clear contractual formulation to allocate the compliance costs between the parties, the standard position applies and according to the law the ‘producer’ remains liable for this.
Steps to tackle problems
Given these different issues, a greater awareness of how and when the WEEEE regulations apply.
This will help to reduce legal costs, help parties to coordinate their goals for waste management and to maintain the reputation of the industry to deliver a transition from sustainable energy.
In practical terms, the parties must guarantee the following with a panel supply: firstly, if a non-AK supplier is involved, check whether the purchase schemes are eligible if the remote sale, if you are a developer, check whether you are actually obliged to meet WEEE under the law. Moreover, companies must ensure that they understand the core requirements of the law and ensure that any work contracts or delivery agreements clearly tackle the allocation of compliance costs.