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Law Firms in Oil Country See Green in Renewable Energy Clients

May 6, 2021, 12:52 PM

Law firms in the heartland of Big Oil are racking up dollars by going green, as investors and companies spur them to grow their renewable energy practices.

Houston-based Vinson and Elkins LLP represented 20 large investor clients over the past 18 months, compared with only five or six in the months previous to that, said Kaam Sahely, head of the firm’s renewables practice in Austin, Texas. Projects included Goldman Sachs Group Inc.'s acquisition from Recurrent Energy of 300MW solar photovoltaic (PV) plus storage project in California.

“It’s a major transition of capital into this space,” Sahely said. “There’s no sense that it’s short term.”

Firms that used to mainly take on solar and wind projects are growing their renewables practices by taking on technologies such as battery storage, hydrogen, carbon capture, and renewable diesel and natural gas. They’re adding attorneys and making acquisitions to keep up with the demand, especially as traditional oil and gas companies make more investments.

‘Moving the Pendulum’

Occidental Petroleum Corp. is investing in carbon capture, and Total SE is following BP Plc’s lead and investing in wind and solar, said Blake Winburne, who leads the energy and infrastructure practice at Orrick, Herrington & Sutcliffe LLP in Houston.

BP’s past renewable work “was always just ancillary,” Winburne said. “Now they’re going to convert themselves to a green energy company over the next 15 years.”

Renewables account for 40% to 60% of the firm’s project finance work after growing in the past 18 months, Winburne said. Environmental, social and governance, or ESG, requirements have been “moving the pendulum of private capital” into renewables, he said.

Orrick opened its Houston office in 2016 with the goal of leading in renewables and has added seven partners to its global team since 2019, firm spokesperson Adi Weisman said.

Outgrowth of Activism

The increase in renewables work is an outgrowth of activism at the grassroots level, said Gina Warren, University of Houston law professor and energy fellow whose research focuses on sustainable energy policy.

“You have investors, customers and shareholders who are demanding a sustainable future,” Warren said. “The companies are required to be more sustainable, and then they’re going to their attorneys.”

Norton Rose Fulbright lawyers in North America worked on 172 renewables transactions with a total value of $26.1 billion over the last five years, firm spokesman Dan McKenna said. Its project group last year spent about 85% of its time on renewable energy projects compared with 60% in each of the 10 years before that, he said.

The firm acquired Chadbourne and Parke LLP in 2017 to expand its renewables practice.

“Some firms made the mistake of thinking this was an industry that was fully driven by subsidies and the tax credits because the tax credits kept getting extended only for a year or two,” said Becky Diffen, an Austin-based partner at Norton Rose. “People kept thinking, when the tax breaks go away, this industry is going to die.”

‘So Many Projects’

Baker Botts LLP’s expansion of its renewables practice since 2019 has the work now making up about three quarters of project finance activity, said Jason Bennett, a Houston-based partner at the firm and department chair of global projects.

Recently the firm advised a subsidiary of Sunnova Energy International Inc. as the borrower on documentation, structuring and tax issues in a $95 million “safe-harbor” financing that included the acquisition of inverters and batteries used in residential solar projects.

The diversity of projects underscores the importance of firms having specialists in different areas, said Elaine Walsh, partner at Baker Botts in Washington. This includes environment and tax but also technology.

“The separation between our energy lawyers and our technology lawyers is getting thinner and thinner each day because there’s so many projects on new, clean tech and different energy technologies,” Walsh said. “Not a lot of firms are prepared for that.”

To contact the reporter on this story: Nushin Huq at correspondents@bloomberglaw.com

To contact the editor on this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes in Washington at jhughes@bloombergindustry.com

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