Key Takeaways from the second EaaS capacity building webinar in Belgium

On May 2nd 2022, Agoria held a capacity building webinar on “EaaS contractual framework, energy policy and property law” in which guest speaker Benjamin Verheye (KU Leuven) explored the loss of equipment ownership risk some EaaS suppliers may face as a consequence of the implementation of the Belgian Property Law. Beatrice Vanden Abeele (Agoria) presented the standardised EaaS agreement developed by Agoria and DLA Piper for the Belgian Market. Finally Ruth Lambrechts (Agoria) presented the implications and opportunities of the recent developments in EU energy policy on EaaS project developers.

Under Belgian law, when an object becomes an inherent part of a real estate, the ownership of that object also becomes the ownership of the owner of the real estate.  This is referred to as “immovable accession”. The building lease foreseen by the Belgian Law allows to overcome this issue by offering the opportunity to split the ownership of buildings in a horizintal way.  For example, the owner of a building may grant a building lease right to the owner of solar panels, the latter thereby acquiring the right to install the panels on the building while maintain their ownership.

Benjamin Verheye argues for a generalisation of the building lease – which applies not only to buildings but also to parts of the building –  as a solution to the loss of ownership risk in service oriented circular business models. Such a solution sets the ground for legal certainty and presents the following advantages:

• Transparency: a building lease needs to be registered in the Belgian land register
• Familiarity: building lease is well known in the real estate practice and most project developers are very familiar with such a practice
• Bankability: it is perfectly possible to grant a mortgage to a bank on the objects that one owns on the basis of a building lease.

Such a solution however requires a modern interpretation of the law especially with regards to the independence principle – under which the object of a building lease must be capable of an independent existence  – which while not mentioned in the Belgian Civil code, is very widely cited in literature and applied in practice.

Benjamin Verheye developed a risk assessment framework which establishes three categories of loss of ownership risks:

• Category A: applies to parts that do not become an inherent part of a building and are therefore not incorporated to the building, e.g. furniture. Such products never face a loss of ownership risk and therefore do not require additional legal measures.
• Category B: applies to equipment that become an inherent part of a building and for which a building lease is possible under the classical interpretation of law (i.e. also meeting the independence requirement). Belong to this category:  solar panels, heat pumps and elevators.
• Category C: applies to building components for which a building lease is possible in a modern interpretation of law – i.e. one that does not consider the independence principle – but are disputable from the classical point of view. Belong to this category solar roof tiles, and heat networks. Project developers considering developing as-a-service solutions for equipment that fall under this category must be extremely careful in the authentic deed that establishes the building lease and be careful towards the risks that are associated with the project.

In Belgium, the legal framework (Civil Code) has set little rules to regulate B2B service contracts and parties have quite some freedom to agree on the contracts content. The aim of the standardized EaaS agreement was to develop a balanced agreement between the two parties to the contract and tackle potential risks and concerns of the two parties.  The EaaS standard contract may need to be further revise to enable the bankability of the projects it underlines.

The EaaS standard agreement is a pay-per-use model which is orchastrated around on certain output specifications. Within an EaaS agreement,  the EaaS provider is free to choose the means to achieve such result. From a legal point of view, the EaaS agreement is a service contract.

Beatrice Vanden Abeele presented the template EaaS contract on the basis of the risks and the concerns of both parties, i.e. the EaaS supplier and his customer.

 

 

In 2018  & 2019 the European Commission adopted the clean energy for all package in order to set the pace for gradual transition towards clean energy and a carbon-neutral economy.  When it comes to providing EaaS, the 2 most important pieces of legislation within this package are the Electricity Market Directive and the Renewable Energy Directive. Ruth Lambrechts (Agoria) presented the implementation status of these two pieces of legislations in the 3 Belgian Regions and the implications and opportunities for EaaS suppliers. While the policy framework potentially enabling energy-as-a-service is still being developed, and considering that the implementation of the measures addressed in these policy frameworks will strongly depend on the rollout of digital meters,  the following can already be noted:

• In order to supply electricity to its equipment, an EaaS provider must set up an official EAN meter and become an recognised electricity supplier, thereby needing to comply with all related regulations and requirements, such as the need to ensure a balance between the supply and demand at any point in time and on all intake/offtake points.
• On Energy flexibility: EaaS provider may act as flexibility provider against a financial compensation by the distribution system operator.
• On energy sharing: an EaaS provider can act as a third party facilitator for the energy sharing between different tenants/owners within the same apartments building block.
• On energy communities: opportunities are limited as energy communities follow a bottom-up approach and an EaaS provider cannot take the initiative to set up an energy community. The objective of these communities is to offer economic or social or environmental benefits to its members and making profit cannot be the primary objective of an energy community.

 

The webinar can be viewed on the EaaS project Youtube Channel

 

• Benjamin Verheye, Postdoctoral Researcher at KU Leuven: Benjamin is a post-doctoral researcher focusing his research on law and technology (blockchain, smart contracts, AI, smart building) and law and sustainability, with special attention to real estate law and the notarial profession. In 2019 Benjamin won the annual TPR prize with his contribution on real estate in the circular economy (www.tpr.be).
• Beatrice Vanden Abeele, Expert Commercial Law at Agoria: Beatrice is a company lawyer working with Agoria for about 10 years. She focuses on business and competition law, providing legal advice to Agoria member companies as well as advocacy and monitoring of legislative initiatives. She is involved in circular economy projects with regard to the contractual aspects and legal questions deriving from new business models, such as servitisation.
• Ruth Lambrechts, Expert Energy & Climate at Agoria: Ruth is an energy & climate policy expert  working with Agoria for about 9 years. She focuses on the regulatory framework of climate policy, energy markets and energy policy legislation such as taxes and energy efficiency legislation.  As project manager for Fit for 55, Ruth is also heavily involved in the European energy legislation and its impact on Belgian technology companies.