Written by Caroline Bush and Arthur Hopkinson, associate director and senior associate in the planning and environment team, and construction and engineering disputes partner Daniel Cashmore at law firm Osborne Clarke, this contributed blog discusses the UK’s Waste Electrical and Electronic Equipment (WEEE) Regulations.
The solar industry faces an array of legal obligations in relation to the disposal of photovoltaic (PV) panels – and, in practice, has struggled to grapple with these commitments.
The cost of removing and disposing of PV panels as part of decommissioning will likely have been considered from the outset. However, when the panels need to be removed prior to decommissioning—for example, for repowering or due to defects—parties will often not have an agreement in place as to who within the supply chain should be responsible for the disposal costs.
Parties should consider as part of their contract negotiations how they allocate these costs to avoid confusion and potential disputes. This will also ensure compliance with the relevant legal framework: the UK’s Waste Electrical and Electronic Equipment (WEEE) Regulations 2013.
WEEE regulations
The WEEE regulations set a UK legal framework derived from European Union law. The regulations were introduced in January 2014 to replace a previous set of legal requirements and to reduce the volume of waste electrical and electronic equipment that needs to enter landfill. This is achieved by incentivising the recovery and recycling of waste equipment
The regulations also place financial responsibility for the disposal of waste equipment on the party in the supply chain which produced the waste.
A key consideration for understanding the implications of the WEEE regulations is which party will bear the costs obligations as the “producer”. This can be those manufacturing and selling equipment under their brand, buying, rebranding and re-selling equipment to the UK market, importing equipment commercially into the UK, or non-UK companies who supply equipment directly to an end-user in the UK by distance selling.
The party obligated as producer will need to register with the relevant national environmental regulator or a producer compliance scheme, and pay annual fees to those bodies to finance the costs of collecting, treating, recovering and disposing of the waste equipment.
The WEEE regulations do allow flexibility as to how costs are allocated within the supply chain and permit costs responsibility to be agreed contractually. However, the producer will always retain strict legal liability to comply with the regulations.
How does this impact the solar industry?
The WEEE regulations may be familiar to many in the industry as solar PV panels have been in scope since the amended regulations came into force in January 2014.
Therefore, those in the industry who classify as a producer will be subject to the default costs liability for disposing of solar panels (whether at the end of their life or when removed for repowering or because they are defective).
Identifying the correct party with legal liability for costs in the PV panel supply chain is important, not only to ensure that solar assets which are marketed as green and sustainable are disposed of in an environmentally sound way but also due to the extent of the costs involved in disposing of potentially a significant number of panels.
Industry issues with WEEE costs
While the legal framework for WEEE is clear, in practice, there is significant confusion and disagreement around who in the supply chain should bear costs responsibility under the regulations. There are a number of problems that are frequently encountered in this area.
Lack of clarity on who is the producer
There is often a lack of clarity on who is the producer for the solar panels. The party that is legally obligated under the WEEE regulations will depend on how the solar developer is purchasing the solar panels. Typically, two scenarios are encountered in supply chains: Direct procurement of the panels by the developer from a UK or non-UK supplier, or indirect procurement of the panels by the developer through a contractor from a UK or non-UK supplier.
Regardless of the legal framework, often solar developers accept responsibility for costs with the WEEE Regulations in both scenarios.
However, in the event this position is disputed there will need to be a detailed look at the specific panel purchase arrangements and supply chain structure to confirm the identity of the ‘producer’ or who is otherwise the party responsible for the costs.
Non-UK-based suppliers refuse to accept producer status
A common response in the industry from non-UK suppliers is that they cannot be the producer of the panels and that the next party in the supply chain that is based in the UK should be the party complying with the WEEE regulations.
While in some instances this may be the case, the position depends on whether the non-UK supplier is selling the panels via “distance selling” and also whether the non-UK supplier is selling directly to the end user of the panels or rather to an intermediary.
As a concept, distance selling means, in summary, entering into a panel purchase contract where the buyer and seller are not simultaneously in the same place (for example, via email and telephone call).
Previously, with panel supply contracts being signed in person, this concept will have been less relevant to the industry.
However, the rise of using alternative signing software (such as DocuSign) or concluding contracts via email, means that increasingly there is an argument that panels sold directly to an end-user in this way satisfy the ‘distance selling’ element and a non-UK supplier is caught as a ‘producer’.
Where the panels are sold to an intermediary which sells the panels on to an end-user, the non-UK 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 scope for developers to push back on accepting costs responsibility wholesale from non-UK suppliers.
Lack of understanding of the regulations
There is also often a lack of understanding about what is required by the WEEE regulations. Generally, contracting parties only appear to discuss the topic of panel disposal costs at the time of disposal.
Instead, agreeing a costs position is a matter that becomes relevant as soon as the panels are supplied to the UK market by a producer.
At that point, the producer should register with a regulator and compliance scheme and should pay annual fees to these bodies to cover the disposal costs of those panels in future.
Through a misunderstanding of the requirements and non-compliance by producers, there is a risk that the developer is left to deal with the waste and meet the disposal costs.
Failure to clearly allocate WEEE regulation costs
Notwithstanding these issues, the WEEE regulations do allow the parties to agree contractually who should fund the producer’s compliance with the regulations.
If the developer agrees to accept the costs of funding a supplier’s compliance costs, this must be agreed and clearly set out in the sale agreement for the panels.
The parties may choose to distinguish between responsibility for costs arising from the disposal of defective panels as opposed to as part of the decommissioning of the solar farm at the end of its life.
Without clear contractual wording to allocate the compliance costs between the parties, then the default position will apply and, as a matter of law, the ‘producer’ will remain liable for these.
Steps to deal with issues
Given these various issues, greater awareness of how and when the WEEE regulations apply is needed.
This will help to reduce legal costs, assist parties in aligning their waste management goals, and maintain the industry’s reputation for delivering a sustainable energy transition.
Practically, the parties to a panel supply arrangement should ensure the following: Firstly, if a non-UK supplier is involved, check if the purchase arrangements qualify as distance selling, if you are a developer, check if you are actually obligated to meet WEEE under the law. Additionally, firms should ensure they understand the core requirements of the law, and ensure that any works contracts or supply agreements clearly address the allocation of compliance costs.
