Australia: Epc Contracts In The Renewable Energy Sector - South African Re Ipp Programme - Lessons Learned From Phases 1 And 2 (October 2012) Part 10

Last Updated: 27 October 2012

EP is the relevant Evaluation Period stated elsewhere in this Contract;

i is the sequential number of each Measurement Period in the Evaluation Period;

MP is the relevant Measurement Period of [15 minutes] each;

is the unshaded insolation (kWh/m²) in the plane of array measured in accordance with paragraph 2.7 below during the relevant Measurement Period.

2 MEASURED PRMP

2.1 Determination of Measured PRMP

Measured PRMP shall be determined and calculated as follows:

whereby:

Measured PRMP is the Measured PR (dimensionless) for the relevant Measurement Period;

MP is the relevant Measurement Period;

EbACis the energy actually metered (kWh) by the HV meter at Delivery Point during the Measurement Period; [Drafting note: If energy generated by the Facility is used to provide auxiliary power (rather than drawing auxiliary power from the grid), it would be appropriate to add the auxiliary power to EAC. However, in such case there should be a separate guarantee of the maximum requirements for auxiliary power.]

is determined in accordance with the formula in paragraph 2.2 below.

is determined in accordance with the formula in paragraph 2.4 below;

[Drafting note: If only one type of module is installed in the Facility, reference can be had to nSTC, being the module efficiency at Standard Testing Conditions as stipulated in the module datasheet.]

Aarrayis the gross collector area of all modules (m²), which (for the avoidance of doubt) shall be the dimensions provided on the module datasheet and shall not be restricted to the cell surface;

TC is the temperature correction factor (dimensionless) determined in accordance with the formula in paragraph 2.5 below; and

D is the degradation correction factor (dimensionless) determined in accordance with the formula in paragraph 2.6 below.

2.2 Determination of

is determined as follows

whereby:

Einsolation,POA is the unshaded insolation (kWh/m²) in the plane of array measured in accordance with paragraph 2.7 below during the relevant Measurement Period;

e is each External Event as defined in paragraph 2.3 below;

f is the total number of External Events in the relevant Evaluation Period; and

is the unshaded specific irradiation (kWh/m²) in the plane of modules received during an External Event persisting during the relevant Measurement Period measured in accordance with paragraph 2.7 below.

2.3 External Events

Each of the following events shall be an "External Events":

  1. the complete or partial unavailability of the grid for the purpose of exporting energy to the grid (but only to the extent of such unavailability);
  2. the complete or partial unavailability of the Facility for the purpose of producing energy (but only to the extent of such unavailability) caused by the action of a third party, unless the prevention of action from third parties was within the scope of the services to be provided by the Contractor or the Operator; [Drafting Note: The exclusion will only be justified if the Contractor or the Operator is responsible for site security and if the Operator is an Affiliate of the Contractor.]
  3. a weather event exceeding the design parameters of the Facility, but only to the extent the Contractor can show that such weather event has reduced the ability of the Facility to produce energy; [Drafting note: Please check that the design parameters have included permissible weather conditions and that such design parameters are reflected in the specification and the datasheets.]
  4. the inability of the Owner to export energy to the grid due to the termination of the Power Purchase Agreement or the revocation, annulment or termination of any relevant Authorisation; and
  5. an event of Force Majeure, but only to the extent the Contractor can show that such event of Force Majeure has reduced the ability of the Facility to produce energy,

provided always that for the duration of the relevant External Event:

  1. if the Contractor and the Operator are Affiliates, neither the Contractor nor the Operator; or
  2. if the Contractor and the Operator are not Affiliates, the Contractor

has not caused or contributed to the External Event and has not aggravated the effects of the External Event on the ability of the Facility to generate and export energy.

m is each module installed in the Facility;

n is the total number of modules installed in the Facility; and

Amodule is the gross collector area (m²) of each module m, which (for the avoidance of doubt) shall be the dimensions provided on the module datasheet and shall not be restricted to the cell surface.

[Drafting note: Paragraph 2.4 is not required if reference is to ?STC only.]

2.5 Determination of TC

The temperature correction factor TC shall be determined as follows:

whereby:

TC is the applicable temperature correction factor (dimensionless);

TC(Pmax)is the negative temperature coefficient (%/°C) for maximum power Pmax provided on the module datasheet;

Tref is [reference temperature in °C]; [Drafting Note: Determining the reference temperature as benchmark has a crucial impact on the temperature correction factor. Three approaches seem to be followed in the industry: (1) Benchmarking against 25°C, being the temperature component of STC, in which case Treal should be measured as the ambient temperature. (2) Benchmarking against Normal Operating Cell Temperature NOCT (usually around 48°C, but in the range of about 33 to 58°C, in which case Treal should be measured on the back of the module such as to pick up the cell temperature). (3) Benchmarking against the reference cell temperature used by the calculation software - PVSYST at 40 °C. The methodology for temperature correction should be reviewed by the technical advisors and taken into account for the purpose of stipulating the Guaranteed PR.]

Treal is the measured average temperature (°C), measured [by the temperature sensor of the weather station][by temperature sensors on the reverse side of the modules] during the relevant Measurement Period; [Drafting Note: See previous drafting note.]

2.6 Determination of D

The degradation correction factor D shall be determined as follows:

whereby:

DMP is the degradation factor applying to the Measurement Period MP;

DF is [specify, typically -0.3 to -0.4] %/a;

n is the year following the Commercial Operation Date into which the Measurement Period falls (but excluding the final year if the final year is not a full year);

DFfinal is 1.00 for every full year following the Commercial Operation Date and the factor calculated in accordance with the formula below if the final year is not a full year:

whereby:

nd is the number of days in the final year that fall within the Evaluation Period;

DF has the same meaning as above.

2.7 Measurement of Einsolation,POA

Einsolation,POA shall be measured and calculated as follows: [Drafting note: Detail measurement and calculation methodology in light of pyranometers and reference cells actually available.]

PERFORMANCE GUARANTEES

[Drafting Note: This Performance Guarantee Schedule must be finalised based on the agreed performance criteria following review of the proposed detailed design and specification referred to in the Specification and the relevant Power Purchase Agreement.]

1 COMMERCIAL OPERATION PERFORMANCE GUARANTEES

Performance Guarantees to be met prior to the Commercial Operation Date are:

1.1 Performance Ratio Guarantee

The Contractor guarantees that during the Commercial Operation PR Test the Actual PR is no less than [95 %] of the Guaranteed PR

[A guarantee that a certain level of performance will be achieved, measured during a certain testing period under standardised conditions. The achievement will be measured by means of a performance test (see Testing Schedule).]

1.2 DC Capacity Guarantee

The Contractor guarantees that the Installed DC Capacity is no less than [99.5 %] of the Guaranteed DC Capacity.

[A guarantee that the component most critical for the capacity of the Facility will be installed, despite potential uncertainties in the supply chain.]

2 POST-COD GUARANTEES

Guarantees to be met after the Commercial Operation Date are:

2.1 Performance Ratio Guarantee

The Contractor guarantees that during each Evaluation Period during the Defects Liability Period the Actual PR is no less than the Guaranteed PR

[A guarantee that a certain level of performance will be achieved, measured on an ongoing basis. The achievement will be measured by means of a performance test (see Testing Schedule).]

2.2 [Parasitic Load/Auto-consumption Guarantee]

[Drafting Note: if the Facility will auto-consume some of the energy produced and such energy is added back on to the EAC for the purpose of the calculation of the Measure PR (see our comment there), the Operator should guarantee that such auto-consumption (parasitic load) does not exceed a stated level).]

LIQUIDATED DAMAGES AND REDUCTIONS IN THE CONTRACT PRICE

1 DELAY LIQUIDATED DAMAGES

[Drafting Note: The following structure is an example of the delay liquidated damages that may be listed in this Schedule.]

1.1 The Delay Liquidated Damages are:

1.1.1 [insert]

[Drafting note: under clause 4.6 of the PPA is that for each day that Commercial Operation is delayed beyond the Scheduled COD, the Operating Period will be reduced by one day and the Expiry Date will be brought forward by one day. The effect of this is that the term of the PPA will effectively be reduced by 2 days for each day of delay beyond the Scheduled COD. This 2 day reduction should be factored in when determining the rate of Delay Liquidated Damages.]

1.2 The aggregate liability for Delay Liquidated Damages is limited to [15.00] % of the Contract Price.

1.3 Delay Liquidated Damages must be invoiced weekly by the Owner and payment will be due within 30 Days of issue of such invoice.

1.4 At the expiration of 30 Days the amount invoiced will be a debt due and payable to the Owner on demand and may be deducted from any payments otherwise due from the Owner to the Contractor and the Owner may also have recourse to the security provided under the Contract.

2 REDUCTIONS IN THE CONTRACT PRICE

Reductions in the Contract Price for breach of the Commercial Operation Performance Guarantees are:

2.1 DC Capacity Guarantee

If the Contractor is in breach of the DC Capacity Guarantee, the Contract Price shall be reduced by an amount of [X.XX %] for each 1.00 % (pro-rated for part thereof) by which the Installed DC Capacity falls short of the Guaranteed DC Capacity.

[The remedy for a breach of the DC Capacity Guarantee will be a reduction in the Contract Price, taking into account the Installed DC Capacity. The reduction in the Contract Price should be somewhat larger than 1.0 % for every 1.0 % shortfall, taking into account the higher over-head costs per unit of Installed DC Capacity and loss of profit on DC capacity not installed.]

3 PERFORMANCE LIQUIDATED DAMAGES

Performance Liquidated Damages for breach of the PostCOD Guarantees are:

3.1 Liquidated Damages for Loss during Defects Liability Period

If the Contractor is in breach of the Performance Guarantee of the Post-COD Guarantees for any Evaluation Period during the Defects Liability Period, the Contractor shall pay the Owner in respect of losses suffered during such Evaluation Period liquidated damages calculated as follows:

Where:

LDEP means the liquidated damages payable in respect of the relevant Evaluation Period.

EP means the relevant Evaluation Period and has the same meaning as in Schedule 9.

Guaranteed PR has the same meaning as in Schedule 9.

Actual PREP means the Actual PR in the relevant Guarantee Period and Actual PR has the same meaning as in Schedule 9.

EnergyEP means the energy that would have been delivered at the Delivery Point in the relevant Evaluation Period had the Actual PREP been at the level of the Guaranteed PR for that Evaluation Period.

CER means the applicable Commercial Energy Rate as stipulated in, and indexed pursuant to, part 3 of schedule 1 of the Power Purchase Agreement.

3.1.1 The aggregate liability for Performance Liquidated Damages for breach of the Performance Guarantee of Post-COD Guarantees for losses during the Defects Liability Period pursuant to paragraph 3.1.1 is limited to [15.00] % of the Contract Price.

3.1.2 Performance Liquidated Damages pursuant to paragraph 3.1.1 must be invoiced by the Owner by reference to each Evaluation Period and payment will be due within 30 Days of issue of such invoice.

3.1.3 At the expiration of 30 Days the amount invoiced will be a debt due and payable to the Owner on demand and may be deducted from any payments otherwise due from the Owner to the Contractor and the Owner may also have recourse to the security provided under the Contract.

3.2 Liquidated Damages for Future Loss

3.2.1 If the Contractor is in breach of the Performance Guarantee of the PostCOD Guarantee calculated in respect of the entire Defects Liability Period, the Contractor shall pay the Owner in respect of future losses expected to be suffered by the Owner after the Defects Liability Period liquidated damages in an amount of [X.XX %] for each 1.00 % (pro-rated for part thereof) by the Actual PR for the Defects Liability Period falls short of the Guaranteed PR. [The liquidated damages for future losses are similar to an adjustment of the Contract Price and should be larger than 1.0 % for every 1.0 % shortfall, taking into account the higher over-head costs if there is a permanent performance shortfall as well as loss of profit on energy not produced. Please also note that a 1.00 % shortfall of the Actual PR automatically translates into a loss greater than 1.00 % (the loss factor is 1/Guaranteed PR) by virtue of 100 %of performance being a PR in the region of 75 to 80 %, even without taking into account the wider effect of the issues raised in the first sentence of this note.]

3.2.2 The aggregate liability for Performance Liquidated Damages for breach of the Performance Guarantee of Post-COD Guarantees for future losses is limited to [[X.XX %] of the Contract Price. [We would recommend that the limit for this type of loss is the Contract Price, but do recognise that this is commercially difficult to achieve. We have seen lower caps (effectively in the region of 10 to 15 % of the Contract Price).]

3.2.3 Performance Liquidated Damages for Future Loss must be invoiced by the Owner by reference to the Defects Liability Period and payment will be due within 30 Days of issue of such invoice.

3.2.4 At the expiration of 30 Days the amount invoiced will be a debt due and payable to the Owner on demand and may be deducted from any payments otherwise due from the Owner to the Contractor and the Owner may also have recourse to the security provided under the Contract.

3.3 [Parasitic Load/Auto-consumption Guarantee]

[Drafting Note: Please see our comment in the Testing Schedule.]

4 OVERALL AGGREGATE LIABILITY

4.1 The overall aggregate liability for Delay Liquidated Damages and Performance Liquidated Damages is limited to [25] % of the Contract Price.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.


DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com

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