Letters of Intent (LOI) for Power Purchase Agreements Posted on Apr 05, 2018

A power purchase agreement ("PPA") is a financial agreement where a developer arranges for the design, permitting, financing and installation of a renewable energy system on a customer’s property at little to no cost. PPAs are excellent tools for putting together renewable energy projects. The process of developing PPAs involves lengthy negotiation, robust documentation, significant analysis and due diligence. A Letter of Intent (“LOI”) for a PPA can ensure exclusivity while these details are worked out.

In addition to providing exclusivity, LOIs can include binding commitments on the proposed key terms of the PPA subject to the Developer completing its credit review, securing applicable federal, state, local and/or utility incentives and a satisfactory review of all due diligence, documentation and other conditions. An LOI can also be used to cover binding commitments to ensure that the typical “deal breaker” type of sticking points that can occur during the PPA development process are agreed upon at the outset. Some of these types of binding commitments that parties might want covered in the LOI include the renewable energy system's specifications, an electricity rate cap, energy output requirements, electricity production guaranty, options to purchase, rights of access, financial guaranties and other key deal terms.

Regardless of how the LOI for a PPA is structured, parties often find LOIs to be a helpful tool for preserving the sales opportunity and protecting their investment while they perform the analysis and due diligence required to complete the full set of PPA project documents.

How Will The Eclipse Affect Electricity Generation? Posted on Aug 16, 2017

This guest blog by Angela Lipanovich, President of Estriatus Law, PC, is also posted on Estriatus Law’s Legal Review (August 08, 2017).

As the majority of the country prepares to experience darkness mid-day for the first time in nearly a century, the approaching total solar eclipse offers an opportunity for reflection, lessons and unification. On August 21, 2017, when the total solar eclipse occurs, our cleantech and renewable energy industry can pause to realize just how far we have come in transforming our nation’s electric supply and technological innovations. In the months leading up to this event, grid operators have prepared to navigate the rapid loss of large amounts of solar energy and the whiplash of solar energy coming back as the sun appears again higher in the sky than when it disappeared. As viewers travel in mass to watch from coast to coast, our relative size to the universe will be underscored.

The path of totality of the eclipse will start in Oregon and move eastward to South Carolina over the course of approximately 90 minutes. Since the last total solar eclipse, our country’s electric grid has undergone drastic changes that will be affected. In March and April of this year, U.S. monthly electricity generation from utility-scale renewable sources, including solar and wind, exceeded nuclear generation for the first time since hydro and nuclear were at the same level in July of 1984. Total PV power installed across the U.S. is estimated to be over 44 GW today with most large scale solar plants built within the past five years. More than 60% of all utility-scale electricity generating capacity that came online in 2016 was from wind and solar technologies. 

The path of totality where the sun is completely blocked during the eclipse will affect 17 utility-scale solar systems, and hundreds of plants, mostly in North Carolina and Georgia, will be at least 90% obscured. More than 6 GW of capacity will be affected in areas that are at least 70% obscured. Northern California is expected to be 76% obscured and Southern California 62% obscured. The rolling effects of the eclipse are expected to have the biggest impact at approximately 10:30 a.m., when PV output is projected to drop 5 GW below typical generation levels. This represents the amount of energy needed to power approximately 1 million homes.

Despite the moon obscuring the sun during a peak time for solar-power production, no reliability issues are expected in the U.S.. Grid operators are lining up extra capacity primarily from natural gas powered turbines. In California, home to 40% of the country’s total PV capacity, the California Independent System Operator plans to replace solar generation from natural gas and hydropower. 

To help offset solar-power loss during the eclipse, CleanTech Docs became a Do Your Thing for the Sun Partner with the California Public Utilities Commission. We have pledged to implement an energy-savings plan that will be deployed during the eclipse, and we are encouraging our customers to join us by taking specific actions to conserve energy during the eclipse. A few reminders about ways to reduce energy use during the eclipse, and thus, reduce greenhouse gas emissions are below:

1. Visit CalEclipse.org or your local/state organization and take an eclipse energy saver pledge.
2. Replace light bulbs with LEDs.
3. Turn off lights in areas that are not being used.
4. Don't charge electronics during the eclipse (9 a.m. to noon).
5. Unplug all appliances not in use.
6. For labs with fume hoods, shut the sash.
7. Turn up the thermostat by 2-5 degrees.
8. Take lunch an hour earlier and turn off lighting and equipment in your office while you’re out.
9. If you regularly do laundry or run the dishwasher during the eclipse period, do so another time of day.
10. Turn off computer monitors if out of the office.
11. Avoid using microwaves during the event.
12. Power down – shut off your computer. Powering down your computer completely uses 50% less energy than sleep mode.
13. Power to the strip – use an electronic power strip. This will help reduce phantom loads. Turn the strip off when not using it.
14. Retrofit old equipment with Energy Star products

We can all do better to reduce our carbon footprint, even those who work at companies or organizations dedicated to growing the cleantech and renewable energy industries. The eclipse is a chance to be reminded not only that we exist in a vast universe, but also that our life is supported by natural systems dependent on the sun. Our success is dependent on working together to solve climate change, one of the greatest threats facing humanity in the 21st century.

The California Independent System Operator has a webpage dedicated to the eclipse and its grid where viewers will be able to track solar production, current and net energy demand in real time.

Solar O&M: Where's The Dough? Posted on Apr 07, 2017

Solar operations and maintenance (O&M) provides the preventative and correctional technical activities that allow solar systems to perform at their best.  As a result of the solar industry’s strong growth curve, O&M is a rapidly growing business opportunity for solar contractors.

The major goals of solar O&M are, as follows:

• Optimization of solar system production for increased asset revenue
• Source of revenue for O&M providers/solar contractors
• Reduction of risks for solar system owners and investors
• Protection of solar system value, revenue stream and longevity
• Compliance with applicable agreements and regulations
• Transparency on solar system production, performance, issues, risks and O&M activities

Some of the common types of solar O&M issues that occur with respect to solar projects include: damage to perimeter fences, ground erosion, transformer leakage, various inverter damage, broken conduit, combiner box damage, vegetation overgrowth, cell browning/discoloring, panel shading, shorted cell, natural damage, vandalism damage, racking erosion, unclean panels and animal nuisance.

Since O&M business relationships are long-term – from 6 years to 30 years – and involve multiple parties, they are also complex.  Any failure of the O&M services subjects every party in the O&M chain to liability.  A solid O&M Agreement is key to protecting your solar business and asset.  We provide a standardized O&M Agreements for these types of relationships. 

If you want to customize our O&M Agreement or to create one from scratch, you might want to use the helpful checklist below created by one of the attorneys in our network.  It contains some of the key legal considerations to take into account when developing these agreements and relationships.

O&M Agreement Checklist

1.  Check Sections of Agreement That Need Technical Review

• Scope of O&M services – how are “services” defined, exclusions, maintenance schedule, will certain assets be replaced as part of maintenance and included in cost
• Scope of service provider’s authority
• Performance standards to be achieved – how defined, who bears risk of exceptional circumstances such as force majeure, prescribed remedies for non-performance, such as liquidated damages
• Limits of liabilities
• Level of any liquidated damages
• Incentive mechanisms

2.  Prepare For A Long-Term Business Relationship

• Provide a review process during the term of the agreement to review performance, investments, etc.
• If there is any third-party financing, ensure term of agreement at least as long as term of funding, PPA, or other third-party contractual agreements, as applicable
• Do termination provisions provide for termination for convenience? Is that okay with all parties?
• Provide mechanism allowing for additional services to be included within scope of service provider’s responsibilities (variations) and a procedure for resolving any disputes as to the costing of those additional services
• Is service provider to interface with customer?
• Is the service provider to be paid a fixed fee, reimbursable basis or combo of both? And are such fees subject to escalation over time?
• Reporting and monitoring of performance – what reports need to be prepared on a regular basis, who has the right to inspect and audit facility and reports, independent expert to monitor provider’s performance, what is the method for monitoring

3.  Incentivize For A Successful Business Relationship

• Control the reimbursable fee elements of a service providers fee – agree on a budget including how to resolve disputes and exclusions; set procedure to control the budget such as regular budget reviews, expenditure type or level approvals, and exceptions to the obligation to keep a budget such as to avoid emergency, prior approvals, and things outside service providers control; & the consequences of failure to stick to the budget such as potential material default with right to terminate, revision of financial limits above which approval is required, reimbursement obligations for any additional costs
• Provide an incentive in the fee for the service provider to perform – if the contractor performs well paid more, if performs badly paid less; for e.g., proportion of amount by which actual operating revenues exceed anticipated operating revenues or set up bonus based on lack of downtime or adjust fee by reference to anticipated/ actual performance standards
• Entitle owner to exercise rights of set off – for e.g., in case of defective services
• Interest/penalties if delay in payment to service provider

4.  Plan Ahead In Case The Business Relationship Ends Badly

• Termination rights – material default, insolvency, revenue and/or performance failing below certain level for period of time, prolonged force majeure, change of control, loss of licensing rights, budget exceeded, convenience
• Upon termination – when is a party entitled to loss of profits, limits on lost profits, right to take over subcontractors, cooperation obligations, spare parts, royalty free license to use documents or technology to maintain perform O&M services, assignment of vendor service agreements
• Liability and liquidated damages – cure periods, reperformance of defective services or repay/replace defective parts, liquidated damage to be imposed, limits on liability, exclusions of consequential damages, liabilities to third parties and breach of laws, authority to employ substitute services at cost of provider.

We hope this blog post helps you get on your way to start doing O&M work or hiring someone who does. 

Do You Need a Solar Power Purchase Agreement or Solar Lease Template? Posted on Jun 21, 2016

In the event that you are looking for a Solar Power Purchase Agreement (PPA) or Solar Lease template, we recommend the online forms developed by NREL, a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. The NREL has done an excellent job creating a variety of standardized Solar PPA and Lease templates. Many industry veterans are using the NREL forms as starting points for their negotiations on solar projects. We did not add our versions of these templates to our site because want do not want to replicate the efforts of the NREL. Our goal is to serve the unmet legal needs in the cleantech industry.  

Many projects that reach the stage of needing a Solar PPA or Solar Lease warrant hiring experienced legal counsel from the outset. We connect our customers to counsel experienced in Solar PPA and Solar Lease project documents. Also, we have an arsenal of specialized Solar PPAs and Solar Leases covering a range of different facts from solar system size, site location, project structure, and ownership type for customers who cannot find the template that they need on the NREL site.