Contractual Analysis of A Power Plant

Posted in Uncategorized by qmarks on February 25, 2012

ProjectCo: Independent Power Plant project for gas-fired power plant

First contract to read: Power Purchase Agreement because it sets out the framework for the project,

in PPA check the

Output: in Megawatt hours

Heat Rate: A measurement used in the energy industry to calculate how efficiently a generator uses heat energy. It is expressed as the number of BTUs of heat required to produce a kilowatt-hour of energy. Convert the heat rate into fuel required to produce 1 MW electricity

Emissions: is there any environmental constraint?

What happens if the plant is unavailable: any payments made, pro-rated amount, extended outage penalties, unavailability penalties under force majeure

Agreements to read

ProjectCo and Power Purchaser :

PPA Agreement

ProjectCo and Government:

Support agreement

ProjectCo and Gas Supplier:

Gas Supply Contract, is it hedged? Take and Pay?

ProjectCo and Construction Contractor:

EPC Contract,

Is EPC Contractor experienced, build a similar project in similar size before? Is it turnkey fixed price fixed time ?

What if COD (commercial operation date) is not met by the SCD (substantial completion date)?

What are the technical and operational performance test requirements? too stringent?

What are the Securities; liquidated damages, L/C, performance bonds?

ProjectCo and Operator:

O&M Contract, cost pass through to the offtaker, insurance, unavailability penalty?

ProjectCo and Equity Investor:

Skin in the game? ROE amount, is it covered under Tariff? Dividend distribution test?

ProjectCo and Lenders: Project Finance Debt contracts

Also check if the project co received the necessary operating permits, emission requirements are met, confirmation of operating phase insurance are in place, and reserve stocks of fuel are in place


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