Energy > AG Speaking Energy
21 Sep '17

Introduction

Large-scale solar development is big business, and solar EPC Contracts are big business by association.  In Q2 2017, the U.S. solar market installed 2,387 MWdc, an 8% increase year-over-year, and the largest second quarter everi.  Utility PV accounted for 58% of those installations, making that the seventh consecutive quarter that the utility-scale space added more than 1 GWdcii.  In today’s solar market, there is significant competition among project developers in search of debt lending and equity investment partners.  This means that in order to develop a competitive edge, developers need to prepare a solar project with the strongest level of guaranteed revenue in order to increase the likelihood of selling the project to such potential debt and equity companies.  Given that the majority of a solar project’s capital expenditure is EPC costs (approximately 70%-90%)iii, the cornerstone of any bankable solar project is a properly negotiated EPC Contract.  As such, developers must offer lenders and investment partners bankable EPC Contracts that centralize the responsibility for meeting many of the perceived challenges associated with a big solar project and make the risk profile of the entire solar project more attractive to such potential partners.  This article identifies the five fundamental risks facing any project developer in an EPC Contract and lays out an easy to use checklist of legal and commercial tools to mitigate them and to ensure the developer is able to present debt lenders and equity investors with the most bankable EPC Contract possible - one that is the most likely to deliver a well-performing solar project on time and on budget.

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15 Sep '17

The Federal Energy Regulatory Commission (FERC or the “Commission”) recently restored its quorum with the swearing in of Commissioners Neil Chatterjee and Robert Powelson, but the casualties from the six-month, quorumless period continue to pile up. East Kentucky Power Cooperative (EKPC), a generation and transmission cooperative in PJM Interconnection, L.L.C., is the latest victim. On September 7, 2017, FERC granted EKPC’s application seeking to terminate its obligation to purchase electric energy and capacity from qualifying small power production facilities (QFs) with a net capacity in excess of 20 MW (the “September 2017 Order”). The September 2017 Order represents a pyrrhic victory of sorts for EKPC, though, because FERC ruled that the termination does not apply to two Kentucky QFs that protested the application — a result that would not have occurred if FERC had a working quorum earlier in the year.

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06 Sep '17

On August 23, 2017, the Department of Energy (DOE) released its Staff Report assessing the reliability and resilience of the electric grid. The highly anticipated report was commissioned in April 2017 by Secretary of Energy Rick Perry, who expressed concerns that the “premature retirement” of traditional baseload generation, such as coal and nuclear—possibly driven, in part, by subsidies for renewables—would place the long-term reliability of the grid at risk, particularly in the organized wholesale electricity markets. The Staff Report finds that there is no immediate crisis due to the changing resource mix, although the continuing evolution of the grid may pose future challenges and risks. Although its findings and conclusions are relatively uncontroversial and consistent with findings made in similar reports and analyses by grid operators and other stakeholders, the Staff Report provides a valuable perspective on the past and future of the electric grid and the wholesale markets.

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30 Aug '17

On August 28, 2017, the Federal Energy Regulatory Commission (FERC or the “Commission”) approved a Stipulation and Consent Agreement between FERC’s Office of Enforcement (OE) and American Transmission Company, LLC (ATC) to resolve an OE investigation of numerous violations by ATC of Sections 203 and 205 of the Federal Power Act (FPA). ATC identified the violations during an internal compliance review precipitated by a March 2014 settlement between OE and certain subsidiaries of ITC Holdings Corp. regarding similar violations, as described here.

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22 Aug '17

On August 21, 2017, Power Africa published its 2017 Annual Report highlighting more than 80 Power Africa transactions closed and more than $14.5 billion in financings since its inception.  Overall, it has facilitated the financial close of power transactions expected to generate more than 7,200 MW of power in sub-Saharan Africa and generated more than $500 million in U.S. exports.  The report demonstrates how Power Africa, and the recently passed Electrify Africa Act, continues to create opportunities for American businesses in Africa as it proceeds toward its goals of increasing installed generation capacity by 30,000 MW and adding 60 million new electricity connections by 2030 on the continent. These developments are important, since interested investors continue to seek access to the $300 billion energy market in sub-Saharan Africa and tap into the demand for an additional 20,000 megawatts in the region.

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15 Aug '17

On July 14, 2017, and July 25, 2017, the U.S. District Court for the Northern District of Illinois and the U.S. District Court for the Southern District of New York, respectively, dismissed challenges to the Illinois and New York Zero-Emissions Credits (ZECs) programs for nuclear generators.1 In doing so, the courts reaffirmed states’ rights to prioritize specific types of generation resources or resource attributes. Relying, in part, on the Supreme Court’s 2016 Hughes2 decision invalidating a Maryland power plant subsidy program, the courts rejected claims that the ZEC programs (i) encroach on the Federal Energy Regulatory Commission’s (FERC or the “Commission”) exclusive authority under the Federal Power Act (FPA) to regulate wholesale sales of electricity by directly affecting prices in the wholesale power markets and (ii) violate the dormant Commerce Clause by discriminating against out-of-state, non-nuclear generators.   

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21 Jun '17

On June 9, 2017, Beaver Creek Wind II, LLC and Beaver Creek Wind III, LLC (together, “Beaver Creek”) responded to a deficiency letter from the Federal Energy Regulatory Commission (FERC or the “Commission”) staff seeking further information on Beaver Creek’s calculation of the “one-mile” rule in its applications for certification as qualifying small power production facilities (QFs). At issue is Beaver Creek’s proposed “weighted geographic center” methodology used to calculate the distance between wind projects consisting of multiple pieces of geographically dispersed electric generating equipment (i.e., wind turbines) for the purposes of applying the one-mile rule under the Public Utility Regulatory Policies Act of 1978 (PURPA). With a potential FERC quorum on the horizon, the instant case provides the new FERC commissioners with an opportunity to establish a preferred methodology, if any, for measuring one mile for purposes of PURPA. As such, the outcome could have immediate impacts for renewable energy project developers, particularly those developing wind projects, as they perform due diligence on property selection and equipment siting when planning multiple projects.

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20 Jun '17

On June 19, 2017, the Comisión Nacional de Hidrocarburos (CNH) completed the Presentation and Opening of Bid Proposals for the First Tender of the Ronda Dos (“Round 2.1”), which was first announced on July 20, 2016. Round 2.1 attracted 36 bidders: 20 individual companies and 16 consortia, including Petroleos Mexicanos, DEA Deutsche Erdoel, Talos Energy, Noble Energy, Chevron, Shell, Total and ConocoPhillips.

Round 2.1 included 15 contract areas with an estimated four billion BOE of dry gas, wet gas, light oil, heavy oil and extra heavy oil located in the shallow waters of Veracruz, Tabasco and Campeche.

Click here to read the full alert.

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