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Renewable Energy Projects: Negotiating Ancillary Agreements for the - - PowerPoint PPT Presentation

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Presenting a live 90-minute webinar with interactive Q&A Renewable Energy Projects: Negotiating Ancillary Agreements for the Real Estate Facility Strategies for Structuring Project Contracts After Negotiating the Terms of the PPA WEDNESDAY,

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Renewable Energy Projects: Negotiating Ancillary Agreements for the Real Estate Facility

Strategies for Structuring Project Contracts After Negotiating the Terms of the PPA Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

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WEDNESDAY, DECEMBER 5, 2012

Presenting a live 90-minute webinar with interactive Q&A

Kristen Thall Peters, Partner, Cooper White & Cooper, San Francisco Gregory D. Chafee, Partner, Thompson Hine, Atlanta

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Continuing Education Credits

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Renewable Energy Facilities

  • Wind
  • Solar
  • Geothermal
  • Biomass
  • Biofuels
  • Municipal Waste/Landfills

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Wind Projects

  • Real estate issues with wind projects are often complex
  • Large projects may involve thousands of acres and

many landowners

  • Documentation begins with options to secure ground

leases to conduct appropriate feasibility studies

  • Securing rights from neighboring landowners, access to

roads and rights to transmission lines and substations

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Geothermal Projects

  • Ground leases may be required from numerous

landowners and cover large areas

  • Construction and operation of a central plant
  • Projects are often developed in phases and

involve shared facilities agreements between the project companies

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Solar Projects

  • Real estate issues are usually less complicated

than other renewable energy projects

  • Facilities can be in remote areas where issues
  • f interference with existing and neighboring

land uses can arise, including solar exposure

  • Rooftop projects may be with ground lessors or

landowners

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Ancillary Agreements

  • Land Contracts
  • Permits

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Land Contracts

  • Purchase & Sale Agreement
  • Site Lease
  • Real property interest
  • Ability to obtain title insurance/lender security
  • Leasehold Mortgage/Fixture Filings
  • License
  • Personal property interest
  • Sublease or sublicense
  • Often used for tax purposes
  • Access, ROW and Easement Agreements
  • Typically non-exclusive
  • Supply
  • Operations
  • Security Agreements

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Key Terms

  • Access
  • Assignment
  • Casualty and Liability
  • Condemnation
  • Default
  • Environmental
  • Indemnification
  • Insurance
  • Interconnection
  • Maintenance and

Performance

  • Mineral Rights
  • Operations
  • Permits
  • Rent
  • Taxes

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Supply

  • Solar & Wind are Free
  • Easement to ensure non-interruption
  • Lease or License
  • e.g. landfill gas, geothermal
  • Purchase Agreement
  • e.g. biomass, digester gas

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Operations

  • Construction Agreements
  • Operation Agreements
  • Maintenance Agreements
  • Interconnection Agreements
  • http://www.ferc.gov/industries/electric/indus-

act/gi/small-gen/agreement.doc

  • Transmission/Distribution Agreements

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Leasehold vs. Fee Interest

  • Rent versus Purchase Price
  • Deposit, if any, is less than down payment
  • Royalty rent paid once project is going
  • Location may necessitate operation on others’

land

  • Ability to have full control of property

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Supply Leases

Representations of Lessor

  • Does lessor own the supply rights?
  • Are there other similar rights granted to others?
  • Are those rights exclusive?
  • Is there litigation involving the rights?
  • Is the lessor contemplating bankruptcy?
  • Does lessor know of any legal prohibitions?

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Supply Leases

  • Effects of Grants of Mineral Rights
  • Do Mineral Rights include fuel source?
  • Is landfill gas the gas that was contemplated

by a reservation of gas rights?

  • Is geothermal heat/steam a mineral that was

contemplated by a reservation of mineral rights?

  • Resolution using Quit Claim deed

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Supply Leases

  • Representations of Lessee/Developer
  • Is developer a knowledgeable operator of this

type of renewable energy project?

  • Will developer assume risk of practicability

and possibility of performance?

  • Does developer own the technology rights?
  • Does developer have financing?

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Supply Lease

  • What are obligations regarding quality and

quantity of fuel source?

  • Can agreement or certain obligations be

terminated?

  • Obligations to ensure quality or quantity?
  • Force majeure

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Supply Lease

  • Contingencies/Timelines
  • Financing
  • Execution of PPA
  • Granting of permits
  • Granting of any consents that may be

required

  • What are remedies or rights if not met?

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Facility Lease

  • Secures the location of the generating facility
  • Solar and wind generating facilities typically

require too much land to buy

  • Exclusive?
  • Landfill gas, biomass, digester gas,

geothermal generating facilities are typically smaller and may be bought or leased depending on location

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Lease vs. License

  • Lease is real property interest
  • Can be secured by a leasehold mortgage
  • Eligible for leasehold title insurance
  • Notice of lease can be recorded
  • License is personal property interest
  • Contractual right only
  • Can be secured by UCC lien

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Sublease vs. Lease

  • Unusual for a Supply Lease
  • More typical for a Facility Lease
  • Large areas of land for wind and solar may be owned

by federal government

  • Smaller facility may occupy/share existing structure to

keep costs down

  • If sharing space, options are direct lease with facility

sharing agreements or sublease

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Access, ROW and Easements

  • Real property vs. personal property
  • Typically non-exclusive
  • Supply
  • Non-interruptive easements for solar, wind
  • ROW for pipelines to transport gas, steam
  • Operational
  • Access to leased or owned generating facility is

critical regardless of type of fuel

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Notices of Land Rights

  • Constructive Notice to All Subsequently

Recorded Lienholders/interest owners

  • Can’t be sold-out if junior lienholder forecloses
  • Foreclosing lienholder takes property subject to

senior recorded rights

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Security

  • Ensures payment
  • Rent
  • Royalty
  • Loan Payment
  • Ensures performance
  • Indemnification Obligations
  • Insurance Obligations
  • Completion

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Security Relationships

  • Ensures obligations of:
  • Borrower to lender
  • Tenant to landlord
  • Licensee to licensor
  • Buyer to seller
  • Easement grantee to easement grantor

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Types of Security

  • Security Agreements
  • Deeds of Trust and Mortgages
  • UCC Liens
  • Parent Guaranties
  • Letters of Credit

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Security Agreements

  • Contract that governs the relationship between

parties to a secured transaction

  • Personal property in which a secured interest in
  • wned is the “collateral”
  • Collateral can only be personal property, not real

property

  • Stock, membership or partnership interest
  • Licenses, contracts
  • Equipment

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Security Agreements

  • Governed by contract wording and Uniform

Commercial Code aka UCC

  • What further permitted sales or assignments

are allowed?

  • What notices must be given by the parties if

certain actions are taken?

  • Must be perfected by filing UCC lien

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Mortgage or Deed of Trust

  • Can be granted on any real property interest
  • Fee ownership
  • Leasehold interest
  • Easement/ROW
  • Underlying interest must be recorded in Official

Records in order to encumber

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Guaranty

  • Can be granted by any third party to encourage

the entering into of a contract

  • Parent of single purpose entity
  • Shareholder of corporate entity
  • What are limits of guaranty?
  • What if project is sold or expanded?
  • What if underlying agreements are changed?

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Letter of Credit

  • Issued by a financial institution
  • Typically irrevocable for a period of time, but

may be automatically renewed

  • Form of demand typically attached

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Permits

  • Building Permits
  • CUPs/LUPs
  • Environmental
  • Special Disposal Requirements
  • Emissions
  • Generator/USTS

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Building Permits

  • Ministerial or Discretionary?
  • What is the timeline that is involved?
  • Do timelines match those of leases, power

purchase agreements and loan documents?

  • Is public hearing required?
  • Necessary to gain support of community?

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Conditional Use Permits

  • Is collection system, facility, pipeline, etc.

permitted in zoning?

  • What conditions can you or will you have to live

with?

  • How long will it take to get them?
  • Are the permits conditions of the leases, power

purchase or loan agreements?

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Environmental Permits

  • Special Disposal Requirements
  • Condensate
  • Emissions
  • Greenhouse Gases
  • Title V Air permits
  • Generator/USTS

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Negotiating Strategies

  • What is the Market for Renewable Energy?
  • RPS and other Required Standards
  • Green Building/LEED Certification
  • Voluntarily Green
  • Why does the lessor/seller/grantor want to contract with you?
  • Royalty
  • Recipient of Clean Energy
  • Initial Stage of Development vs. Established Facility
  • Who is the Off taker? And will Off taker help you?
  • IOU
  • Local power company
  • Private User

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Renewable Energy Projects: Negotiating Ancillary Agreements for the Real Estate Facility December 5, 2012

Kristen Thall Peters, Esquire Gregory D. Chafee, Esquire

Cooper, White & Cooper LLP Thompson Hine, LLP 201 California Street, 17th Floor Two Alliance Center Center San Francisco, California 94111 3560 Lenox Road, Suite 1600 Atlanta, Georgia 30326 (415) 433-1900 (404) 407-3642 Email: KTPeters@cwclaw.com Email: greg.chafee@thompsonhine.com Website: www.cwclaw.com Website: www.thompsonhine.com