Renewable Energy Projects: Structuring Operations & Maintenance - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Renewable Energy Projects: Structuring Operations & Maintenance Agreements Negotiating Owner and Operator Obligations, Performance Remedies, Services, Termination, Indemnification, Force Majeure, and Other Key Provisions TUESDAY, MARCH 7, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: ​ Rusty Brewer, Partner, Amis, Patel & Brewer , Washington, D.C. Brian C. Harms, Partner, Troutman Sanders , Atlanta The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Renewable Energy Projects: STRUCTURING OPERATIONS & MAINTENANCE AGREEMENTS March 7, 2017 Brian Harms Rusty Brewer Partner Partner Troutman Sanders LLP Amis, Patel & Brewer, LLP

I. O& O&M M Agreement ement Str tructuring: cturing: Key Issues ues • Unscheduled Maintenance • Performance Obligation and Guarantees • Warranties • Scope of Service/Change Order Relief • Termination and Limitation of Liability 6

II. O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Services – Scope of Services • Broad Scope Everything • Broad Scope with Carve Outs (owner tasks) • Defined Scope Particular Tasks (washes?) • Fixed Price Scope vs vs Cost Plus Scope • Change Order Relief – Unscheduled Maintenance Protection • Tension with performance obligations • Alerts, notification and impetus for physical remedy (tied to performance remedies) • Spare Parts and Management 7

II. O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Services – Project Agreement/Permit/Compliance Obligations • Specific vs. Broad • PPA LD Protection (forecasting) • Change Order Relief • NERC Requirements – Service Fee - $/DC Concept for Solar – Flow Through With Tax Equity and Debt Documents • Budgeting • Reporting Obligations 8

II. . O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Performance Obligations and Remedies – Availability Guarantee • Level of Guarantee – Calculation for Actual vs Expected Availability and Time Period for Calculation • Carve Outs from Guarantee (e.g. single point failure) • LD Calculations – Performance Guarantee • Level of Guarantee – Calculation of Actual vs Expected Delivered Amounts and Time Period for Calculations • Carve Outs from Guarantee (e.g. single point failure) • LD Calculation – Standard for Performance of Services • Needs to Comply with Applicable Laws, Permits, and the Terms of all Project Agreements (e.g., PPA, IA, Real Estate, Equipment Warranties) • What are the Remedies for Failure to Perform in Accordance with the Standard – Key Lender Concern 9

II. . O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Owner Obligations – Access and Storage – Data and Remote Access – Permits/Project Agreements – Updates to Maintenance Specifications – Potential Division of Labor Issues (e.g. scheduling under a PPA based on O&M forecasts) • Term and Termination – Term – 5 Years/10 Years – Extensions? – LTSA Considerations – Termination • Event of Default • Termination for Convenience • Termination Damages/Closeout 10

II. . O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Warranties – Oversight of Pass-Through Warranties (in and out cost issues) – Services Warranty – LTSA Warranty Obligations • Limitations on Liability – Fixed Amount vs vs Amount Based on a Fee – Carve Outs (e.g. third party indemnity claims) – Key Lender Concern • Indemnification – Typical Service Provider Indemnification – Fines and Penalties – Hazardous Materials – Interplay with Project Insurance 11

II. . O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Force Majeure, Change in Law and Change Order Relief – Force Majeure • Definition and Carve Outs • Responses and Change Order Relief – Change in Law • Definition and Carve Outs • Change Order Relief – Change Orders • Mandatory Change Orders • Requested Change Orders • Potential Default Change Orders • Calculation of Amounts 12

II. . O& O&M M Agreement eement Str tructur cturing: ing: Key y Pr Provisions isions • Insurance – Owner – Property and Indemnification Coverage (typical terms) – Contractor – Indemnification Coverage (typical terms) • Intellectual Property and Data – Contractor Access and Use – Licensing and SCADA System – IP Escrow 13

III. O&M Agreement Structuring: Strategies for Monitoring and Management • Solar – Capital Intensive and Operations Light – Limited Personnel at the Site; Operations Center Becomes the Key – Key is SCADA and Alert/Notification System – Where is the Site Plant Located and Know the Soiling and Other Potential Degradation Concerns (i.e. grid insulation with cold temperatures and maybe some snow melt in turn) • Wind – More Labor Intensive than Solar (more stuff can go wrong with moving parts) – Key is Still SCADA and Alert/Notification System – Make Sure Your Guarantee is Air Tight 14

III. O&M Agreement Structuring: Strategies for Monitoring and Management • Portfolio Approach – Can Help Get Decreased Cost Per Project – Helps Build a Relationship Quickly • Managing the O&M Provider – Build Relationships – Not all that Different from any Commercial Arrangement 15

Contact Information Brian an Harms ms Part rtner ner Trou outman tman Sander ders s LLP 404.88 .885.3682 5.3682 bria ian.harms@ n.harms@tro routm utmansa ansanders nders.com .com Rusty ty Brewer wer Part rtner ner Amis, s, Patel el & Brewer wer, , LLP LLP 202.60 .601.8502 1.8502 rust styb ybrewe rewer@ r@apb apb-le legal.com gal.com 16