Renewable-Energy Projects: Aligning Completion, Grid Access And Debt Repayment

In a renewable-energy project, the engineering contract, power purchase agreement and loan documents may treat completion differently. A project may be complete for the contractor’s purposes but still lack the grid access needed to start earning revenue. If the documents do not account for this difference, the developer may have to pay the contractor and begin repaying its loans before it can supply electricity and earn revenue.

When the project is examined across all three agreements, the real problem becomes clearer. An extension granted under the power purchase agreement may leave the contractor’s completion date unchanged. A contractor may agree to more time without the lender extending its repayment schedule. Temporary grid access may also allow the project to supply some electricity without meeting the requirements for commercial operation under the other agreements. Each party may therefore be acting within its contractual rights, while the developer still faces payments